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  • Wealth and Poverty in the U.S.

  • Social class structure in the U.S.

  • Main export partners of the U.S.A are

  • Who owns the public debt

  • What are the reasons of such a debt

  • Credit crunch of 2008 and current major economic concerns

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  • he Federal Reserve prints more and more money out of thin air. And all of this new money is creating a tremendous inflation

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    Party System: Historically, 3 features have characterized the party system in the U.S.:

    1) two major parties alternating in power;

    2) lack of ideology; and

    3) lack of unity and party discipline.

    The U.S. has had only 2 major parties throughout its history. When the U.S. was founded, 2 strong political groupings emerged - the Federalists and Anti-Federalists.

    Since then, the practice of two major parties alternating each other in power has existed. And for over one hundred years, America’s two-party system has been dominated by the Democratic and Republican Parties.

    The Democratic Party was started in the 1820’s growing from an offshoot of the country’s first party, the Federalist Party.

    The Republican Party began as an anti-slavery party in 1854 with members from the Democratic Party and the Whigs. It was formed to oppose the spread of slavery into new states.

    Neither party, however, has ever completely dominated American politics. On the national level, the majority party in Congress has not always been the same as the party of the president. Even in the years when one party dominated national politics, the other party retained much support at state or local levels. Thus, the balance between the Democrats and Republicans has shifted back and forth. In general, the parties tend to be similar. Democrats and Republicans support the same overall political and economic goals. Neither party seeks to shake the foundation of the U.S. economy or social structure.
    SUMMARY

    1. The American Constitution is based on the doctrine of the sep­aration of powers between the Executive (the Presidency), Legis­lative (Congress) and Judiciary (the Courts) branches.

    2. All legislative powers of the federal government are granted to the Congress. Congress is a bicameral legislature, consisting of two chambers: the House of Representatives (the “Lower House”) and the Senate (the “Upper House”).

    3. As far as passing legislation is concerned, the Senate is fully equal to the House of Representatives. The House lacks two specific powers granted to the Senate. Only the Senate can approve treaties negotiated and submitted by the President. The Senate also has sole power to confirm cabinet members and other key government officers. However, the House has the power to withhold funding to carry out the agreements, and thus has leverage over many treaties. Moreover, the legislation dealing with gathering revenue (generally through taxes) originates in the House of Representatives (specifically the U.S. House Committee on Ways and Means).

    4. Congress has sole jurisdiction over impeachment of federal officials including presidents. The House has the sole right to bring the charges of misconduct which would be considered at an impeachment trial, and the Senate has the sole power to try impeachment cases and to find officials guilty or not guilty. A guilty verdict requires a two-thirds majority in the Senate and results in the removal of the federal official from public office.

    5. The Constitution provides that the Vice President shall be President of the Senate. The most powerful person in the Senate is the Senate Majority Leader. The House of Representatives has its own presiding officer — the Speaker of the House, who is elected by the House and has important responsibili­ties, giving him considerable influence over the President.

    6. Congressional committees play a dominant role in Congress proceedings. At present the Senate has 16 standing committees; the House of Representatives has 20 standing committees. Each specializes in specific areas of legislation. Almost every bill introduced in either house is referred to a committee for study and recommendation. The committee may approve, revise, kill or ignore any measure referred to it. It is nearly impossible for a bill to reach the House or Senate floor without first winning committee approval.

    7. Bills are introduced by a variety of methods: a) some are drawn up by standing committees; в) some by special committees created to deal with specific legislative issues; and с) some may be suggested by the President or other executive officers; d) citizens and organizations outside the Congress may suggest legislation to members; and e) individual members themselves may initiate bills.

    8. The President has the option of signing the bill (at this point it becomes national law) or vetoing it. A bill vetoed by the President must be reapproved by a two-thirds vote of both houses to become law, this is called overriding a veto.

    9. Congress is a collegial and not a hierarchical body. Power does not flow from the top down, as in a corporation, but in practically every direction, the legislative behavior of representatives and senators tends to be individualistic, reflecting the great variety of electorates represented and the freedom that comes from having built a loyal personal constituency.

    10. The head of the executive branch is the U.S. President, who is both the head of state and head of government. Under him is the Vice President and the Cabinet. The officials in the United States Cabinet are strongly subordinate to the President. The President is the executive and Commander-in-Chief, responsible for controlling the U.S. armed forces and nuclear arsenal. The President may veto legislation passed by Congress; he or she may be impeached by a majority in the House and removed from office by a two-thirds majority in the Senate for “treason, bribery, or other high crimes and misdemeanors.” The President may not dissolve Congress or call special elections, but does have the power to pardon convicted criminals, give executive orders, and (with the consent of the Senate) appoint Supreme Court justices and federal judges.

    11. U.S. Presidential elections are held every four years. The President and the Vice President are the only two nationally elected officials in the United States. They are elected indirectly, through the Electoral College.

    12. The U.S. judicial branch is represented by the federal courts, which include district courts, courts of appeal, and the Supreme Court; by 90 district courts, which are trial courts; by 13 courts of appeals; and by several legislative courts which decide the cases that lie outside of the Constitution’s Article III.

    13. Each branch of government power checks or limits the power of the other branches.

    14. The U.S. has had only two major parties throughout its history. Three features have characterized the party system in the United States: 1) two major parties alternating in power; 2) lack of ideology; and 3) lack of unity and party discipline.



    QUESTIONS FOR DISCUSSION

          1. How can the U.S. government be defined and in what documents are the U.S. basic laws set down?

          2. What is the structure, powers, functions and responsibilities of the House of Representatives and the Senate?

          3. What role do U.S. Congressional committees perform?

          4. How does the U.S. legislature work?

          5. What do you know about the Congressional powers of investigation, about informal practices of Congress, lobbyism?

          6. What are the powers and duties of the U.S. President and his Cabinet?

          7. What requirements must one meet in order to become President and how long can he stay in office?

          8. How are the U.S. Presidential elections conducted?

          9. Why is much of the modern electoral process concerned with winning swing populous states?

          10. The day-to-day enforcement and administration of federal laws is in the hands of 15 executive departments, created by Congress to deal with specific areas of national and international affairs, isn’t it?

          11. What are the powers and the responsibilities of the Supreme Court of the United States?

          12. How many courts are there in the U.S.A. and what do they do?

          13. What is the system of checks and balances about?

    LECTURE 4

    U.S. ECONOMY AND DEMOGRAPHICS

    This lecture tells us that the U.S. has the largest and the most technologically powerful economy in the world, with a per capitaGDP of $54,980. The U.S.A. is also the foremost debtor nation in the world. The lecture also tells us about the U.S. demographics and touches upon the following items:

    • the U.S. economic history;

    • definition of the U.S. economy,

    • government's role in the U.S. economy;

    • analysis of the U.S. economy by sector;

    • U.S. business pattern;

    • American labor force;

    • employment;

    • labor unions;

    • wealth and poverty in the U.S.;

    • social class structure in the U.S.;

    • foreign trade;

    • public debt and its history;

    • credit crunch of 2008 and current major economic concerns;

    • U.S. demographics.


    Key Words and Proper Names:, antitrust, balance the budget, benefit, birth and death rates, business ventures, collective bargaining, customize products, consumer economy, creditor nation, economic deregulation, debtor nation, declining dollar value, fertility rate, fiscal deficits, global economic downturn, employer subsidized health insurance plan, investment bank failures, entrepreneur, gross domestic product, per capita GDP, free enterprise system, job security, housing bubbles, trade imbalance, household income, insolvency, laissez faire economic policies, lay-off, low-cost loans, low-interest loans, market value, overextended, sky-rocketing military spending, stock market, two-tier labor market, merger, mortgage, public opinion poll, poverty line, ratio, revenues, self-employment, stockholder, sub-prime mortgage crisis, government-sponsored securities, surplus, tax cut, tight credit , welfare and unemployment benefits, unemployment rate, venture capital;

    NASDAQ, NYSE, AMEX, CME, and PHLX, CEO, Medicare, Medicaid, Boeing, Cessna, Lockheed Martin, General Dynamics

    The U.S. economy is the world's largest. Its nominal GDP was $17.311 (Q-2 2014), with the GDP growth of 4.2% in 2014. The U.S. economy also maintains a very high level of output per capita. In 2014, GDP per capita was $54,980.

    Today, the U.S. is home to 29.6 million small businesses, 30% of the world's millionaires, 40% of the world's billionaires, as well as 139 of the world's 500 largest companies. This is twice the total of any other country. The U.S. has been the birthplace of 161 of Britannica's 321 Great Inventions, including items such as the airplane, internet, microchip, laser, cell phone, refrigerator, email, microwave, LCD and LED technology, air conditioning, assembly line, supermarket, bar code, electric motor, andATM.

    Apple, Google, IBM, McDonald's, and Microsoft are the world's five most valuable brands in an index published by Millward Brown. A 2012 Deloitte report, published in STORES magazine, indicated that of the world's top 250 largest retailers by retail sales revenue in fiscal year 2010, 32% retailers were based in the U.S., and those 32% accounted for 41% of the total retail sales revenue of the top 250. Amazon.com is the world's largest online retailer. Half of the world's 20 largest semiconductor manufacturers by sales were American-origin in 2011. American producers create nearly all of the world's highest-grossing films. Many of the world's best-selling music artists are based in the U.S. U.S. tourism sector welcomes approximately 60 million international visitors every year.

    The U.S. is one of the world's largest and most influential financial markets, home to major stock and commodities exchanges like NASDAQ, NYSE, AMEX, CME, and PHLX.

    The U.S. also boasts of having the world's largest gold reserves and the world's largest gold depository, the New York Federal Reserve Bank. A large contributor to the country's success has also been its currency. The U.S. dollar still holds about 60% of world reserves, as compared to its top competitor, the euro, which controls about 24%.

    Historically, the U.S. economy has maintained a stable overall GDP growth rate, a low unemployment rate, and high levels of research and capital investment funded by both national and, because of decreasing saving rates, by foreign investors. Since the 1960’s, the U.S. economy has absorbed savings from the rest of the world. The U.S. is by far the most heavily “invested-into” country in the world, with foreign investments measuring almost $2.6 trillion, which is more than twice that of any other country. The U.S. is also by far the largest investor in the world, with U.S. investments in foreign countries totaling over $3.61 trillion, which is almost twice that of any other country.

    It should be noted that the American labor market has always attracted immigrants from all over the world and has one of the world's highest migration rates.

    Almost two-thirds of the nation’s total economic output goes to individuals for personal use (the remaining one-third is bought by the government and business). In 2014, consumer spending coupled with government health care spending constituted more than 70% of the American economy. The consumer role is so great, that the U.S. is characterized as having a “consumer economy”.

    History: The U.S. economic history covers a period of more than two and a half centuries. It has its roots in European settlements of the 16th, 17th, and 18th centuries. The theoretical foundation of the American economic system was provided by Adam Smith, whose economic ideas of “laissez faire” had a strong influence on the development of capitalism. These ideas were compatible with the high value that America’s Founding Fathers placed on individual liberty. Freedom from economic control seemed an extension of freedom from control of religion, speech, and the press.

    Historically, the main causes of the U.S. economic growth were:

    • the number of available workers and, more importantly, their productivity and mobility, including a stable cheap labor pool of millions of immigrants from all over the world,

    • a large unified market,

    • a supportive political-legal system,

    • vast areas of highly productive farmlands,

    • vast natural resources (especially timber, coal and oil),

    • a cultural landscape that valued entrepreneurship,

    • a commitment to investing in material and human capital

    • willingness to exploit labor.

    Moreover, the U.S. was able to utilize its resources and God-given advantages due to a unique set of institutions designed to encourage utilization, extraction and manufacturing.

    The U.S. pioneered in scientific management of production and coordination (it is motherland of the Second Industrial Revolution). The role of flexible organization structures known as corporations or voluntary associations of owners or stockholders cannot be denied as a contributor to the U.S. economic growth. They proved to be an effective device for accumulating the funds needed to launch a new business or to expand an existing one.

    Mixed economy: The U.S. has a capitalistmixed market-oriented economy. A central feature of the U.S. economy is the economic freedom afforded to the private sector. It makes most of economic decisions in determining the direction and scale of what the U.S. economy produces. This is enhanced by relatively low levels of regulation and government involvement, as well as the court system that generally protects property rights and enforces contracts.

    In 2013, the private sector constituted 55.3% of the U.S. economy, with federal government activity accounting for 24.1% and state and local government activity (including federal transfers) the remaining 20.6%.

    Market forces in America operated with a minimum of government intervention till the end of the 19th century. Strong government regulation in the U.S. economy started in the early 1900’s with the rise of the Progressive Movement.

    Since then government regulation has been introduced more than once as a measure to stabilize the U.S. economy. E.g., the need for the government regulation in the field of employment can be illustrated by the following most recent example: on June 26, 2009, Jeff Immelt, the CEO of General Electrics, called for the U.S. to increase its manufacturing-based employment to 20% of the workforce, saying that the U.S. had outsourced too much in some areas and could no longer rely on the financial sector and consumer spending to drive demand.

    In the U.S. there are certain limits to free enterprise and private ownership. Some services are better performed by public rather than private enterprise. E.g., in the U.S., government is primarily responsible for the administration of justice, education (although there are many private schools and training centers), the road system, social statistical reporting, and national defense. It regulates “natural monopolies,” and it uses antitrust laws to control or break up other business combinations that become so powerful that they can surmount market forces. Government also addresses issues beyond the reach of market forces. It provides welfare and unemployment benefits to people who cannot or will not support themselves, it pays much of the cost of medical care for the aged and those who live in poverty; it regulates private industry to limit air and water pollution; it provides low-cost loans to people who suffer losses as a result of natural disasters; and it has played the leading role in the exploration of space, which is too expensive for any private enterprise to handle. All of this is paid for by a system of progressive taxation.

    Historically, government's role in the U.S. economy was exercised through 1) government regulation and control, 2) through protective tariffs and subsidies to industry, i.e., direct services and assistance, 3) it built infrastructure, and 4) established banking policies, including the gold standard, to encourage savings and investment in productive enterprises. Lately, the government has maintained steady economic growth by adjusting spending and tax rates (fiscal policy) or managing the money supply and controlling the use of credit (monetary policy).

    In 2013, the total U.S. budget constituted 15.7% of the GDP and was made up of:

    revenues:$2.77 trillion (individual income tax, 47.4%; social insurance, 34.2%; corporate taxes, 9.9%; other, 8.5%) and expenditures: $3.45 trillion (Social Security, 23.2%; defense, 14.3%; Medicare, 7.3%; Medicaid, 7.7%; interest, 7.5%;other, 25.7%). Budget deficit in 2014 was $492 billion.

    Postindustrial economy: The U.S. has the largest and most technologically powerful economy in the world. Its economy is postindustrial, with the service sector of the economy now contributing to the greatest share of the U.S. GDP. So, the service sectorcontributes 79.4% of GDP, industry – 19.5%, agriculture – 1.1 % (2013).

    By occupation, 38% U.S. citizens were employed in managerial and professional and technical spheres, 23% - sales and office, 23% - other services, 12% - in manufacturing, mining, transportation, and crafts, 3.3% - in installation, maintenance, and repair; 0.7% - in farming, forestry, and fishing in June 2014.

    As a shift from production of goods to the delivery of services is a dominant feature of the American economy, so the large majority of service-providing jobs are found in the group of trade, transportation, and utilities occupations. Other key service industries for the U.S. include finance, tourism and information technology.

    The industrial sector is also highly diversified and technologically advanced. The leading business field by gross business receipts iswholesale and retail trade; by net income itismanufacturing. Around 16 % of the population is employed in manufacturing, extraction, transportation, and crafts. The U.S. produces approximately 18% of the world's manufacturing output, a number that has declined as other nations developed competitive manufacturing industries. The industrial production rate was 2.5% in 2013.

    The U.S. as a world leading, high-technology innovator is the world's 2nd largest manufacturer, with a 2013 industrial output of U.S. $2.4 trillion. Its manufacturing output is greater than that of Germany, France, India, and Brazil combined. Its main industries include petroleum, steel, automobiles, construction machinery, aerospace, agricultural machinery, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, and mining, and defense.

    The U.S. leads the world in airplane manufacturing. American companies such as Boeing, Cessna, Lockheed Martin, General Dynamics produce a vast majority of the world's civilian and military aircraft. Chemical products are also the leading manufacturing field.

    The U.S. is the third largest producer of oil in the world, as well as its largest importer. In 2013, the U.S. imported 2,808 million barrels of crude oil, compared to 3,377 million barrels in 2010. President B. Obama promises that by 2015 the U.S. will have become the biggest world exporter of oil.

    The U.S. is the world's number one producer of electrical and nuclear energy, liquid natural gas, sulfur, phosphates, and salt. It is the world’s leading producer of aluminum, copper, and paper, and one of the top producers of automobiles. No other nation exports as much high technology as the U.S. American firms have always been at or near the forefront in technological advances, especially in computers and in medical research, aerospace and bio-chemical products, and military equipment.

    Agriculture:The U.S. is the third largest agricultural producer in the world behind China and India. Agriculture is a vital part of the U.S. economy and society. The U.S. is a net exporter of food and controls almost half of world grain exports. In productive terms, the achievements of this sector of the economy are extraordinary. U.S. farmers produce enough food for domestic consumption and still supply 15% of the world’s food needs. Meanwhile,e agriculture accounts for just 1.1% of GDP; and only 0.7% of the population of the U.S. is employed in the agricultural sector.

    The U.S. is the world's top producer of corn and soybeans. The U.S. controls almost half of the world grain exports. Products include wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products; forest products; fish.

    Most employed in the agricultural sector are proprietors of independent farms. Once the dominant American social class, farmers diminished in overall numbers during the 20th century, when farm holdings grew more consolidated, and farming operations became more mechanized and extremely efficient. Large amounts of capital needed to operate a competitive farm require a large-scale organization. In this respect, farming mirrors big business: like any enterprise, a farm has owners (who may be a family or a corporation), salaried managers, supervisors, foremen and workers.

    U.S. business pattern: The overall pattern in American business is characterized by the trend towards large-scale enterprises. Giant corporations dominate. Small corporations are being consumed by larger ones and large corporations become even larger through mergers. Large corporations, once run by individuals with high public profiles like Henry Ford or Andrew Carnegie, are now often run by nearly anonymous career executives who rarely own more than a fraction of 1% of the corporation’s stock.

    At the same time the end of the 20th century saw a trend called deinstitutionalizing. While giant corporations determine much of the nation’s economic behavior, entrepreneurs have a significant impact on the American economy. Small businesses started by entrepreneurs provided more new employment than larger corporations. The high-tech era has produced a new generation of entrepreneurs, especially in dot-com business.

    And in recent years entrepreneurship has been a major driver of economic growth in the U.S. American society highly emphasizes entrepreneurship and business. An entrepreneur is someone who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods. This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The most obvious form of entrepreneurship refers to the process and engagement of starting new businesses (referred as Startup Company).

    According to Paul Reynolds, entrepreneurship scholar and creator of the Global Entrepreneurship Monitor, “by the time they reach their retirement years, half of all working men in the U.S. probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers.”

    Venture capital, as an industry, originated in the U.S. and it is still dominated by the U.S. According to the National Venture Capital Association 11% of private sector jobs come from venture capital backed companies and venture capital backed revenue accounts for 21% of U.S. GDP.

    Some new American businesses raise investments from angel investors(venture capitalists). In 2010, healthcare/medical accounted for the largest share of angel investments, with 30% of total angel investments (vs. 17% in 2009), followed by software (16% vs. 19% in 2007), biotech (15% vs. 8% in 2009), etc.

    Americans are “venturesome consumers” who are unusually willing to try new products of all sorts, and to pester manufacturers to improve their products.

    American labor force: The onrush of technology explains the gradual development of a “two-tier labor market” in which those at the bottom lack the education and professional/technical skills of those at the top and, they more and more fail to get proper pay raises, health insurance coverage, and other benefits.

    The World Bank ranks the U.S. first in the ease of hiring and firing workers. The U.S. population for 2014 was 318,662,000; the U.S. has the highest labor force participation rate in the world with 156.08 million (includes 8.98 million unemployed, Q2 2014).

    Of those employed, around 80% had jobs in the service sector. The private sector employs 91% of Americans. Government accounts for 8% of all U.S. workers. Over 90% of all employing organizations in the U.S. are small businesses. The 30 million small businesses in the U.S. account for 64% of newly created jobs (those created minus those lost). Jobs in small businesses accounted for 70% of those created in the last decade.

    The proportion of Americans employed by small business versus large business has remained relatively the same year by year as some small businesses become large businesses and just over half of small businesses survive more than 5 years.

    American companies are among largest businesses and employers in the world. A good example is Wal-Mart, the largest company and the largest private sector employer in the world, which employs 2.1 million people world-wide and 1.4 million in the U.S. alone.

    Employment: The U.S. labor market is huge but currently very volatile. Unfortunately, the labor force has yet to recover fully from the 2008 financial crisis. Unemployment rates in the U.S. nearly doubled in 2009 from 5.8% to 9.3%, while in 2010 unemployment was around 10%. In September 2014, it was 6.1%.

    Between February 2008 and February 2010, the number of people working part time for economic reasons increased by 4 million to 8.8 million, that is a 83% increase in part time workers during the two year period.

    Education, age, gender, race and location influence the unemployment rate. Thus, in 2009 the unemployment rate among young people between 15-24 years of age was total 17.6%, male:20.1% and female: 14.9%. Female unemployment in total continued to be significantly lower than male unemployment (7.5% vs. 9.8%). The unemployment among whites continues to be much lower than African American unemployment (at 8.5% vs. 15.8%). In October 2009, 34.5% of young African American men were unemployed. Officially, Detroit’s unemployment rate was 27%, but Detroit News suggests that nearly half of the city’s working-age population may be unemployed in 2009.

    Labor unions: The drive for success is the cornerstone of American ideology as a result there is no focused ideological support for America’s labor unions. Labor unions in the U.S. do not have the power or political direction of their counterparts in Europe. About 12% of workers are unionized, compared to over 30% in Western Europe.

    Achievements of European labor, such as workers’ participation in corporate strategy in West Germany and nationalization of industries in Great Britain seem radical compared with the achievements of American workers, such as increases in overtime pay, paid vacations, premium pay for night work, and employer subsidized health insurance plans.

    American labor unions today are losing members and influence. One explanation for the difference between labor unions in Europe and the U.S. is:

    • American workers have traditionally valued self-reliance and individualism.

    • The lack of rigid class distinctions has given many workers the feeling that they are not permanently destined to a working-class existence.

    • The lack of class consciousness and the belief that one can rise to a higher station in life through individual effort help explain why socialism has not gained mass appeal as a unifying ideology among American workers.

    • The changing trends in the economy as a whole - the decline in manufacturing industries, once a stronghold of unionism, and the rise in service and high-tech industries, which employ fewer blue-collar workers - have contributed to the decline of America’s labor unions.

    • The movement of many industries to the South, where right-to-work laws hinder unionism.

    Wealth and Poverty in the U.S.: The wealth is varied with relation to race, education, geographic location and gender. No doubt, households with greater income feature the highest net worth. In addition, wealth is unequally distributed - the wealthiest 25% of U.S. households own 87% ($54.2 trillion, in 2009) of the wealth in the U.S.

    Household net worth fell between 2007 and 2009 by a total of $17.5 trillion or 25.5%. This was the equivalent loss of one year of GDP.

    Between 2000 and 2010, the median household income for working-age households fell from $61,574 to $55,276, a decline of roughly $6,300, which is more than 10%. As of 2008, the median household income was $52,029. It ranged from $68,080 in Maryland to $36,338 in Mississippi.

    284,000 working people out of 155.6 million working in the U.S. have two full-time jobs and 7.6 million have a part-time job in addition to their full-time employment. Average gross salary in 2012 was $55,048.

    Social class structure in the U.S.: Many Americans believe in a simple three-class model that includes the "rich", the "middle class", and the "poor". People are grouped into class structures according to wealth, income, education, type of occupation, and membership in a specific subculture or social network. Economists have proposed class systems with 6 distinct social classes. These class models feature an upper or capitalist class consisting of the rich and powerful (less than 5% of the population), an upper middle class consisting of highly-educated and wealthy professionals (ca. 15%), a middle class consisting of college-educated individuals employed in white collar industries (ca.34%), a lower middle class (ca. 19%), a working class (12% )constituted by clerical and blue collar workers whose work is highly routinized, and a lower class (13-15%) divided between the working poor and the unemployed underclass.

    The lower classes constituting roughly a fifth to a quarter of American society consists mainly of low-rung retail and service workers as well as the frequently unemployed and those not able to work. Hunger and food insecurity are present in the lives of 3.9% of American households, while roughly 25 million Americans (ca. 9%) participate in the food stamp program. Overall, around 14.8% of the population falls below the poverty threshold.

    Foreign trade: The U.S. is the world's largest trading nation. The U.S. is the world’s largest importer of goods and third largest exporter. Principal goods in America’s export trade ($1.57 in 2013) are capital goods, 28%; industrial supplies and materials (except oil fuels), 25%; consumer goods (except automotive), 12%; automotive vehicles and components, 9.4%; food, feed, beverages, 8.6%; fuel oil and petroleum products, 7.6%; aircraft and components, 6%; other, 4%.

    The leading U.S. imports ($2.30 trillion in 2013) are consumer goods (except automotive), 23%; capital goods (except computing), 19%; industrial supplies (except crude oil), 18%; crude oil, 14%; automotive vehicles and components, 13%; computers and accessories, 5.4%; food, feed, and beverages, 4.8%; other, 3%.

    The U.S. is a member of several international trade organizations. The U.S. participates in the activities of such organizations as APEC, ASEAN (dialogue partner), Australia Group, BIS, FAO, G-5, G-7, G-8, G-10, NAFTA, NATO, OSCE, Paris Club, UN, UN Security Council, UNESCO, WHO, WMO, WTO, etc.

    Main export partners of the U.S.A are: Canada 19.1%; Mexico 14.8%; China, 7.4%; Japan, 4.2%; United Kingdom, 3.2% (2013).

     Main import partners are China, 18.4%; Canada, 14.9%; Mexico, 12.5%; Japan, 5.8%; Germany, 5.3% (May, 2013). So, Canada, China, Mexico, Japan, UK and Germany are top trading partners of the U.S.

    Despite its huge domestic production, the U.S. economy depends heavily on foreign imports. Before the 1970’s, the U.S. consistently exported more goods than it imported. However, since 1971, the U.S. has been operating under a trade imbalance importing more goods than it exports. E.g., the value of imports $2.30 trillion (2013) substantially outweighs the value of exports ($1.57 trillion (2013). Foreign manufacturers are now selling more in the U.S. than Americans are exporting abroad. Most of America’s television sets, cameras and shoes and clothes are made by foreign companies.

    Current international trade developments in areas such as foreign competitiveness, import-export policies, currency exchange rates and trade imbalance have posed tough problems for the U.S. economy. In 2013, the total U.S. trade deficit was about $0.73T, which is $1.30 in exports minus $2.57T in imports.

    For example, the U.S. trade deficit with China for 2010 was 27 times larger than it was back in 1990. 

    In Fiscal Year 2012, the U.S. federal government ran a budget deficit of $1.09 trillion or 70% of GDP (2012 est.), in 2013 it was 71.8% of GDP.

    Public debt history: On June 30, 2014, debt held by the public was approximately $12.6 trillion or about 74% of Q1 2014 GDP. Intra-governmental holdings stood at $5.1 trillion (30%), giving a combined total public debt of $17.6 trillion or about 103% of Q1 2014 GDP. In 1980, the U.S. public debt was $909 billion - or an amount equal to 33.3% of the U.S. GDP. By 1990, that number had more than tripled to $3.2 trillion - or 55.9% of GDP. Debt levels rose quickly in the following decades. Every man, woman and child in the U.S. currently owes $55,093 for their share of the U.S. public debt.

    In order to fund the national debt, the U.S. relies on selling U.S. treasury bonds to people both inside and outside the country, and in recent times a growing percent of buyers are from overseas. So, the answer to the question: Who owns the public debt? is: Mutual funds, pension funds, foreign governments, foreign investors, American investors, etc.

    As of June 2014, $6.0 trillion or approximately 48% of the debt held by the public was owned by foreign investors, the largest of which were the People's Republic of China and Japan at about $1.3 trillion and $1.2 trillion, respectively.

    As of January 2011, foreigners owned $4.45 trillion of U.S. debt, or approximately 47% of the debt held by the public of $9.49 trillion and 32% of the total debt of $14.1 trillion. The largest holders were the central banks of China, Japan, Brazil, Taiwan, United Kingdom, Switzerland and Russia. The share held by foreign governments has grown over time, rising from 13% of the public debt in 1988 to 25% in 2007.

    Large foreign economies such as China, Japan, Arab states of the Persian Gulf and the EU own huge dollar reserves (especially as the U.S. is more in debt), so there is a fear that they will move away from the dollar. China's reserves are more than $3 trillion, the world's largest.

    Here there are the top 10 (as of May 2013) foreign governments that own the most U.S. debt:

    1. China, Mainland, $1315.9 billion.

    2. Japan, $1111.0 billion.

    3. Oil Exporters such as Saudi Arabia and Iran, $266.3 billion.

    4. Brazil, $255.5 billion.

    5. Caribbean Banking Centers such as Bermuda and the Cayman Islands, $253.2 billion.

    6. All Other, $218.9 billion.

    7. Taiwan, $189.4 billion.

    8. Switzerland, $187.0 billion.

    9. Belgium, $171.0 billion.

    10. United Kingdom, $155.2 billion.

    To sum up, the profile of the economy shows the U.S. to be a gigantic economic power and one of the world’s leading producer of goods and services, but you see that the strength of the U.S. economy has decreased lately.

    What are the reasons of such a debt? As Soros said, before the 2008 crash, the U.S. economy was built on debt and derivatives. Debt said "Eat, drink and be merry...you don't have to pay until tomorrow." Derivatives said "Trust me. Your investment will increase in value." This derivative bubble burst in 2008.

    Credit crunch of 2008 and current major economic concerns in the U.S. can be summed up as: government, business and consumer debt, low savings rates, falling house prices, low consumption rates and sizable trade and budget deficits, inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of the aging population, soaring oil and grain prices and stagnation of family income in the lower economic groups.

    We may say that one of the main reasons of the U.S. economic problems is its enormous military expenditures which divert resources from productive uses such as consumption and investment. Wars in Iraq and Afghanistan required major shifts in national resources from civilian to military purposes and contributed to the growth of the budget deficit and public debt. Through 2011, the direct costs of the wars totaled nearly $900 billion, according to U.S. government figures. U.S. revenues from taxes and other sources are lower, as a percentage of GDP, than those of most other countries.

    In fact, the main reasons of the credit crunch of 2007-2009 were military spending by the U.S. government, then came soaring oil prices. Imported oil accounts for about 60% of the U.S. consumption even today. E.g., in July 2008, oil peaked at $147.3 a barrel in the U.S. Meanwhile, bio-ethanol production increased the prices of grains by 3.5 times in 2008. These high prices caused a dramatic drop in demand.

    At the same time, the start of the 21st century witnessed an enormous inflow of capital from China, also considered as one of the root causes of the financial crisis of 2008: China was buying huge quantities of dollar assets to keep its currency value low and its export economy working, which caused U.S. interest rates and saving rates to remain artificially low. These low interest rates, in turn, created the housing bubble of 2008 or the so-called the sub-prime mortgage crisis (when mortgages were cheap, house prices were inflated as people could afford to borrow more).

    This housing bubble collapse was a cause of the crisis in the financial markets worldwide not only in the U.S.A.

    So, the global economic downturn, the sub-prime mortgage crisis, investment bank failures, sky-rocketing military spending and tight credit, high oil and grain prices had pushed the U.S. into a recession by mid-2008. GDP contracted until the 3d quarter of 2009, making the deepest and longest downturn since the Great Depression.

    Prominent economist George Soros wrote then: housing bubbles in the U.S. were caused by deregulation and financial liberalization of the U.S. economy, which is so hell-bent on the pursuit of pleasure and wealth as we may add.

    At that very time B. Obama was sworn in as U.S. President. Since Franklin Roosevelt, no U.S. president came to office in such difficult circumstances. Like FDR President Obama started with his policy of Relief, Reform and Recovery named Change.

    To help stabilize financial markets, in October 2008 the U.S. Congress established a $700 billion Troubled Asset Relief Program (TARP). The government used some of these funds to purchase equity in U.S. banks and industrial corporations, much of which had been returned to the government by early 2011.

    In January 2009, the U.S. Congress passed and President Barack Obama signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years - two-thirds on additional spending and one-third on tax cuts - to create jobs and to help the economy recover.

    In 2010 and 2011, the federal budget deficit reached nearly 9% of GDP. In 2012, the federal government reduced the growth of spending and the deficit shrank to 7.6% of GDP.

    In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, a health insurance reform that was designed to extend coverage to an additional 32 million American citizens by 2016, through private health insurance for the general population and Medicaid for the impoverished. Total spending on health care - public plus private - rose from 9.0% of GDP in 1980 to 17.9% in 2010.

    In July 2010, the President signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, a law designed to promote financial stability by protecting consumers from financial abuses, ending taxpayer bailouts of financial firms, dealing with troubled banks that are "too big to fail," and improving accountability and transparency in the financial system - in particular, by requiring certain financial derivatives to be traded in markets that are subject to government regulation and oversight.

    In December 2012, the Federal Reserve Board (Fed) announced plans to purchase $85 billion per month of mortgage-backed and Treasury securities in an effort to hold down long-term interest rates, and to keep short term rates near zero until unemployment drops below 6.5% or inflation rises above 2.5%.

    In late 2013, the Fed announced that it would begin scaling back long-term bond purchases to $75 billion per month in January 2014 and reduce them further as conditions warranted; the Fed, however, would keep short-term rates near zero so long as unemployment and inflation had not crossed the previously stated thresholds. Long-term problems include stagnation of wages for lower-income families, inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of an aging population, energy shortages, and sizable current account and budget deficits.

    All these programs were aimed at overcoming the consequences of the 2008-2009 crisis, but at the same time they meant more government involvement and greater government spending which was expanding at an exponential rate.  Nowadays, federal spending is almost 18 times higher than it was back in 1970. Barack Obama backed the budget that would increase the U.S. government spending to 5.6 trillion dollars in 2021. 

    It will, in its turn, lead to the growth of the national debt at a breathtaking speed.  Now many economists say the sad truth is - that it is the U.S. government - that has a massive debt problem.  The Federal Reserve prints more and more money out of thin air. And all of this new money is creating a tremendous inflation

    And if the price of oil is high again, then the consequences for the U.S. economy will be very bitter because the entire American economic system is based on being able to use massive quantities of very cheap oil. 

    One more thing should be mentioned, it is outsourcing. The number of unemployed Americans will not decrease as long as American corporations are allowed to pay slave labor wages to workers on the other side of the globe.  Outsourcing is very bad for the U.S. middle class.  The U.S. economy as it currently exists is unsustainable by definition.  It cannot function without debt. 

    In one of his speeches in 2012, Vladimir Putin accused the U.S. of living beyond its means "like a parasite" on the global economy and he noted that dollar dominance was a threat to the financial markets. From the above said we may conclude that the U.S. federal government is massively overextended, most of state and local governments are massively overextended, most of major corporations are massively overextended, and the majority of U.S. consumers are massively overextended (принимать на себя невыносимые финансовые обязательства).

    The only way that the game can continue is for the Federal Reserve to print increasingly larger amounts of paper money out of thin air and for everyone in the economic food chain to go into increasingly larger amounts of debt. But no debt spiral can go on forever.  At some point this entire house of cards is going to collapse.
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