News What is wrong with the US economy?

[Astronuc]

It’s the season for charitable giving. And far too many Americans, particularly children, need that charity.

Scenes of a devastated New Orleans reminded us that many of our fellow citizens remain poor, four decades after L.B.J. declared war on poverty. But I’m not sure whether people understand how little progress we’ve made. In 1969, fewer than one in every seven American children lived below the poverty line. Last year, although the country was far wealthier, more than one in every six American children were poor.

Paul Krugman, Helping the Poor, the British Way, December 25, 2006

And there's more children in 2006 than in 1969.

 

[loseyourname]

Does the above strike anyone else as awfully strange language? Why contrast less than one in seven with more than one in six? Those could conceivably be exactly the same numbers. I suppose it's possible that's the entire point, but if that is so, why not word it "last year, that percentage remained virtually unchanged?" And why talk about children living "below the poverty line" in 1969, but simply being "poor" today? Is he talking about different things, or is this the same parameter?

 

[Astronuc]

Does the above strike anyone else as awfully strange language? Why contrast less than one in seven with more than one in six? Those could conceivably be exactly the same numbers. I suppose it's possible that's the entire point, but if that is so, why not word it "last year, that percentage remained virtually unchanged?" And why talk about children living "below the poverty line" in 1969, but simply being "poor" today? Is he talking about different things, or is this the same parameter?

All good questions. Why not use percentages - 1 in 6 ~ 16% or 1 in 7 ~14%, and those numbers are close - 15% give or take. Then Krugman could say that in 37 years, the numbers are essentially/virtually unchanged.

As for poverty and poor, poverty is a subset of poor. There are many people living above the poverty line, but are still considered poor (economically speaking), as in working poor.

 

[russ_watters]

Does the above strike anyone else as awfully strange language? Why contrast less than one in seven with more than one in six?

No they couldn't be. Less than 1 in 7 could be 1:7.1, 1:7.4, 1:7.3, etc. Fewer than 1 in 6 could be 1:5.8, 1:5.9, 1:5.7, etc.

My problem with poverty stats, as always, is that they are manufactured on a sliding scale that makes direct comparisons like that utterly meaningless. That poor kid today lives a lot better than that poor kid did 1969. We've looked at this kind of stat before, and I'll try to find some again, but here's a few consumer goods numbers for the UK: http://www.statistics.gov.uk/cci/nugget.asp?id=823

I doubt anyone today would say that a refrigerator is not a necessity of living, yet in the early '70s, it would seem that even some people above the poverty line didn't have them. Today, 95% of households do.

 

[russ_watters]

As for poverty and poor, poverty is a subset of poor. There are many people living above the poverty line, but are still considered poor (economically speaking), as in working poor.

Excuse me? No, "poverty" is not a subset of "poor", they are different forms of the same word.

That's another way these 'advocates' (not you, the guy who wrote the article) intentionally decieve people into believing their points. It is a lie to label a group "below the povety line", then discuss a different group, calling them "poor", and implying they are the same group.

 

[Astronuc]

Excuse me? No, "poverty" is not a subset of "poor", they are different forms of the same word.

That's another way these 'advocates' (not you, the guy who wrote the article) intentionally decieve people into believing their points. It is a lie to label a group "below the povety line", then discuss a different group, calling them "poor", and implying they are the same group.

It's not a lie - it's a matter of definition/interpretation which is subject to subjective/objective assessment.

The nature and extent of the working poor in the United States is a contested subject; while both sides of the political spectrum acknowledge that there are non-negligible numbers of working people living near or below the poverty line, there is disagreement as to whether or not this reflects a genuine flaw with current economic policy, and what the response should be.

http://en.wikipedia.org/wiki/Poverty_in_the_United_States
http://en.wikipedia.org/wiki/Working_poor

The 'poverty line' is certainly an arbitrary boundary, but there are those whose incomes are above the poverty line, but they are still considered to be poor. So my use is correct in a sense of "a square is a rectangle, but a rectangle is not [necessarily] a square."

http://chronicle.uchicago.edu/950511/poverty.shtml
http://www.econlib.org/library/ENC/PovertyintheUnitedStates.html
http://www.leftbusinessobserver.com/Poverty-in-the-US.html

But then the economy is doing so well, or even great by some measures. Certainly some bonuses on Wall Street are at record levels.

 

[ShawnD]

As much as I hate quoting the first page...

What's wrong - for one, the US economy is highly leveraged. The aggregate debt is increasing. What happens when even the interest can't be paid?

I wouldn't worry too much about it. Canada will go bankrupt well before the US does, and when that happens your government will probably realize debt is not a good thing

https://www.cia.gov/cia/publications/factbook/geos/ca.html - Debt is 69.6% of GDP

https://www.cia.gov/cia/publications/factbook/geos/us.html - Debt 64.7% of GDP

 

[Gokul43201]

I wouldn't worry too much about it. Canada will go bankrupt well before the US does, and when that happens your government will probably realize debt is not a good thing

https://www.cia.gov/cia/publications/factbook/geos/ca.html - Debt is 69.6% of GDP

To quote completely:

69.6% of GDP (2005 est.)

I'd like to see what the actual number is. I'm thinking right now that the above estimate turned out to be quite wrong. Canada's enjoyed surpluses for at least the last 5 years, and I imagine their debt has been dropping since the 70% high it reached a decade ago. I can't find recent data easily. The US, however, has been in a 5 year streak of heavy, to industrial-grade deficit spending.

Edit: Just found this - http://www.fin.gc.ca/ec2005/ec/ecc3e.html

Federal debt as a percentage of the economy was 38.7 per cent in 2004–05, a reduction of 29.7 percentage points from its peak of 68.4 per cent in 1995–96.

The estimate in the CIA Factbook is pretty outdated!

 

[Astronuc]

https://www.cia.gov/cia/publications/factbook/geos/us.html - Debt 64.7% of GDP

I've heard higher number like 75-80%.

But then I can never find the actual data going into this. Rather I find processed information and summaries.

People maybe aware that the $200+ billion appropriated for the Iraq War so far has been authorized as 'supplemental spending' so it is not counted toward the Federal Debt.

It is my understanding that obligations for future payments like Social Security are NOT counted as debt.


In the near term, I heard a forecast that 20% of sub-prime mortgages will likely go into default during the next few years, but I don't know what fraction of total mortgages that is.

In the 3rd Qtr of 2006, the US economy as measured by GDP grew at an annual rate of 2% - which is below the rate of inflation.

GROSS DOMESTIC PRODUCT: THIRD QUARTER 2006 (FINAL)
CORPORATE PROFITS: THIRD QUARTER 2006 (FINAL)

Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- increased at an annual rate of 2.0 percent in the third quarter of 2006,
according to final estimates released by the Bureau of Economic Analysis. In the second quarter, real
GDP increased 2.6 percent.

The GDP estimates released today are based on more complete source data than were available for
the preliminary estimates issued last month. In the preliminary estimates, the increase in real GDP was
2.2 percent (see "Revisions" on page 3).

The increase in real GDP in the third quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), exports, equipment and software, nonresidential structures,
and state and local government spending that were partly offset by a negative contribution from
residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

http://bea.gov/bea/newsrelarchive/2006/gdp306p.htm

 

[McGyver]

Flawed Resource Argument in Brokaw/NBC Illegal Immigration Special

Once again the mainstream media clouded a clear economic and political issue: this time illegal immigration. The flaw in Brokaw's story and interviews is that if a company cannot find enough labor (human resources and capital), you don't go and siphon it off from an "unapproved source."

If a company cannot meet its resource needs, it has many options. It can seek help through organizations that help supply these resources, lobby state and federal legislatures, barter labor, swap resources, raise prices and wages, or scale back your business. I owned a specialty medical company for 10 years thru the 1980's, and eventually was forced to change my services as I couldn't find the skilled labor. The economy is contantly changing from undersupply to oversupply, to price hickes and drops. Businesses must learn to operate within their own market limitations, so sustain it with our long tested controls, rather than cut corners and break laws. Once business and society chooses this path - you compromise the free market forces - and can experience a free for all - an economy w/o boundaries doomed for collapse.

 

[russ_watters]

It's not a lie - it's a matter of definition/interpretation which is subject to subjective/objective assessment.

Clearly they are subject to subjective/objective assessment*, but they are the same word (root), so one person cannot use two different definitions (of the same word) simultaneously. That's an intentional contradiction.

*Caveat: word definitions are not subject to interpretation. The assesment of where the line should be drawn is what is subject to interpretation. You cannot arbitrarily choose to use a word in a different way than everyone else does because it suits a useful purpose for you. Again, that's an intentional deception because in doing so, you know that people will think you mean one thing when you actually mean something else.

The 'poverty line' is certainly an arbitrary boundary, but there are those whose incomes are above the poverty line, but they are still considered to be poor.

So my use is correct in a sense of "a square is a rectangle, but a rectangle is not [necessarily] a square."

Who? (besides you, then) None of the links you provided suggest that there is more than one condition that can be labeled poor. All of the commentaries are simply arguing that the line the government draws is in the wrong place.

A square is indeed a special subset of a rectangle. Poverty is not a subset of poor, "poverty is the state of being poor". If you are poor, you are living in poverty, if you are living in poverty you are poor.

http://dictionary.reference.com/browse/poverty

 

[loseyourname]

No they couldn't be. Less than 1 in 7 could be 1:7.1, 1:7.4, 1:7.3, etc. Fewer than 1 in 6 could be 1:5.8, 1:5.9, 1:5.7, etc.

Oops.

I suppose this is where I should plea for Krugman to simply use straight percentages in order to avoid confusing me in the first place.

 

[Gokul43201]

Oops.

I suppose this is where I should plea for Krugman to simply use straight percentages in order to avoid confusing me in the first place.

Lots of statistics (look at news reports of polling results) are described using simple whole number ratios rather than actual percentages, because apparently, the common person is better able to identify (perhaps, by picturing visually) and make sense of these simple ratios. I'd prefer the straight percentages too!

 

[turbo]

Lot's of statistics (look at news reports of polling results) are described using simple whole number ratios rather than actual percentages, because apparently, the common person is better able to identify (perhaps, by picturing visually) and make sense of these simple ratios. I'd prefer the straight percentages too!

It's puzzling why some people choose to use whole-number ratios. After all, we have a currency system in which coins are valued as a percentage of the dollar, and even little kids understand that a quarter ($0.25) is more valuable than a dime ($0.10). Maybe it's just me, but it sounds more immediate and real to say "12% of US residents live in poverty" instead of "one in eight US residents lives in poverty".

 

[kmarinas86]

The US debt is already consists of a significant portion of the money supply in the US.

http://en.wikipedia.org/wiki/Money_supply
M1 was about $1.4 trillion
M2 about $6.5 trillion
M3 about $9.7 trillion

US debt is $8.6 Trillion or 49% of the Money Supply

A simple solution would be to cut prices of everything by half while demanding people turn half of their money to pay for national debt. Who exactly would get that $8.6 Trillion, and what would it be used for?

The real problem is when the year's interest paid on debt is equal to the year's money supply, it is only then can the money supply attain a zero value. We are far from that.

 

[ShawnD]

A simple solution would be to cut prices of everything by half while demanding people turn half of their money to pay for national debt. Who exactly would get that $8.6 Trillion, and what would it be used for?

The problem is that lowering the money supply in such an extreme manner would cause insane deflation. $10 today is worth $20 tomorrow. Having your dollar suddenly worth twice as much increases your buying power, but it murders your selling power. Just as an example, places like China have a lot of selling power because their money is worth basically nothing to us. If US money doubled in value, US companies wouldn't be able to sell anything outside of the country, which would in turn cause layoffs, trade deficit, high unemployment, and possibly higher crime (because you ain't got no job).

My understanding is that most debt is actually owed to citizens. For example, back in WW2 there were things called "war bonds". When you buy $1000 of war bonds, you're basically giving the government $1000 and in return getting a slip of paper that says "we owe you $1000 plus interest". When this happens, you benefit from giving this $1000 to the government because they will pay interest on that $1000 loan you've given them, it's not really any different from when you borrow money from the bank.
The other kind of debt is when the country borrows money from other countries. This kind of debt is always bad and should be avoided at all cost.

 

[russ_watters]

I suppose this is where I should plea for Krugman to simply use straight percentages in order to avoid confusing me in the first place.

Preaching to the choir there - by now you must know I see most such articles as intentional obfuscations. Using percentages would certainly clarify things and that is precisely what they want to avoid.

 

[russ_watters]

My understanding is that most debt is actually owed to citizens.

The other kind of debt is when the country borrows money from other countries. This kind of debt is always bad and should be avoided at all cost.

These days, the ratio of foreign to domestic is getting pretty high. According to Wik it was 44% in 2004: http://en.wikipedia.org/wiki/United_States_public_debt

Those two kinds of debt work exactly the same way as far as the government is concerned, its just that if foreigners own the t-bills or bonds, they get the profit from them instead of Americans. It isn't harmful, it just isn't as helpful.

 

[Jimmy Snyder]

I think the American economy works all too well. I would define a perfect economy as one in which all resources were being used to their fullest potential. Resources would include factories as well as workers. If there is one piece of idle equipment, or a person who isn't employed, the economy is not what it could be. I'm not too worried about finances as embodied in the question "Who is going to pay for all this?" I counter with the question "Who will pay if we don't do all this?"

When you look at the economy we have now, regardless of whether you find the glass half empty or half full, you find something not quite right. It seems that we produce enormous waste really efficiently. Lacking any real need for a larger economy, and yet constantly increasing efficiency, we are forced to produce more and more junk. I am reminded of Vance Packard's idea that factories should be built on pivots next to cliffs. When the economy is down, you can send the product of the assembly line directly to the city dump. It beats laying people off.

My solution is to encourage kids to stay in school longer and encourage early retirement. This would result in a shorter work life, less stuff, and a smaller, but better economy.

 

[Murray Gauthier]

Re: What is wrong with the US economy?
How about 13 trillion dollars of debt??!(gas is still cheap; instead of buying a 50 thousand dollar car, buy a 20 thousand dollar car and use 30 thousand for fuel and maintenance).

 

[ray b]

FREE TRADE
is not free nore fair
and is hurting the USA
it sounds like a good plan
but has not WORKED
RESULTS are bad
our workers are get less
and the international CORPs more
by sending our jobs to china
but the rich love the result
as they do not care about fair
just the bottom line

 

[Astronuc]

How about this for 'what's wrong with the economy'?

Would you believe the adding 167,000 new jobs in December. But isn't that great news? Apparently not because it means wages would increase with fewer unemployed! But doesn't that mean more workers spending more dollars? This seems rather schizophrenic.

It appears that economists look at wage earners as a 'cost' rather than a source of spending 'revenue' - and this in an economy that it is largerly driven by consumer spending.

National Economy Shows Muscle in Job Growth
http://www.npr.org/templates/story/story.php?storyId=6730804

All Things Considered, January 5, 2007 · The labor market finished strong for 2006, posting an increase of 167,000 jobs for December, the Department of Labor reported Friday.

The unemployment rate held steady at 4.5 percent. For all of 2006, employers added 1.8 million jobs to payrolls. That's a relief. Throughout last year, many economists worried that the cooling real-estate market could hurt job growth and tip the country into recession.

After years of spiraling prices and even bidding wars, the housing boom was over by 2006. In markets around the country, housing prices fell for the first time in more than three decades.

Nigel Gault, U.S. economist for Global Insight, recalls why people were concerned: "Given that performance of the housing market, people would naturally worry [about] what's going to happen to the construction market, and what are the spillover effects going to be on the rest of the economy, consumer spending, etc."

The answer so far: not that much.

Slowdown in Housing

Overall, the job market has proved remarkably resilient. Of course, the slump in housing did take a toll. Residential construction jobs fell sharply, but growth in commercial and heavy construction off-set those losses.

Or this is just an example of a dichotomy - the glass is half full or half empty as jimmysnyder mentioned.

Economic Indicators Point to Solid Job Market
http://www.npr.org/templates/story/story.php?storyId=6727734

 

[russ_watters]

Of course good news for some can be bad news for other. There's even something else implied there that is even a more direct dichotomy - good things can be problems and problems can be good things. Hiring more workers costs money and rising expenses are a bad thing but if you are hiring more workers it is probably because sales are up and rising sales is a good thing. My dad calls that a "good problem". (kinda like twin blonde bikini models are a good problem...)

My solution is to encourage kids to stay in school longer and encourage early retirement. This would result in a shorter work life, less stuff, and a smaller, but better economy.

But I like "stuff"!

That sounds tounge-in-cheek, but what "stuff" are we going to get rid of? My telescope? I don't need it, but I really really like it. Trips to Disney World? ZZ would be really upset about that.

"Fight Club" was both exactly right and exactly wrong. No, that coffee table can't define you as a person and if you are letting it, there really is something wrong with you. But that doesn't mean you shouldn't still buy it if you like resting your feet on it at the end of a hard day's work.

Stuff makes us happy and stuff (consumerism) is what drives the economy. We want it and we need it and as long as we don't get carried away by it, booth sides of that coin are a good thing.

 

[gabee]

A note about stuff--unfortunately it's this "stuff" that often sends us in the wrong direction. I hate how this greed for "stuff" (money) is what makes companies ignore the fact that they're irreversibly damaging the environment, and it's why they employ cheap labor wherever it's available. Only when corporations are given tax breaks for adhering to environmental regulations or when they'll get good PR out of it do they appear to change their mind.

It seems inherent in the system that development is the enemy of nature. :/ Just a thought.

 

[ray b]

How about this for 'what's wrong with the economy'?

Would you believe the adding 167,000 new jobs in December. But isn't that great news? Apparently not because it means wages would increase with fewer unemployed! B]

wonder what the avg pay for the "new jobs" are
we lost a lot of higher paying jobs too ""Factories, however, cut 12,000 positions and construction companies eliminated 3,000 jobs - casualties of the souring housing market and the struggling auto industry.""
and ''Leisure and hospitality expanded employment by 31,000 and financial firms added 9,000 new jobs.''
now leisure and hospitality pay is low much lower then a factory job
union auto worker get near 30 an hour and leisure and hospitality pay near minimum rates
so 12,000 x 30= 360,000 per hour vs 31,000 at say 6 = 186,000
and that a GAIN??
looks to me like more 19,000 people working for about 1/2 the pay of the lost jobs

sorry but in the real world of neo-conned control the many earn less
as the better jobs leave for china and fast food workers get the new jobs
and few at the very top earn more as a result of so called ''free trade''

 

[Astronuc]

Right or wrong?

The company underperformed, its stock tanked, but Home Depot's board still gave outgoing chief Robert Nardelli a $210 million severance package.

KAI RYSSDAL: Now here's an interesting item from the day's news. A guy runs a company that underperforms. Underperforms a lot. The stock tanks. Rivals are nipping at the heels. What happens? Well, when Home Depot announced today its CEO was resigning, with the company's blessing, the board gave him $210 million. From New York, Marketplace's Dan Grech reports.

http://marketplace.publicradio.org/shows/2007/01/03/PM200701033.html

I think corporate governance could stand an improvement.


Nardelli's Severance Package Was Pure Highway Robbery - of Investors

Home Depot (NYSE: HD - News) announced the immediate departure of Mr. Robert L. Nardelli, 58 Chairman, Chief Exec. Officer, President and Chairman of Exec. Committee. Shareholders are looking at approximately $210 million to wave good-bye. Apparently Mr. Nardelli will not be sitting on the board as a triumphant retired CEO offering sage advice to those that come after him. The remaining officers and more importantly, members of the board, appear to remain intact. Some of the grey bearded directors have even been asked to stand for re-election. So what has changed or is transpiring? Has the problem really been solved? By the way, the new boss does not have a retailing background. So that problem definitely has not been resolved.

The negotiated settlement, which is almost certainly based, patterned, rooted or influenced on a pre-existing employment agreement, is huge by any standards. $210 million is approximately 20% of last quarter's reported cash flow. $210 million is approximately 2% of last quarter's inventory position. $210 million is approximately $592 per associate (Home Depot's website reports 355,000 associates). $210 million is an incredible amount of money! Most of us would eagerly take the settlement. More than one would have darkly worked to the settlement rather than doing the actual job.

Apparently - some investors are just as outraged by Nardelli's $245 million in total pay over the last five years.

 

[Astronuc]

A sinkhole caused by a broken water main in Brooklyn last year swallowed an S.U.V. Nationally, such incidents have become more frequent.

Gaping Reminders of Aging and Crumbling Pipes

PORTLAND, Ore. — After a sinkhole swallowed a sewer-repair truck here on the day after Christmas, the truck’s crew crawled to safety, muddy and mystified.

Last summer in Irving, Tex., a 2-year-old boy disappeared near a sinkhole. One theory was that he was kidnapped. Another was that he was lost in the sewer system that had broken open and caused the collapse.

In December, firefighters in Brooklyn rescued a grandmother carrying groceries who fell into a hole that opened beneath her on a sidewalk. And in Hershey, Pa., a damaged storm drain caused a six-foot-deep sinkhole in Chocolate Town Park, nearly sinking the town’s New Year’s Eve celebration.

Local and state officials across the country say thousands of miles of century-old underground water and sewer lines are springing leaks, eroding and — in extreme cases — causing the ground above them to collapse. Though there is no master tally of sinkholes, there is consensus among civil engineers and water experts that things are getting worse.

The Environmental Protection Agency has projected that unless cities invest more to repair and replace their water and sewer systems, nearly half of the water system pipes in the United States will be in poor, very poor or “life elapsed” status by 2020.

“I’m not exaggerating,” said Stephen P. Allbee, a project director in the agency’s water division who helped make the projections. “It’s a really, really big public issue, and it’s going to be with us for a long time.”

Local geology or underground hazards are blamed for many sinkholes: weak limestone in Florida, old mineshafts in Pennsylvania. But increasingly, the authorities say, as America’s cities grow older and basic repairs are put off, when the ground gives way the problem is bad pipes.

The American Society of Civil Engineers has been giving low grades on the US infrastructure for years. Lower taxes mean little or no maintenance in some cases.

 

[edward]

Chrysler is in trouble

DETROIT - DaimlerChrysler Chief Executive Dieter Zetsche, under enormous pressure in Germany to spin off the money-losing Chrysler Group, says all options for the U.S. auto making arm are now on the table.

The surprise statement overshadowed details of Chrysler's three-year, $4.5 billion recovery plan announced Wednesday that includes 13,000 job cuts.

http://www.forbes.com/home/business/2007/02/14/chrysler-for-sale-biz-cz_jm_0214chrysler.html

In recent years there have been numerous companies that have announced recovery plans that include massive job cuts. Is there any evidence that this really works?

In most cases profits go up temporarily and the CEO's get a big pat on the back, but I can not see how job cuts are a permanent solution.
The only industry that can increase profits with a reduced production are the oil companies.

Referring to massive job cuts as recovery plans is all hype. They should be called CEO survival plans.

 

[turbo]

In recent years there have been numerous companies that have announced recovery plans that include massive job cuts. Is there any evidence that this really works?

There is a pervasive attitude in the boardroom and in some political circles that the workforce is a burden - a drag on the profitability of a company. To the contrary, the workforce is absolutely necessary, and a well-trained, skilled labor pool is an asset to be cherished and nurtured. The problems that the big 3 automakers are having are not attributable to the workforce, but to the decision-makers high up in the companies who have let the Japanese and now the Koreans take huge parts of the market with affordable, dependable vehicles that Americans want to buy.

To illustrate this, look at the Marysville plant that Ford closed years ago because it was "not profitable". Honda bought the plant, refurbished it, brought in all new equipment, hired back much of the workforce that Ford had laid off, and started production of the Honda Accord, which soon became the biggest-selling car in the US market. ( Note: Ford managed to take back the sales record with the Taurus, but only by "buying" huge numbers of the Taurus themselves and leasing them dirt-cheap to rental companies. Without those bogus sales, the Accord was still by far the most popular car in the US and in fact had the highest percentage of US-made parts of all US-made cars as well.) When Ford closed the plant at Marysville, they were showing their stock-holders that they were willing to sacrifice innovation, design, reinvestment, and smart marketing in order to boost stock prices in the short term. As long as the CEOs of big companies are compensated with stock options and are compelled to cater to the short-term interests of stock-holders, they will continue to make short-sighted decisions that will guarantee the decline of our economy. The Big 3 are not being hurt by their labor forces - they are being hurt by ignorance, greed in the boardroom and by decision-making processes that have horizons of 1-2 years instead of decades.

 

[Futobingoro]

The efficiency of almost all economic processes grows logistically; i.e. businesses grow more efficient as they increase in size, but the trend reverses past a certain point. There is also the powerful force which drives businesses out of industries they do not a have a comparative advantage in.

The American automobile cuts may be a combination of those and/or other factors.

Gone are the days when Boeing manufactured most of the parts for their aircraft. Contracting parts out (though fraught with some difficulties) has reduced the cost of the aircraft.

The Chinese military has actually shrunk considerably since the late 1970s, and is now a "leaner, meaner" force. Ostensibly, this was done to increase the efficiency of what had been described as a cumbersome military.

I consider both of those changes valid.