|
Post by blueneck on Jan 20, 2007 8:05:04 GMT -6
Again using some simple arithmetic, we will debunk the comparative advantage argument for outsourcing.
Walmart is running an ad saying they save the average family $2300 a year on their shopping bill. OK, lets assume for a minute this is really true.
Lets take an average manufacturing worker making $50000 a year with benefits and 3 weeks vacation.
This manufacturing worker looses his job because his factory is boxed up and shipped to china.
The stats show that this guy will be out of work on average of 3 months. The new job he will get is likely to pay 12-20% less than his prior job, and will likely have less benefits and vacation. According to a recent article I read in a news magazine.
So just taking the 12% for this exercise, he has just lost $5100 of income, not counting his reduced benefits and 3 months of no income.
So - if he saves $2300 at Walmart, but lost $5100 to his job being outsourced, he is still in the hole $2800.
So again I ask, where are the promised advantages of globalization for working people?
|
|
|
Post by unlawflcombatnt on Jan 21, 2007 2:58:07 GMT -6
I think you're being overly generous toward Walmart.
They drive down aggregate American worker wages more than the cost savings they provide. They drive other retailers out of business, putting local retail workers out of jobs. Then they hire only some of those same workers back, and for less than they were previously making.
By forcing many American suppliers to actually set up their production facilities in China, they put American production workers out of jobs, and drive down demand for remaining American workers, driving their wages down as well.
They drop prices down just enough to drive competitors out of business, and then drop them no further. The remaining savings on labor costs are pocketed by Walmart management and ownership, not passed on to American consumers.
Walmart puts the burden of paying for its employees' medical care onto the American taxpayer, instead of covering it themselves. Thus, taxpayers are subsidizing medical care for Walmart employees. Walmart assists its impoverished employees in applying for every type of taxpayer-provided aid available.
Walmart uses the profits it steals from reducing wages to finance political campaigns and bribe elected representatives into passing Walmart friendly legislation. It also uses that money to advertise, propagandize and deceive the American public into thinking they somehow are "helping" America.
They're not helping anyone but themselves, and "themselves" is confined to upper level management and stockholders only. They're screwing the remainder of their employees, the surrounding community, small businesses, and the American people as a whole.
|
|
|
Post by blueneck on Jan 21, 2007 7:55:43 GMT -6
Yes indeed. walmart is the most anti-competition, anti- small business company on the planet.
For every two jobs walmart creates, 3 jobs are lost. and the jobs lost are generally better pay better benefit jobs. The lost jobs span from small business to manufacturing jobs and the service and support industries for each.
As you correctly state, walmart is the poster child for corporate welfare by bullying communities into land grabs and infrastructure improvements as well as tax abatements - all on the tax payer's dime and advantages their "competitors" seldom if ever get. This is not to mention the burden on social services and local charities to help feed, clothe and medicate the underpaid workers. situations that didn't exist in any big way before Walmart came to town.
The hypocrisy of the right in their vigorous defense of walmart just blows the mind - Encouraging people going on the dole, hurting small business, burdening charities, not to mention the support of communist china, a country that has forced abortion and religious persecution.
Indeed, but I find by underestimating it helps counter the right's "but, but, but....." arguments. But yes, it would look far worse if the actual numbers were to be used. Plus you have to keep it simple for the righties - too many variables lock them up.
And you could subsititute "manufacturing worker" for accountant, IT worker, medical technician, CAD drafter, customer services as well - all jobs feeling the sting of outsourcing and the downward pressure of wages and benefits it entails.
Se even the $40000 a year accountant or CAD draftsman, saves $2300 at walmart according to their horrendously one sided ad, but loses $4080 in income is also in the hole $1780 from where he was before.
We are not even taking into account the rising utilities, local taxes, food, and medical costs, although the reimployed worker now has to cover more of his medical costs out of pocket as well.
This is the middle class squeeze, and all the spin and talking points in the world won't change that reality for middle class folks.
|
|
rdf
Contributor
Posts: 27
|
Post by rdf on Jan 21, 2007 12:17:21 GMT -6
Walmart is unique in several respects. Not only is it the largest retailer on the planet (and one of the largest firms overall), but it is still under the control of the founding family. Each of the current senior Waltons is worth over $18 billion. One of things they do with their wealth is to promote causes that are aimed at enhancing their generational wealth. The most important of these is their membership in the group of 18 super wealthy families who have been working behind the scenes for the past decade to eliminate the estate tax. www.citizen.org/documents/EstateTaxFinal.pdfThe Walton's aren't just wealthy they are miserly. If you are interested in discussing Walmart why not visit the Walmart-specific blog that I'm an occasional contributor to, The Writing on the Wal: thewritingonthewal.netUnlike the union-sponsored anti-Walmart blogs or the astro-turf ones set up by Walmart's PR firm, we are just a bunch of regular guys with an interest in fairness.
|
|
|
Post by blueneck on Jan 21, 2007 12:23:51 GMT -6
Great site rdf!. Could you imagine if the waltons took a page from Henry Ford's playbook to deal with his 50% turnover problem? Pay unprecented wages for the time and industry! imagine that - instead of running amercian worker's down, they could help to lift them up - like their ads say they do.
But of course - they are the anti-Fords, pay people as little as possible so they can't afford to shop anywhere else.
|
|
|
Post by unlawflcombatnt on Jan 21, 2007 15:21:51 GMT -6
It's amazing how often the mainstream Corporate financial progagandists changes their story regarding what causes inflation. They'll cite how Wal-Mart keeps prices down by lowering its labor "costs," allowing Wal-Mart to sell products for less. Then they'll turn around and bemoan rising wages in the overall U.S. economy as being "inflationary." In the former case they're implying that inflation is caused increased production costs (increased "supply" costs.) In the latter case they're blaming it on the increased "demand" caused by increased wages and increased spending power of consumers. They'd like to have it both ways, emphasizing the one most helpful in supporting their active deception of the moment.
Increased wages and consumer income do allow consumers to spend more, buy more, and pay higher prices for goods. Thus, price increases are related to increased demand. But wages and spendable consumer income also limit price increases, even when production costs rise. Consumers cannot pay higher prices simply because production costs have increased (read: labor costs.) Aggregate demand limits average price increases. If a company has a large profit margin, like Wal-Mart, increased labor costs won't cause any sustained price increase. If Wal-Mart raises prices, they'll lose sales and reduce their profits. Wal-Mart will always charge the price that produces maximum sales revenue (and profit). That level is where the
(# of goods sold) X (price of goods sold) = the maximum $$.
With a 50% profit margin, that number is exactly the same, regardless of whether they pay employees $6/hour, or $10/hour. Profits are reduced by the wage increase. But the "price" where maximum profits are achieved is exactly the same. Raising prices to compensate for labor cost increases will reduce profits.
The price-reduction myth told by Wal-Mart is easy to refute with common sense alone. Aggregate American wages decline when Wal-Mart replaces American-produced goods with Chinese-produced goods, because higher-paid American production workers are replaced by lower-paid Chinese workers. If the sum of all price reductions is less than the sum of all wage reductions, then American workers lose. In this case, the aggregate loss in spending power exceeds aggregate price reduction. In other words, total spending power would decline more than the total price decline.
If aggregate price reductions were actually greater than labor cost reductions (from outsourcing), there'd be no benefit from outsourcing. Wal-Mart (and other outsourcers) would be reducing profits by outsourcing. To restate this, if price reductions were greater than cost reductions, it would be unprofitable to outsource.
Does anyone really believe Wal-Mart's price reductions are greater than cost reductions? Are they really sacrificing profits by outsourcing? Is Wal-Mart really passing on their entire labor cost savings to American consumers?
|
|
|
Post by LibSlayer on Jan 23, 2007 15:10:26 GMT -6
Again using some simple arithmetic, we will debunk the comparative advantage argument for outsourcing. Walmart is running an ad saying they save the average family $2300 a year on their shopping bill. OK, lets assume for a minute this is really true. Lets take an average manufacturing worker making $50000 a year with benefits and 3 weeks vacation. This manufacturing worker looses his job because his factory is boxed up and shipped to china. The stats show that this guy will be out of work on average of 3 months. The new job he will get is likely to pay 12-20% less than his prior job, and will likely have less benefits and vacation. According to a recent article I read in a news magazine. So just taking the 12% for this exercise, he has just lost $5100 of income, not counting his reduced benefits and 3 months of no income. So - if he saves $2300 at Walmart, but lost $5100 to his job being outsourced, he is still in the hole $2800. So again I ask, where are the promised advantages of globalization for working people? No, you have to count the $2300 in savings for ALL of the Walmart shoppers with is FAR more than those who have lost their job, by 10 or 20 to 1. If you have 1 million workers lose their jobs and $5100 in wages, and you have 25 million families who save $2300 (all by your numbers), the gain is HUGE, roughly $57 billion saved to $5 billion lost.
|
|
|
Post by LibSlayer on Jan 23, 2007 15:12:07 GMT -6
It's amazing how often the mainstream Corporate financial progagandists changes their story regarding what causes inflation. Causes of Inflation Economists wake up in the morning hoping for a chance to debate the causes of inflation. There is no one cause that's universally agreed upon, but at least two theories are generally accepted: Demand-Pull Inflation - This theory can be summarized as "too much money chasing too few goods". In other words, if demand is growing faster than supply, prices will increase. This usually occurs in growing economies. Cost-Push Inflation - When companies' costs go up, they need to increase prices to maintain their profit margins. Increased costs can include things such as wages, taxes, or increased costs of imports. www.investopedia.com/university/inflation/inflation1.asp
|
|
|
Post by unlawflcombatnt on Jan 23, 2007 23:33:03 GMT -6
Economists wake up in the morning hoping for a chance to debate the causes of inflation.There is no one cause that's universally agreed upon We completely agree on this point.
|
|
|
Post by unlawflcombatnt on Jan 24, 2007 15:30:28 GMT -6
Causes of Inflation Economists wake up in the morning hoping for a chance to debate the causes of inflation. There is no one cause that's universally agreed upon, but at least two theories are generally accepted: Demand-Pull Inflation - This theory can be summarized as "too much money chasing too few goods". In other words, if demand is growing faster than supply, prices will increase. This usually occurs in growing economies. Demand-Pull Inflation is probably the biggest factor. And there are some nuances here. If buying power is increased exclusively through wages (and not borrowing), there is no resultant increase in money supply (through bank loans). Potential price increases are limited by the increase in wages, and the increased spending power that results from increased wages. In contrast, if buying power is increased through borrowing (and wages remain unchanged), there is an increase in the money supply. Potential price increases result from increased spending power due exclusively to the increased money supply (bank loans & credit). This latter results when the Fed reduces interest rates. And it is further compounded by the asset bubbles created, and even further increase in money that can be borrowed off these assets, causing still further inflation. Clearly, demand-pull inflation is greater when it's the result of increased borrowing, rather than increased wages. An increase in consumer buying power of 5% through wage increases alone is much less inflationary than a 5% buying power increase from increased borrowing ability alone. Thus, when Corporate media propagandists start feigning concern about the inflationary effects of wage increases, their typical Corporate "Hypocri-ship" becomes apparent. Immediately following these anti-inflation regurgitations, these phony 'inflation-fighters' will push for interest rate reductions, which are far more inflationary than wage increases. Of course, they're fully aware of this. What makes an interest rate reduction attractive, however, is that it helps the investor-class a lot more than wage increases. An interest rate reduction increases capital available for investment. It also increases consumer buying power, but without increasing wages. Thus it increases profits from sales more than an increase in wages, because it increases total consumer buying power (and sales) without increasing labor costs any. Thus sales increase while labor costs do not. Increasing consumer spending through easy borrowing is the best scam ever devised to increase the upward redistribution of wealth. Substituting increased borrowing power for increased wages is clandestine way that the Corporate plutocratic elite increase their own wealth at the expense of the American middle class and the American worker. By artificially increasing consumer buying power through loans and easy credit, the Corporate elite have helped American consumers and workers to dig their own financial graves. This has resulted in an increasingly upward transfer of wealth, an increasingly large debt-bubble, and an increasingly unsustainable economy. Once again, we need to "change the course." And soon.
|
|
|
Post by LibSlayer on Jan 24, 2007 18:32:28 GMT -6
"Demand-Pull Inflation is probably the biggest factor. And there are some nuances here. "
No the high inflation we have been having is due to the rise in the costs due to energy increases.
"Thus, when Corporate media propagandists start feigning concern about the inflationary effects of wage increases, their typical Corporate "
There is absolutely no doubt that wage increases are inflationary.
"Increasing consumer spending through easy borrowing is the best scam ever devised to increase the upward redistribution of wealth. "
You need to study the Business Cycle and the FED's response to it.
It is very simple, low GDP growth usually comes with low inflation, the FED cuts rates to allow more growth. When GDP growth is high it usually means high inflation and the FED raises rates to slow growth which slows inflation.
"Once again, we need to "change the course." And soon. "
Now there I agree with you, we need to get government COMPLETELY out of the market and eliminate the minimum wage.
|
|
|
Post by unlawflcombatnt on Jan 24, 2007 23:03:51 GMT -6
"Demand-Pull Inflation is probably the biggest factor. And there are some nuances here. " No the high inflation we have been having is due to the rise in the costs due to energy increases. Fuel price increases have made some contribution. But it's due mostly to excessive credit and liquidity creation, making more money available to purchase consumer goods and assets, thereby inflating consumer prices and asset values. There is absolutely no doubt that increased credit and increased borrowing have increased inflation more than increased wages. The biggest cause of inflation during the Bush years has been excessive credit creation, excess debt creation, and increased money creation through loans and borrowing. Wage increases have contributed much less to inflation than has the increased consumer and government spending financed with borrowed money. It's the increased purchasing power from increased wages, not the increased wages themselves, that fuels demand-pull inflation. And this purchasing power can also be increased through increased borrowing and credit. And that increase also increases demand-pull inflation. And such demand-pull inflation can occur without any wage increase whatsoever. And this is easy to verify when looking at national figures for "personal outlays" vs. "disposable personal income." Personal outlays have exceeded disposable personal income for 2 straight years. Any price increases resulting from this spending can not be attributed to wage increases, since spending rose more than wages. This borrowing bubble and debt-fueled inflation is largely the fault of the Federal Reserve. However, Bush has further exacerbated the problem by increasing the national debt, making it necessary for the government to increase the portion of government spending financed through borrowing, and decrease that financed through revenue collections. No, you need to read what Republican Congressman Ron Paul has said in his speech regarding our monetary system and the Federal Reserve, and it's contribution to inflation.
|
|