Debates
12 Oct 11
12 Oct 11
http://newamerica.net/publications/policy/the_way_forward
"The first of those developments has been the steady entry into the world economy of successive waves of new export-oriented economies, beginning with Japan and the Asian tigers in the 1980s and peaking with China in the early 2000s, with more than two billion newly employable workers. The integration of these high-savings, lower wage economies into the global economy, occurring as it did against the backdrop of dramatic productivity gains rooted in new information technologies and the globalization of corporate supply chains, decisively shifted the balance of global supply and demand. In consequence, the world economy now is beset by excess supplies of labor, capital, and productive capacity relative to global demand."
===
Seems like a cogent argument.
Wages in the US are stagnant not because of tax policies or "the rich" but because of worldwide labor-glut. Given what was coming, it made little sense to keep borrowing to buy ever-higher priced homes -- but we did. So now we have a hangover that only greater Chinese consumption will cure!
12 Oct 11
Originally posted by spruce112358The authors don't seen to agree with your assessment that only greater Chinese consumption can "cure" our economic ills. Maybe you should have read the whole thing:
http://newamerica.net/publications/policy/the_way_forward
"The first of those developments has been the steady entry into the world economy of successive waves of new export-oriented economies, beginning with Japan and the Asian tigers in the 1980s and peaking with China in the early 2000s, with [b]more than two billion newly employable workers. ...[text shortened]... es -- but we did. So now we have a hangover that only greater Chinese consumption will cure![/b]
First, as Pillar 1, a substantial five-to-seven year public investment program that repairs the nation’s crumbling public infrastructure and, in so doing, (a) puts people back to work and (b) lays the foundation for a more efficient and cost-effective national economy. We also emphasize the substantial element of “self-financing” that such a program would enjoy, by virtue of (a) massive currently idle and hence low-priced capacity, (b) significant multiplier effects and (c) historically low government-borrowing costs.
Second, as Pillar 2, a debt restructuring program that is truly national in scope, addressing the (intimately related) banking and real estate sectors in particular – by far the most hard-hit by the recent bubble and bust and hence by far the heaviest drags on recovery now. We note that the worst debt-overhangs and attendant debt-deflations in history6 always have followed on combined real estate and financial asset price bubbles like that we have just experienced. Accordingly, we put forward comprehensive debt-restructuring proposals that we believe will unclog the real estate and financial arteries and restore healthy circulation – with neither overly high nor overly low blood pressure – to our financial and real estate markets as well as to the economy at large.
12 Oct 11
Originally posted by no1marauderI think the assessment of the impact of China and other Asian economies is quite useful.
The authors don't seen to agree with your assessment that only greater Chinese consumption can "cure" our economic ills. Maybe you should have read the whole thing:
First, as Pillar 1, a substantial five-to-seven year public investment program that repairs the nation’s crumbling public infrastructure and, in so doing, (a) puts people back to work and ...[text shortened]... blood pressure – to our financial and real estate markets as well as to the economy at large.
When the lame duck congress of 1994 approved of the US entry into the WTO organization and the GATT treaty, what did they think was going to happen?
Joe Six-Pack, working in a textile mill in South Carolina, having 3 kids living at home perhaps would lose his job. I believe American workers are good, but how good do they have to be to make $30 per hour when someone in Pakistan is willing to work for $1 per hour? But it is okay if Joe Six-Pack loses his job. He can be retrained for another job. Perhaps after 15 years in a textile mill production floor, he can be a graphic designer for Macy's. Or, perhaps he can get two lesser paying jobs to make up for his lost income, and while he's supporting his family with two jobs, he can attend a nearby university and get a degree in graphic design. Or, perhaps he will just cease to exist. While the economy saves $30 per hour of pay for Joe Six-Pack, someone pays his medical bills, housing, etc.
The important thing is that the wealth of the world increases as a result of free trade, as most economists will tell you.
Previously, Joe Six-Pack could do an honest days work for a reasonable wage. Perhaps there'd have to be trade barriers to allow this to continue. But once we enter the realm of free trade, there's lots of money to be made by those that are most creative. And one of the most common forms of creativity that is rewarded in this new world is the creative endeavor of finding ways to move jobs from high wage countries to low wage countries. Admittedly there is more wealth in the world as we collectively produce more for less. But now, those such as Joe Six-Pack who previously could work for someone who voluntarily chose to hire him, he is left with the only recourse of using the political machine to commandeer goods and services to survive. In my opinion, this is so much more distasteful than any trade barrier ever was.
Bottom line, free trade increases wealth, but does not naturally distribute it as evenly as before. There's a lot of wealth out there, but you almost need a new 4 year degree every 8 years to keep up.
12 Oct 11
Originally posted by techsouthUnemployment in the US is the result of policies pursued by the US government. It has little to do with globalization, even if there are Joe Six-Packs who lost their jobs - there is plenty of useful stuff to do.
I think the assessment of the impact of China and other Asian economies is quite useful.
When the lame duck congress of 1994 approved of the US entry into the WTO organization and the GATT treaty, what did they think was going to happen?
Joe Six-Pack, working in a textile mill in South Carolina, having 3 kids living at home perhaps would lose his job ...[text shortened]... lot of wealth out there, but you almost need a new 4 year degree every 8 years to keep up.
12 Oct 11
Originally posted by KazetNagorraGlobalization IS a policy pursued by the US government.
Unemployment in the US is the result of policies pursued by the US government. It has little to do with globalization, even if there are Joe Six-Packs who lost their jobs - there is plenty of useful stuff to do.
I presume you mean OTHER policies.
If so, fine. You've made an assertion and I've made an assertion. But at least I've framed my assertion in the language of the national dialog that was ongoing at the time the lame-duck (Democratic) congress was signing up for GATT. And your assertion is by no means a counter argument.
At the time, the idea was that those displaced by out sourced jobs would retrain for other jobs. How do YOU see this happening? Does someone that worked in a factory for 20 years become a graphic designer? Do they go back to college while supporting a family?
Sure there is plenty of useful stuff to do. But as of now, there does not seem to be people willing to pay someone to do these useful things. At least as not as much as before.
12 Oct 11
1 edit
Originally posted by techsouthBlaming the Democratic Congress for GATT is a bit incongruous; GATT passed 288-146 and a higher percentage of Republicans voted for it than Democrats (R: 121Y 56N 68% in favor; D 167Y 89N 65% in favor). Of course, 60% of Democrats voted against NAFTA and it was passed only because of overwhelming Republican support (132Y 43N 75% in favor).http://www.piie.com/publications/chapters_preview/92/iie2679.pdf
Globalization IS a policy pursued by the US government.
I presume you mean OTHER policies.
If so, fine. You've made an assertion and I've made an assertion. But at least I've framed my assertion in the language of the national dialog that was ongoing at the time the lame-duck (Democratic) congress was signing up for GATT. And your assertion is by ...[text shortened]... people willing to pay someone to do these useful things. At least as not as much as before.
I don't disagree with most of your analysis (except I think whether "free trade" creates more wealth is an open question) but your attempt to exclusively blame Democrats for the plight of Joe Six Pact formerly employed at the SC textile mill is misplaced.
12 Oct 11
Originally posted by techsouthThe article, and your comments were both thought provoking. What I notice in both, is an absolute lack of consideration of a seemingly simple notion, allowing the market to function, correct, and to then move on.
I think the assessment of the impact of China and other Asian economies is quite useful.
When the lame duck congress of 1994 approved of the US entry into the WTO organization and the GATT treaty, what did they think was going to happen?
Joe Six-Pack, working in a textile mill in South Carolina, having 3 kids living at home perhaps would lose his job ...[text shortened]... lot of wealth out there, but you almost need a new 4 year degree every 8 years to keep up.
There is this built in assumption that somebody has to plan, coerce, manipulate, and figure out a way out of these difficulties, when the truth is that our best and brightest got us into this fix, so why would we look to the same planners that sent us off the bridge to get us back on track?
12 Oct 11
Originally posted by normbenignIt was blind faith in the benefits of unregulated capitalism that were the main causes of the present economic difficulties. Your call for even more blind faith in unregulated capitalism is unconvincing in the extreme.
The article, and your comments were both thought provoking. What I notice in both, is an absolute lack of consideration of a seemingly simple notion, allowing the market to function, correct, and to then move on.
There is this built in assumption that somebody has to plan, coerce, manipulate, and figure out a way out of these difficulties, when the tr ...[text shortened]... , so why would we look to the same planners that sent us off the bridge to get us back on track?
13 Oct 11
Originally posted by no1marauderPoint well taken. I recall at the time that it was a lame duck congress that would be trending away from Democrats. That along with a Democratic president. I thought it was a bad decision then that had significant support on both sides of the aisle. Republicans in general are more in favor of "free trade", although the most elite democrats tend to be on board.
Blaming the Democratic Congress for GATT is a bit incongruous; GATT passed 288-146 and a higher percentage of Republicans voted for it than Democrats (R: 121Y 56N 68% in favor; D 167Y 89N 65% in favor). Of course, 60% of Democrats voted against NAFTA and it was passed only because of overwhelming Republican support (132Y 43N 75% in favor).http://www.piie ...[text shortened]... mocrats for the plight of Joe Six Pact formerly employed at the SC textile mill is misplaced.
Most economist would say that more free trade results in the most efficient production of goods and services. I think they overlook the social upheaval.
13 Oct 11
Originally posted by normbenignI'm a conservative that is more inclined to free markets than "planned" economies.
The article, and your comments were both thought provoking. What I notice in both, is an absolute lack of consideration of a seemingly simple notion, allowing the market to function, correct, and to then move on.
There is this built in assumption that somebody has to plan, coerce, manipulate, and figure out a way out of these difficulties, when the tr ...[text shortened]... , so why would we look to the same planners that sent us off the bridge to get us back on track?
But consider two countries. Country A, has a largely free people and high standard of living. Because of scarce labor, wages are fairly high, and this without government coercion. Country B is run by a dictator and has a low standard of living. Wages are very low. Without trade, Country B is unstable and could easily topple.
Now add free trade between the two countries. This does a disservice to the people of both countries. Country A, because the labor force has to compete against very low cost labor. Country B, because it props up the dictator and helps him continue in his oppression of the people.
If the world is full of dictators and crippling socialist, our best chance for prosperity is to limit trade at the border. Would it really be so bad if DVD players were made in America and cost $200? Would that be worse than the depression we're in, that will likely get a lot worse?
Not to mention that "free trade" is not really free trade. It is really a bureaucracy to regulate trade and gives power of legal sanctions away to countries run by tyrants and dictators.
Originally posted by no1marauderCan you support this wildly unsupported assertion? Where was this unregulated capitalism? Was Fannie Mae unregulated? Was HUD unregulated? Was the SEC an unregulatory agency? Is the Federal Reserve an unregulated capitalist entity? Are the nations banks and money lenders unregulated, or held responsible when they behave irresponsibly? Where is all this laissez faire you say is to blame?
It was blind faith in the benefits of unregulated capitalism that were the main causes of the present economic difficulties. Your call for even more blind faith in unregulated capitalism is unconvincing in the extreme.
What a douche bag to dare make such an assertion, and think anyone with a half a brain is going to accept that puke.
The entire episode is regulations gone wild. A perfect storm of government planning, do goodering, and manipulation of government by quasi government businesses, and croney capitalists.
13 Oct 11
Originally posted by techsouthI agree on free trade being best, however neither GATT nor NAFTA were true free trade agreements. Both were bills thousands of pages long, followed up with thousands of additional pages of implementing regulations, none of which comes close to "free trade".
Point well taken. I recall at the time that it was a lame duck congress that would be trending away from Democrats. That along with a Democratic president. I thought it was a bad decision then that had significant support on both sides of the aisle. Republicans in general are more in favor of "free trade", although the most elite democrats tend to be o ...[text shortened]... e most efficient production of goods and services. I think they overlook the social upheaval.
These were croney trade, lobbyist trade, manipulated trade. Not even close to free trade.
Again, it was the smart people thinking they could arrange things better than markets could.
13 Oct 11
Originally posted by techsouthAgreed on all of your points, as you'll see when you read my last post. The problem is that in Country A there are low skill, lower paying jobs which rising wages ultimately will drive out of the country regardless.
I'm a conservative that is more inclined to free markets than "planned" economies.
But consider two countries. Country A, has a largely free people and high standard of living. Because of scarce labor, wages are fairly high, and this without government coercion. Country B is run by a dictator and has a low standard of living. Wages are very low. W ...[text shortened]... e trade and gives power of legal sanctions away to countries run by tyrants and dictators.
Consider Nike, which in the 70s was making shoes in Oregon and New Hampshire, with wages a bit over minimum wage, and employing about 4 to 5 hundred people in the two locations. This was a business started in the garage and basement of two U of Oregon track coaches.
The running shoe business was about to explode, and they built a factory in Indonesia, saving a big chunk of labor costs while still paying Indonesian workers about 3 times the going labor rate at the time. The rest is history as they say. Nike is a giant, selling all kinds of athletic shoes, apparel and gear on every continent. They traded 400 shoemaking jobs for thousands of much higher paying jobs in sales, marketing, distribution, logistics, management, etc.
Jobs migrate naturally to where they fit in with the labor available and the cost of that labor. We can slow down the migration, but it is doubtful we can stop it or whether we should want to.
If the economy was a static thing, perhaps the notion of pulling back and closing the borders might make sense. However, I think that the next century will see inventions that we haven't thought of yet, just as the last century produced such inventions.
The big problem IMHO, is will the USA do any of that inventing? Our big problem is not income redistribution or nationalized health care, but the problem is that we've wasted a couple of generations in almost totally nonfunctional K - 12 public schools. And the systems seem to becoming more corrupt and disfunctional. We have high school graduates who can't read, but are too proud to "flip burgers". We have college grads who expect to make 50K, but have no idea of what they have to produce to earn that money. We have an entitlement mentality, and very few are asking who is going to produce what we are entitled to.
13 Oct 11
Originally posted by normbenignExactly. The problem is that we have very limited free trade. The United States has free trade relations with 17 nations, and we've now added South Korea, Colombia and Panama. "The modest projected increase in demand will come mostly from South Korea, the world’s 14th-largest economy, which will join a short list of developed nations that have free trade pacts with the United States, alongside Australia, Canada, Israel and Singapore." That isn't a lot of nations.
I agree on free trade being best, however neither GATT nor NAFTA were true free trade agreements. Both were bills thousands of pages long, followed up with thousands of additional pages of implementing regulations, none of which comes close to "free trade".
These were croney trade, lobbyist trade, manipulated trade. Not even close to free trade.
Again, it was the smart people thinking they could arrange things better than markets could.
http://news.yahoo.com/congress-passes-3-free-trade-agreements-003629553.html
"The agreement with South Korea, the world's 13th largest economy, was the biggest such deal since the North American Free Trade Agreement with Mexico and Canada in 1994."
Here's an interesting statistic: "The U.S. Chamber of Commerce notes that U.S. farm products sold to South Korea face 54 percent tariffs, compared with 9 percent for Korean agricultural goods in the United States, and that U.S. automakers are hit with a 35 percent tariff in Colombia, compared with 2 percent for any vehicles coming from Colombia."
And yet labor labor groups in BOTH the US AND Columbia are screaming that jobs are going to be lost in THEIR countries!!!
Simple hysteria by unthinking reactionaries.