By Rick Glaze
The best foreign aid program in history may not be a giveaway program at all. In fact, the ideal program is the one in which world economies grow at a rate of more than 4 percent for three years.
Many of the fastest-growing economies, such as China and India, are selling goods like mad to U.S. consumers. We are buying - and, as a result, dollars are landing in these and other countries throughout the world, creating a large trade deficit.
Our economy, however, continues to gain on key competitors. The 15 nations in the European Union had a total economic output 20 percent greater than that of the United States in the early 1970s. Today our output is half a trillion more than the EU, based on a study of the Joint Economic Committee.
After hitting more than $74 a barrel, the price and availability of oil are topics of great concern. One camp says oil will reach $100 per barrel, the other estimates $40. Any guesses?
A study by the U.S. Commerce Department’s Bureau of Economic Analysis concludes that Americans devoted 3.4 percent of their total spending to gasoline and fuel in 1970. In 2005, the report says, Americans spent 3.3 percent of their total income on gas and fuel. Further, the United States used 17 million barrels a day to produce $5.2 trillion in goods and services in 1970. In 2005 we needed 20.7 million barrels a day to produce $11.1 trillion in output. Such high productivity contributes to growth in the economy and low inflation.
A note on a local matter, an election is scheduled June 6 with a tax issue at stake in Santa Clara County. Measure A is a general half-cent sales tax that would raise an estimated $8.2 billion over 30 years. There are no specific projects identified in the measure, though many areas, including health care and transportation, are targeted for the extra funds. The tax revenue would be spent at the discretion of the Santa Clara County Board of Supervisors on whatever the sitting group at the time deemed important - for the next 30 years. Voters will want to look closely at this proposed new tax.
Rick Glaze is president of Glaze Capital Management Inc. of Los Altos and is a registered representative offering securities through First Allied Securities Inc. E-mail him at Rick@Glazecapital.com.
