Tariffs: The Smoot-Hawley Fairy Tale

[unlawflcombatnt]

Jan 28, 2010 14:32:31 GMT -6 @HgeStelrFn said:

Sooooooooooo...you deny that a massive reduction in global trade in the 1930s....
1 - even occured (laughable - just as funny as atheists claims that there is no God)

What I "deny" is that there was a massive reduction in US trade. In fact, I've proven with the publicly available statistics that I posted in my opening post. And what's more, I've proven it with the statistics I provided.

Was caused in major part by Smoot-Hawley (right - that is why it was basically repealed)

The Smoot-Hawley Tariff didn't "cause" anything, nor was it a "major contributor" to anything--other than modern day globalist and Corporatist propaganda by American free traitors.

Again the claims that Smoot-Hawley caused or exacerbated the Great Depression are not only false--they are easily disproveable by the publicly available statistics that I posted in my opening post.

[Kyle]

Just wondering, but why is a trade deficit a bad thing? This nation has always run a trade deficit in times of economic prosperity, at least in modern times. We have always seen the trade deficit shrink during times of economic hardship. During the Great Depression, we had a trade surplus.

Keep in mind as well that the currency plays a role in this as well. Those who want a strong dollar will also have a large trade deficit. A weak currency creates a small trade deficit.

Also, does not the argument that Smoot-Hawley did not harm the economy much because trade was only a very small portion of the economy completely undermine the argument for those against free trade?

Because by that argument, what it essentially says is infringing on free trade would have harmed the economy, but with Smoot-Hawley, trade was too small a portion of the economy for there to be any real damage.

But if protectionism is good, then it shouldn't matter how large a proportion of the economy depended on trade.

Also, remember that younger economies grow at higher rates than more mature economies. The U.S. economy grew at the same rate overall in the 1970s that it did in the 1980s, even though the 1970s were considered bad economic times and the 1980s very prosperous (minus the Volcker Recession). Yes, the U.S. economy did grow during the 1930s, but while the growth rate might have seemed okay by modern standards, for the time it was a horrendous growth rate, extremely slow for an economy that was still young.

And protectionism in a young economy in general will work because it can help that economy develop its domestic industries, which can't stand up to foreign competition until developed. But for a developed economy, it works differently (protectionism certainly hasn't helped Argentina for example).

What I would garner from the data is that protectionism in a young economy can work, in a developed, more mature economy, it is very bad, and Smoot-Hawley only didn't harm the general economy all that much because trade was a very small portion of the economy.

[unlawflcombatnt]

Jul 5, 2010 16:36:33 GMT -6 @Kyle said:

Just wondering, but why is a trade deficit a bad thing?

It means we're buying more goods/services from foreign countries than we're selling. That means that the difference in goods/services is being produced/provided by foreign workers instead of American workers. It means foreign workers are employed at the expense of American workers.

Also, does not the argument that Smoot-Hawley did not harm the economy much because trade was only a very small portion of the economy completely undermine the argument for those against free trade?

No, none at all. Now our trade deficit is a very large part of our economy, and a large part of consumer spending goes toward purchasing goods produced by foreign workers--reducing the demand for goods produced by American workers.

But if protectionism is good, then it shouldn't matter how large a proportion of the economy depended on trade.

That makes no sense whatsoever. If a tiny fraction of our economy depended on trade, then protectionism would make only a tiny amount of difference, one way or the other. But if the trade deficit is huge, and protectionism does prove helpful, then it makes a huge amount of +difference for our economy.

And protectionism in a young economy in general will work because it can help that economy develop its domestic industries, which can't stand up to foreign competition until developed. But for a developed economy, it works differently (protectionism certainly hasn't helped Argentina for example)

Protectionism helps any economy that's being decimated by foreign imports, regardless of whether it is "young" or "old." The age of the economy has nothing to do with it. It's the damage caused by imports that is the determining factor.

What I would garner from the data is that protectionism in a young economy can work, in a developed, more mature economy, it is very bad, and Smoot-Hawley only didn't harm the general economy all that much because trade was a very small portion of the economy.

What you've garnered is wrong. Protectionism didn't affect the US significantly during the Great Depression, one way or the other, because the relative size of our trade was small. Even on that small amount, it didn't markedly change the trade balance.

But more importantly, the possibility of American producers moving their production to a foreign country and employing cheap foreign labor did not even exist at that time. Unlike today, American capital and American producers couldn't simply replace $18/hour American workers with 50¢/hour foreign workers.

[Kyle]

It means we're buying more goods/services from foreign countries than we're selling. That means that the difference in goods/services is being produced/provided by foreign workers instead of American workers. It means foreign workers are employed at the expense of American workers.

Why is buying more goods/services than selling a bad thing though? I would think it is a sign of prosperity that we are wealthy enough as a nation to import more than we export. Remember we still produce a heck of a lot in this nation. We are responsible for about 24% of global manufacturing. It's just we are so rich, we import even more than we export.

Also remember trade isn't a zero-sum game jobs-wise. For a country like China to create jobs does not mean that a nation like America must lose jobs. Trade doesn't occur unless both parties benefit somehow. Voluntary trade creates wealth and jobs for both sides.

No, none at all.

How come?

Now our trade deficit is a very large part of our economy, and a large part of consumer spending goes toward purchasing goods produced by foreign workers--reducing the demand for goods produced by American workers.

Isn't that just because some American products are worse quality or higher-priced? I'd say it isn't people buying foreign products that reduce demand for American products, it is reduced demand for American products that causes people to buy foreign products. As long as American products can compete with foreign products, people will purchase them.

As said, America still makes a lot of products and they are of very good quality.

That makes no sense whatsoever. If a tiny fraction of our economy depended on trade, then protectionism would make only a tiny amount of difference, one way or the other. But if the trade deficit is huge, and protectionism does prove helpful, then it makes a huge amount of +difference for our economy.

What I meant was that in arguing Smoot-Hawley didn't contribute to the Great Depression, many say it is because trade was a very small proportion of the economy at the time, and thus Smoot-Hawley affected only a very small portion of the overall economy. By that argument though, if trade was a large portion, Smoot-Hawley would have had a much larger effect.

Protectionism helps any economy that's being decimated by foreign imports, regardless of whether it is "young" or "old."

I'd say it depends. In general, a young developing economy will need protectionism at first in order to allow its industries to develop (ex. early America, Japan, South Korea, etc...) but once developed, protectionist measures tend to destroy jobs and if anything incentivize the companies long-term to produce shoddy-quality products that they can then charge a high price for (which hurts the population).

In a developed economy, I'd think temporary protectionist measures could help a country's companies get their act together to be able to compete with foreigners if they had slacked off (like Harley-Davidson for example), but permanent protectionism will only incentivize them to continue producing shoddy products (there is a reason why they were getting decimated in the first place).

For example, the reason foreign companies began to decimate domestic American companies in the 1970s was because the American companies had slacked off completely, due to a lack of competition. Foreign companies offered a better product and it was cheaper.

People should not be forced to have to purchase the shoddy domestic products just to protect domestic corporations. Temporary protectionism will incentivize those companies to get their act together.

The age of the economy has nothing to do with it. It's the damage caused by imports that is the determining factor.

In a developed ("older") economy, the industries should be strong and able to compete fine. If they still cannot compete regardless, then they do not deserve to be in business and the people should not be forced to buy their lower-quality products.

What you've garnered is wrong. Protectionism didn't affect the US significantly during the Great Depression, one way or the other, because the relative size of our trade was small. Even on that small amount, it didn't markedly change the trade balance.

Didn't Smoot-Hawley only affect a certain amount of the existing U.S. trade, but not the whole thing? I know that other countries enacted retaliatory tariffs at the time.

But more importantly, the possibility of American producers moving their production to a foreign country and employing cheap foreign labor did not even exist at that time. Unlike today, American capital and American producers couldn't simply replace $18/hour American workers with 50¢/hour foreign workers.

50 cent foreign workers allow cheap consumer products. If you force companies to use $18 an hour American workers, you are doing a few things:

1) Forcing a company to pay people way more than they are worth

2) Driving up prices or unemployment (remember there is no free lunch, you increase the cost of workers to businesses and something has to give, either prices go up which hurts everyone else, or unemployment goes up).

3) Assuming the workers can work at $18/hour, the higher prices will cause a drop in demand, which will hurt retailers and distributors, which will cause layoffs among those employees.

4) Production itself will go down likely due to the drop in demand, which will hurt the original workers themselves.

5) The American products will not be competitive in foreign markets, as they will be too expensive.

[waltc]

50 cent foreign workers allow cheap consumer products.

Really? Then how come the prices for consumer goods haven't dropped when we got rid of the American worker and use Chinese slave and child labor?

You realize the Chinese workers who make IPADS and IPODS can't even afford those goods, takes about 3 months of their salary. I guess they can't see the benefits of working for crap wages.

The same goes for the SEAsians who make Nikes and the Mexicans who make cars for GM.

If you force companies to use $18 an hour American workers, you are doing a few things:

1) Forcing a company to pay people way more than they are worth



Your lack of humanity is showing. I take it you are either: a foreigner; don't work for a living; or a Republican who doesn't see the value of paying a American a decent wage.


2) Driving up prices or unemployment (remember there is no free lunch, you increase the cost of workers to businesses and something has to give, either prices go up which hurts everyone else, or unemployment goes up).

Laughable. There has been no drop in prices of consumer goods made in Mexico, China or anywhere else. The prices have remained high, the savings were not passed on to the consumer and instead went to rich white guys on Wall Street.

Oh yeah during this era of off-shoring manufacturing to Asia, the salaries of executives have skyrocketed to the point that any wage savings accomplished by off-shoring is off-set by the bloated wages of executives.

That said, every worker with a high wage job indirectly employs two service industry workers and keeps real estate prices strong among other things. High wages = lots of disposable income.

Example: Joe Deadend who works at Wal-Mart pulls down minimum wage has no benefits, lives in a apartment and has to work another job to make ends meet. Has little in the way of disposable income. Whereas Joe Boeing makes $25 a hour, excellent benefits package, can afford a home and a late model car along with various consumer items, etc.

Poor people don't buy much period.

3) Assuming the workers can work at $18/hour, the higher prices will cause a drop in demand, which will hurt retailers and distributors, which will cause layoffs among those employees.

Again erroneous. More disposable income available to consumers the more purchasing power. No money = no purchasing power.

4) Production itself will go down likely due to the drop in demand, which will hurt the original workers themselves.

5) The American products will not be competitive in foreign markets, as they will be too expensive.

We are competitive in foreign markets except for shit holes like China and Asia in general where they rip off American technological know-how and repackage it as their own and sell it back to us.

Generally though the biggest market for goods is the U.S. and the rest of world needs us a lot more than we need them.

[nailbender]

Kyle wrote:

What I meant was that in arguing Smoot-Hawley didn't contribute to the Great Depression, many say it is because trade was a very small proportion of the economy at the time, and thus Smoot-Hawley affected only a very small portion of the overall economy. By that argument though, if trade was a large portion, Smoot-Hawley would have had a much larger effect.

Kyle, exactly who are the "many" that argue Smoot-Hawley didn't contribute to the GD? I believe all economics textbooks and most economists support the mantra/myth that Smooth-Hawley either "caused" the GD or made it "much worse". Paul Craig Roberts and a handful of Populists are the only people I know of debunking the Smoot-Hawley Myth.

This thread destroys that widely believed myth that is repeated by so many in the media, economists and educational system which is used as "evidence" why protectionism and tariffs are so harmful economically. Why do you think the statement is never contested when it is obviously completely inaccurate and not supported by the data. It is a myth supporting the globalists free trade agenda/policies and is their ONLY evidence as far as I can tell, besides the uncontested statement that it benefits everyone.

Kyle wrote:

Why is buying more goods/services than selling a bad thing though? I would think it is a sign of prosperity that we are wealthy enough as a nation to import more than we export. Remember we still produce a heck of a lot in this nation. We are responsible for about 24% of global manufacturing. It's just we are so rich, we import even more than we export.

Also remember trade isn't a zero-sum game jobs-wise. For a country like China to create jobs does not mean that a nation like America must lose jobs. Trade doesn't occur unless both parties benefit somehow. Voluntary trade creates wealth and jobs for both sides.

Kyle, I believe you are brainwashed by the neo-economists and fail to see the "BIG PICTURE" on how "International Trade" works in reality. The failure by our gov policies, economists and general public to understand how trade works is the very reason the is NO bottom to our economic disaster that unrelentingly continues to destroy not only the US economy, but advanced economies around the world.

Globalization, out sourcing and off shoring of jobs is not occurring naturally in any fantastical world of equal democratic and environmentally concerned trading partners, it is being enabled and facilitated by the multi-national corps and the International Banking Cartel, which own and run our gov, to consolidate wealth and power with no regard to a any nations sovereign economic well being or survival. It's an elaborate looting scheme and economic warfare against the unknowing and uneducated middle class of advanced economies which will ultimately turn them into serfs/slaves of the One World Gov/Corporation.

Your view that the US is very wealthy is very naive IMO. Where is the wealth? The US gov is $13 Trillion in debt with seldom mentioned $10's of Trillions in unfunded obligations and financial guarantees. The US doesn't have any wealth actually, what it has is a mountain of debt approx. 380% of GDP that can NEVER be repaid.

This is the reason the US can import vastly more than it exports. The ever increasing mountain of unrepayable debt creates an illusionary "mask" of wealth that allows the game to continue, until it doesn't. The US is collectively living far above it's ability to pay, just like a sub-prime borrower that has purchased a house they cannot afford to buy, support or pay off. Debt should ONLY be used to increase production, it should never be used to support consumption or a lifestyle.

You delude yourself to think an evironmentally conscious democratic country can or should compete or trade with a communistic/totalitarian China and expect a prosperous outcome for boths sides of the trade. This is labeled "free trade", yet China is a currency manipulator with closed borders to most US products or manufacturers. When a US company wants to sell their products in China, if must MAKE those products in China and in so doing, transfer the technology (that we developed) to them for FREE in order to access their markets. This is outright treasonous IMO, but it appears we support any insanity for $$$.

The US Multi-National Corps didn't move their production to China or Asia, while eliminating US jobs, because the US facilities weren't profitable. It was because the foreign facilities were MORE profitable in the SHORT term.

When US industries are off shored, the US consumer still purchases the consumable, but the US economy is hurt/crushed because the production workers wages no longer circulate through the US economy, it circulates through the foreign economy, reducing not only the amount of money circulating, but the velocity. Globalization is an economic death spiral.

How did the bankers mask the destruction and export of the US economic foundation, which is production and manufacturing without anyone (you) complaining? They hid the destruction with a "mask" of DEBT to replace the creation of wealth through production.

Debt has been incurred, wealth has not been produced.

Kyle wrote:

Also remember trade isn't a zero-sum game jobs-wise. For a country like China to create jobs does not mean that a nation like America must lose jobs. Trade doesn't occur unless both parties benefit somehow. Voluntary trade creates wealth and jobs for both sides.

You claim "free trade" benefits everyone, which in a vacuum of angels may be true, but in today's world, it only benefits those that forces/powers that enable it and in this case it is the corporations, the bankers, with China/Asia benefiting the most. The middle class is being destroyed. Who will be doing the consuming when they no longer have a job (because they've been exported) and can no longer afford "cheap underwear". Who will buy the cheap underwear or dvd players? With what?

I do agree that trade isn't a zero-sum game jobs wise, which further supports the need for high import tariffs on manufactured products. A large portion of our exports are unprocessed foods, which are commodities that are heavily automated in production. Agriculture doesn't employ enough people/jobs for a balanced trade account to work.

Balanced trade must be a balanced trade ratio of Total Value/Jobs to be beneficial to both parties, even if they are democratic/evironmentally conscious equals.

Advanced economies (young and mature) around the world need to produce wealth to retain their living standards that were built on this foundation. It does not make economic sense, with real unemployment above 3%, for a country to import anything it can't produce (manufacture, mine, grow). This is true for National Defense also, how a military can depend on 3rd world and Communistic countries for everything from computer chips/development to cloth is beyond me to reconcile.

The multi-national corps and bankers could care less if this countries economy and society is run into the ground and destroyed as long as they are making money. Not until high tariffs are placed on imports, the revolving door from DC to Wall Street is closed, the Representatives start representing the people instead of their corporate contributors and the US issues Sovereign Money will there be any bottom to the economic destruction we are witnessing.

Economics is War and there is nothing "Free" about it, there is always a cost for that deal that seems "to good to be true", in this case it is the middle class that is currently being looted and destroyed and it doesn't even understand it is happening.

[Kyle]

Jul 5, 2010 21:57:51 GMT -6 @waltc said:

Really? Then how come the prices for consumer goods haven't dropped when we got rid of the American worker and use Chinese slave and child labor?

Because of inflation. They would be significantly higher otherwise.

You realize the Chinese workers who make IPADS and IPODS can't even afford those goods, takes about 3 months of their salary. I guess they can't see the benefits of working for crap wages.

The same goes for the SEAsians who make Nikes and the Mexicans who make cars for GM.

Their wages are very high in comparison to the alternative forms of work available in their nation, and will continue to go up as China develops more and more.

Your lack of humanity is showing. I take it you are either: a foreigner; don't work for a living; or a Republican who doesn't see the value of paying a American a decent wage.

Has nothing to do with any lack of humanity. I am simply going by economics. There is a cost involved. One cannot just magically increase the cost of something and not have a trade-off somewhere. For example, put a high tax on gasoline. What do you think will happen? People will buy less of it.

Also, since when is a person entitled to a "decent" wage? A perosn is paid according to what value they provide to the economy.

Laughable. There has been no drop in prices of consumer goods made in Mexico, China or anywhere else. The prices have remained high, the savings were not passed on to the consumer and instead went to rich white guys on Wall Street.

The job of a corporation is to make money for the owner. If the corporation is forced to use more expensive labor, there is a trade-off somewhere, which can mean fewer benefits, higher prices, smaller dividends, etc...most big corporations have institutional investors, such as pension funds, mutual funds, etc...so I wouldn't say the savings just go to "rich white guys on Wall Street."

Oh yeah during this era of off-shoring manufacturing to Asia, the salaries of executives have skyrocketed to the point that any wage savings accomplished by off-shoring is off-set by the bloated wages of executives.

No they aren't. You are making it sound as if it is a zero-sum game, and the company doesn't grow any. Off-shoring allows companies to make products cheaper, and to generate more wealth, and thus grow larger.

Executives are paid according to what value they provide to the company. Corporations these days have grown very large, so if you want talented people to run them, you need to py them pretty highly.

That said, every worker with a high wage job indirectly employs two service industry workers and keeps real estate prices strong among other things. High wages = lots of disposable income.

Yes. But if you try to give everyone a high wage, it creates a trade-off somewhere.

Example: Joe Deadend who works at Wal-Mart pulls down minimum wage has no benefits, lives in a apartment and has to work another job to make ends meet. Has little in the way of disposable income.

So who is making him remain Joe Deadend? He needs to work his way up and/or acquire more skills to make himself valuable to society. It is greedy for him to expect society to pay him a lot of money when he offers virtually no real skills.

Whereas Joe Boeing makes $25 a hour, excellent benefits package, can afford a home and a late model car along with various consumer items, etc.

Yes, and will cost the company an arm and a leg and eventually possibly bankrupt it, as they did with GM and Chrysler. Not to mention most people of that skill level do not deserve that wage.

Poor people don't buy much period.

To increase such a person's wages means cutting the money from other people who would receive it. Again, no free lunch.

Again erroneous. More disposable income available to consumers the more purchasing power. No money = no purchasing power.

You are trying to get something for nothing here. You artificially increase the costs to a business, you'll either get high unemployment or higher prices. Either one will cause a drop-off in demand.

We are competitive in foreign markets except for shit holes like China and Asia in general where they rip off American technological know-how and repackage it as their own and sell it back to us.

Yes, and that is wrong, and there should be retaliatory measures for Chinese firms that illegally violate the intellectual property of American firms.

Generally though the biggest market for goods is the U.S. and the rest of world needs us a lot more than we need them.

I agree.

[Kyle]

Jul 5, 2010 23:58:48 GMT -6 nailbender said:

Kyle, exactly who are the "many" that argue Smoot-Hawley didn't contribute to the GD?

I've been Googling the subject to get an alternative opinion on the matter, seems quite a few people refute the notion that Smoot-Hawley contributed to the Great Depression. One article I remember started something like, "No matter how many times it is refuted, this myth persists..."

I believe all economics textbooks and most economists support the mantra/myth that Smooth-Hawley either "caused" the GD or made it "much worse". Paul Craig Roberts and a handful of Populists are the only people I know of debunking the Smoot-Hawley Myth.

I don't know. I know quite a few believe that the failure of the Federal Reserve to keep the banking system solvent helped play a big role.

This thread destroys that widely believed myth that is repeated by so many in the media, economists and educational system which is used as "evidence" why protectionism and tariffs are so harmful economically. Why do you think the statement is never contested when it is obviously completely inaccurate and not supported by the data.

I don't know if it is contested or not. The problem I see with using it as something to claim protectionism and tariffs are not harmful is that it only applied to a small portion of the overall economy.

Also other economies have not benefited from protectionist measures (such as Argentina for example).

It is a myth supporting the globalists free trade agenda/policies and is their ONLY evidence as far as I can tell, besides the uncontested statement that it benefits everyone.

If you mean the statement "free trade benefits everyone" is uncontested, I wouldn't say that. Many contest that statement. Trade is a complex argument because there are examples where free trade does not work and where it works fine, and same with protectionism.

In general, it seems mostly from what I can tell that young, developing economies benefit a lot from protectionist measures, whereas once developed, free trade is best.

Kyle, I believe you are brainwashed by the neo-economists and fail to see the "BIG PICTURE" on how "International Trade" works in reality. The failure by our gov policies, economists and general public to understand how trade works is the very reason the is NO bottom to our economic disaster that unrelentingly continues to destroy not only the US economy, but advanced economies around the world.

I am just a student of economics, which is a big, complicated field. According to the Austrians, more stimulus spending is stupid because it drives up debt and doesn't work and the higher debt hurts the economy more and more.

Then you have folks like Paul Krugman claiming the sky will fall out without massive deficit spending.

The Austrians say the Federal Reserve is creating potentially massive inflation by inflating the money supply so much. The rest of the economics establishment says that is crazy, because the economy is deflating, and thus had to counter with inflation, or massive liquidity to the economy.

My own understanding is that the housing bubble bursting, and then the collapse of Wall Street, and thus credit crunch, are mainly what almost collapsed the world economy. Economies now are burdened with high debt loads and massive entitlements and for some (Greece, Spain, Italy, Portugal), the chickens are coming home to roost.

Globalization, out sourcing and off shoring of jobs is not occurring naturally in any fantastical world of equal democratic and environmentally concerned trading partners, it is being enabled and facilitated by the multi-national corps and the International Banking Cartel,

International banking cartel? Sounds conspiracy-theorish...

which own and run our gov, to consolidate wealth and power with no regard to a any nations sovereign economic well being or survival. It's an elaborate looting scheme and economic warfare against the unknowing and uneducated middle class of advanced economies which will ultimately turn them into serfs/slaves of the One World Gov/Corporation.

Again, sounds rather conspiracy theorish.

Your view that the US is very wealthy is very naive IMO. Where is the wealth? The US gov is $13 Trillion in debt with seldom mentioned $10's of Trillions in unfunded obligations and financial guarantees.

It's about a $14 trllion economy, although you are correct, the public debt is growing and there are trillions more in unfunded obligations.

The US doesn't have any wealth actually, what it has is a mountain of debt approx. 380% of GDP that can NEVER be repaid.

The national debt could never fully be repaid. Some of it is owned by American citizens.

This is the reason the US can import vastly more than it exports. The ever increasing mountain of unrepayable debt creates an illusionary "mask" of wealth that allows the game to continue, until it doesn't. The US is collectively living far above it's ability to pay, just like a sub-prime borrower that has purchased a house they cannot afford to buy, support or pay off. Debt should ONLY be used to increase production, it should never be used to support consumption or a lifestyle.

I agree, but I think you are confusing public debt with the debt held by various individuals in the nation. People especially now I think have learned not to live off of debt, that housing prices do not continue to inflate forever as many thought.

You delude yourself to think an evironmentally conscious democratic country can or should compete or trade with a communistic/totalitarian China and expect a prosperous outcome for boths sides of the trade. This is labeled "free trade", yet China is a currency manipulator with closed borders to most US products or manufacturers.

Yes, and that will have to stop in the future. However certain products we sell there (like automobiles).

When a US company wants to sell their products in China, if must MAKE those products in China and in so doing, transfer the technology (that we developed) to them for FREE in order to access their markets. This is outright treasonous IMO, but it appears we support any insanity for $$$.

I agree with you here.

The US Multi-National Corps didn't move their production to China or Asia, while eliminating US jobs, because the US facilities weren't profitable. It was because the foreign facilities were MORE profitable in the SHORT term.

For some, it depends. There are some businesses that tried to maintain production domestically and it drove them out of business.

As for short-term, well that is just how public corporations work, the management must increase quarterly profits.

But you are again using the zero-sum argument, the idea that moving production to China or Asia eliminates U.S. jobs without any gain somewhere. Making the products cheaper causes people to buy more, which creates other jobs elsewhere and economic growth overall for both the manufacturers in China and the U.S. corporations.

When US industries are off shored, the US consumer still purchases the consumable, but the US economy is hurt/crushed because the production workers wages no longer circulate through the US economy, it circulates through the foreign economy, reducing not only the amount of money circulating, but the velocity. Globalization is an economic death spiral.

This is simply not true. That is again the zero-sum fallacy, that there is a limited supply of money and jobs. The company saves money via outsourcing, and with cheaper products, generates more wealth, which allows for more job creation.

How did the bankers mask the destruction and export of the US economic foundation, which is production and manufacturing without anyone (you) complaining? They hid the destruction with a "mask" of DEBT to replace the creation of wealth through production.

Not sure what you mean here. The U.S. produces more stuff than anyone else in the world, and we manufacture more than anyone, we just use fewer people. Sort of like how we grow a whole lot of food as well, even though less than 1% of Americans now are farmers.

Debt has been incurred, wealth has not been produced.

As of recently, very much so!

You claim "free trade" benefits everyone, which in a vacuum of angels may be true, but in today's world, it only benefits those that forces/powers that enable it and in this case it is the corporations, the bankers, with China/Asia benefiting the most.

I think you are putting too much influence in the corporations/bankers. Free trade benefits those that engage in it, and when done voluntarily, it must benefit both sides. As for China, as you said above, what they do isn't exactly free trade.

The middle class is being destroyed.

The middle-class is not being destroyed. If anything, the middle-class is wealthier today than it has ever been.

Who will be doing the consuming when they no longer have a job (because they've been exported)

Again, zero-sum fallacy, there is not some limited number of jobs that countries have to compete over.

and can no longer afford "cheap underwear". Who will buy the cheap underwear or dvd players? With what?

They will have jobs.

I do agree that trade isn't a zero-sum game jobs wise,

You seem to imply it is zero-sum above.

which further supports the need for high import tariffs on manufactured products.

In what way?

A large portion of our exports are unprocessed foods, which are commodities that are heavily automated in production. Agriculture doesn't employ enough people/jobs for a balanced trade account to work.

You are saying you want to reverse the innovation done in the agricultural sector to force them to use more human labor?

Balanced trade must be a balanced trade ratio of Total Value/Jobs to be beneficial to both parties, even if they are democratic/evironmentally conscious equals.

Not sure if I get this. In free trade, trade will ONLY occur if it is mutually beneficial to both parties. If one party is a net loser, they will not engage in the trade.

Advanced economies (young and mature) around the world need to produce wealth to retain their living standards that were built on this foundation. It does not make economic sense, with real unemployment above 3%, for a country to import anything it can't produce (manufacture, mine, grow).

Why should a country not import something if it cannot produce it? How else would it get it?

This is true for National Defense also, how a military can depend on 3rd world and Communistic countries for everything from computer chips/development to cloth is beyond me to reconcile.

I agree here. However I think it is just that the modern tech has gotten so advanced and complicated that for a lot of stuff there isn't much choice. For example everyone talks about oil dependency, but they forget about the numerous other materials all crucial to the economy that we have to import as well.

The multi-national corps and bankers could care less if this countries economy and society is run into the ground and destroyed as long as they are making money.

I think they do, because they cannot make money if there is no one to buy anything. You get rich in free-market capitalism by providing products and services for the masses.

Not until high tariffs are placed on imports, the revolving door from DC to Wall Street is closed, the Representatives start representing the people instead of their corporate contributors and the US issues Sovereign Money will there be any bottom to the economic destruction we are witnessing.

I think there will certainly be a bottom if you mean the current recession. What do you mean by "Sovereign Money?"

Economics is War and there is nothing "Free" about it, there is always a cost for that deal that seems "to good to be true", in this case it is the middle class that is currently being looted and destroyed and it doesn't even understand it is happening.

I would say if you force the middle-class to have to buy expensive products made stateside, you really WILL start hurting them I'd say (and the poor---a lot of poor for example are able to feed their family right now because of entites like Wal-Mart for example).

[unlawflcombatnt]

Jul 5, 2010 18:24:36 GMT -6 @Kyle said:

It means we're buying more goods/services from foreign countries than we're selling. That means that the difference in goods/services is being produced/provided by foreign workers instead of American workers. It means foreign workers are employed at the expense of American workers.

Why is buying more goods/services than selling a bad thing though? I would think it is a sign of prosperity that we are wealthy enough as a nation to import more than we export.

It means we're exporting our wealth, by buying more than we're selling. And that very definitely IS a bad sign, and a bad trend.

Also remember trade isn't a zero-sum game jobs-wise.

Actually, it is a zero sum game, when it comes to workers. And for wages, it is a losing game for workers overall, when higher-wage workers are replaced 1-to-1 by lower wage workers. The end result is less of the sales revenue goes to worker-consumers, and more goes to management/capital/non-consumers.

For a country like China to create jobs does not mean that a nation like America must lose jobs. Trade doesn't occur unless both parties benefit somehow.

Wrong. It most certain does mean America must lose jobs (which has already happened).

Voluntary trade creates wealth and jobs for both sides.

No. "Voluntary trade" only redistributes wealth upward on both sides. More of the consumer-spending dollar goes to the management and the investor class, and less goes to the worker-consumer class in aggregate.

When the same man-hours of labor are performed by lower-waged workers, less aggregate wages are paid out--and there is less aggregate consumer spending power among the working class. Unless aggregate prices are reduced by the same amount aggregate wages are reduced, it is a losing proposition for the American worker.

And aggregate prices will never be reduced as much as aggregate prices, because that would eliminate the profit motive from outsourcing--and the replacement of American labor with cheaper semi-slave foreign labor.

Isn't that just because some American products are worse quality or higher-priced? I'd say it isn't people buying foreign products that reduce demand for American products, it is reduced demand for American products that causes people to buy foreign products. As long as American products can compete with foreign products, people will purchase them.

American products are almost universally "better" than most 3rd world produced goods. But they cost more to make due to higher American wages, and the potential for outrageously high profits does not exist for American products. In contrast, sellers can falsely claim equivalent quality of foreign-produced goods, and though they're selling them at a somewhat lower price, that somewhat lower price still provides them with a huge increase in profit margin.

Better still, the foreign-made garbage they pawn off on the American public breaks down and malfunctions sooner--increasing demand for more foreign-produced garbage to replace it.

As said, America still makes a lot of products and they are of very good quality.

Yes we do.

What I meant was that in arguing Smoot-Hawley didn't contribute to the Great Depression, many say it is because trade was a very small proportion of the economy at the time, and thus Smoot-Hawley affected only a very small portion of the overall economy. By that argument though, if trade was a large portion, Smoot-Hawley would have had a much larger effect.

Yes indeed. But again, the effects of outsourcing were non-existent at that time. So whereas Tariffs might possibly have had a deleterious effect on our trade balance in the 1930's, such is not the case today.

In the 1930's, American workers and production was competing against foreign capital using foreign labor in foreign countries.

Today, American workers are competing against foreign AND American capital using foreign workers in foreign countries.

The fact that American capital is going into production facilities using essentially slave labor, makes it impossible for American workers to compete. The productivity of foreign labor is just as well capitalized as American labor, making them near equally productive, but at a fraction of the cost.

protectionist measures tend...incentivize the companies long-term to produce shoddy-quality products that they can then charge a high price for (which hurts the population).

There is some truth to that. For that reason, Tariffs can't just be blindly applied to all imports. They have to be targeted, and they cannot just be used to protect dysfunctional American industries that produce over-priced or poor quality products.

But then, that's why we have a Congress. They're mission is to regulate trade (instead of the WTO), and to apply Tariffs when it is in the majority of Americans' best interests, and allow imports when it is in most Americans best interest.

But in a time of falling employment, a recent loss of 8 million private-sector jobs, and decades of stagnant wages, it's generally a good policy to impose Tariffs on almost all imports--especially manufactured goods. The increased price Americans might pay in the short-run will be more than offset by the increase in aggregate wages, and aggregate consumer buying power.

In a developed economy, I'd think temporary protectionist measures could help a country's companies get their act together to be able to compete with foreigners if they had slacked off (like Harley-Davidson for example), but permanent protectionism will only incentivize them to continue producing shoddy products (there is a reason why they were getting decimated in the first place).

Agreed. Tariffs should be completely under the control of the People's representatives--Congress--and should be raised or lowered according to the needs of the People. At present, high Tariffs (or outright embargoes) should be placed on 100% of manufactured imports, because that is in the best interests of the American People.

There is no manufactured item Americans can't make for themselves, and there's no manufactured item we should not be currently making ourselves. The only reasons foreign manufactures are cheaper is due to cheap slave labor in those exporting countries, currency manipulation, illegal subsidies, and complete absence of environmental regulations.

For example, the reason foreign companies began to decimate domestic American companies in the 1970s was because the American companies had slacked off completely, due to a lack of competition. Foreign companies offered a better product and it was cheaper.

That might be true with Japan and Germany, but definitely not with China (or Mexico, or Taiwan, or any southeast Asian countries).

As anyone who has worked with tools knows, Chinese-made tools are garbage. (They should be outright banned from the US, based on their deplorable quality, non-existent durability, and outright potential for causing injury.)

People should not be forced to have to purchase the shoddy domestic products just to protect domestic corporations. Temporary protectionism will incentivize those companies to get their act together.

.

Again, you might be "qualitatively" right, but you are "quantitatively" wrong. The overwhelming majority of American-made products are better than their foreign counterparts--especially those coming from China.

In a developed ("older") economy, the industries should be strong and able to compete fine. If they still cannot compete regardless, then they do not deserve to be in business and the people should not be forced to buy their lower-quality products.

Now you're just espousing typical globalist B.S.

American workers are more productive than any others on earth. But they're not as cost-effective. And it is the cost-effectiveness, not productivity, that determines where treasonous American capitalists invest their money. Worse still, it is the short-term returns, not the long-term returns, that malevolently direct the flow of American capital.

It's all about the quickest buck, not about the long-term profitability or viability of a firm or producer.

But more importantly, the possibility of American producers moving their production to a foreign country and employing cheap foreign labor did not even exist at that time. Unlike today, American capital and American producers couldn't simply replace $18/hour American workers with 50¢/hour foreign workers.

50 cent foreign workers allow cheap consumer products. If you force companies to use $18 an hour American workers, you are doing a few things:

1) Forcing a company to pay people way more than they are worth

No. You're forcing American companies to pay workers what they ARE worth, instead of allowing them return to Slavery--which is what paying workers 50¢/hour essentially is.

2) Driving up prices or unemployment (remember there is no free lunch, you increase the cost of workers to businesses and something has to give, either prices go up which hurts everyone else, or unemployment goes up).

Wrong again. It is workers who provide the wages to purchase production. If you reduce their wages (or eliminate their income altogether through outsourcing)--you reduce spending power and production demand--which reduces demand for workers to provide production--i.e., it INCREASES unemployment.

3) Assuming the workers can work at $18/hour, the higher prices will cause a drop in demand, which will hurt retailers and distributors, which will cause layoffs among those employees.

Even more wrong. The higher wages of American workers will INCREASE demand {which is directly related to aggregate income--(#of workers X wages)--which rises when wages rise}.

4) Production itself will go down likely due to the drop in demand, which will hurt the original workers themselves.

Wrong as above. Rising wages increase aggregate consumer buying power, which INCREASES production demand.

5) The American products will not be competitive in foreign markets, as they will be too expensive.

Who cares? We sell very little of our manufactured goods in foreign markets.

80-90% of American production is sold on the American domestic market. It makes no sense to sacrifice 80-90% of our consumer market to make gains on the other 10-20%--especially when the involved foreign countries are guaranteed to implement policies to counteract an increase in American imports.

[Kyle]

Jul 6, 2010 3:06:26 GMT -6 unlawflcombatnt said:

It means we're exporting our wealth, by buying more than we're selling. And that very definitely IS a bad sign, and a bad trend.

No it doesn't. This is an myth. It used to be believed that a nation importing more than was exported impoverished a nation because the difference between imports and exports had to be paid in gold, and the gold was seen as lost national wealth. But the real wealth of a nation is its goods and services. If the goods and services available to Americans are greater as a result of internationaltrade, then the nation is wealtheir, not poorer, regardless of whether there is a "deficit" or "surplus" of international trade.

We ran a trade surplus during the Great Depression. The trade deficit also always shrinks during times of economic recession (like right now).

Remember, "countries" do not trade, individuals and businesses engage in trade, and they only do so with one another if it is mutually beneficial.

Actually, it is a zero sum game, when it comes to workers.

Completely wrong. There isn't any limited number of jobs. Jobs are created all the time, and other ones destroyed. For one country to gain jobs does not require another country to lose jobs.

And for wages, it is a losing game for workers overall, when higher-wage workers are replaced 1-to-1 by lower wage workers. The end result is less of the sales revenue goes to worker-consumers, and more goes to management/capital/non-consumers.

Of course less sales revenue will go to such worker consumers, as they are lower wage workers. If they want more money, they need to make themselves more valuable to earn it. However, the company is able to create more wealth and that wealth contributes to overall economic growth.

Wrong. It most certain does mean America must lose jobs (which has already happened).

No it doesn't. This is patently false. There is not any fixed number of jobs countries must fight over. When countries become more prosperous, they all tend to create more jobs.

This claim was made about NAFTA, that i woudl cause a large sucking sound of jobs from America, but it did no such thing, instead leading to the creation of millions of new jobs in the U.S., Canada, and Mexico.

No. "Voluntary trade" only redistributes wealth upward on both sides. More of the consumer-spending dollar goes to the management and the investor class, and less goes to the worker-consumer class in aggregate.

The "investor class" IS a good deal the "worker-consumer class" through things like pension funds, mutual funds, IRAs, 401Ks, etc...but regardless, wealth does not get redistributed upward through trade. Trade creates wealth for both sides, which leads to more jobs, greater productivity, and overall higher wages for everyone.

When the same man-hours of labor are performed by lower-waged workers, less aggregate wages are paid out--and there is less aggregate consumer spending power among the working class. Unless aggregate prices are reduced by the same amount aggregate wages are reduced, it is a losing proposition for the American worker.

And aggregate prices will never be reduced as much as aggregate prices, because that would eliminate the profit motive from outsourcing--and the replacement of American labor with cheaper semi-slave foreign labor.

You are forgetting that if you force businesses to pay workers a higher wage than they are worth, you are hurting the business. The business will either raise prices or hire fewer American workers (higher unemployment rate), or a combination of both.

Remember, most businesses in America are small businesses. You make it sound as if the only employers in America are giant, publicly-traded corporations.

The engine of economic growth in this country is the small business, and if you saddle them with artificially-higher-priced employees, you will hurt them.

You will also make Big Business more dominant, as Big Businesses can more easily absorb the costs of something like a "living wage." There is a reason Wal-Mart supports raising the minimum wage. You can be assured it isn't to help the workers. It is to destroy the competition.

American products are almost universally "better" than most 3rd world produced goods. But they cost more to make due to higher American wages, and the potential for outrageously high profits does not exist for American products. In contrast, sellers can falsely claim equivalent quality of foreign-produced goods, and though they're selling them at a somewhat lower price, that somewhat lower price still provides them with a huge increase in profit margin.

Better still, the foreign-made garbage they pawn off on the American public breaks down and malfunctions sooner--increasing demand for more foreign-produced garbage to replace it.

The foreign-made stuff isn't all garbage, or people wouldn't buy it. They would pay a higher price for the good-quality stuff. The fact is simply that manufacturing certain things in America is too expensive. Or it cuts too much into the profit margin of the business, upon which I see nothing wrong with outsourcing the production. The job of a business is to make a profit.

Toys are a recent example of a product that has been made crappy by the Chinese (lead paint), causing a lot of people to stop buyng any and all toys made in China.

Yes indeed. But again, the effects of outsourcing were non-existent at that time. So whereas Tariffs might possibly have had a deleterious effect on our trade balance in the 1930's, such is not the case today.

Not sure I am getting this, why would they not today?

In the 1930's, American workers and production was competing against foreign capital using foreign labor in foreign countries.

Today, American workers are competing against foreign AND American capital using foreign workers in foreign countries.

The fact that American capital is going into production facilities using essentially slave labor, makes it impossible for American workers to compete. The productivity of foreign labor is just as well capitalized as American labor, making them near equally productive, but at a fraction of the cost.

Aside from the use of what could be deemed "slave" labor (not all of it is), I see nothing wrong with this.

Also, do not confuse wage rates with labor costs. A country can have higher wage rates, but lower labor costs overall.

There is some truth to that. For that reason, Tariffs can't just be blindly applied to all imports. They have to be targeted, and they cannot just be used to protect dysfunctional American industries that produce over-priced or poor quality products.

But wouldn't any American industry seeking a tariff technically either be overpriced or poor in quality? Because otherwise, there'd be no need for the tariff, the company would be able to compete fine with the foreign companies.

But then, that's why we have a Congress. They're mission is to regulate trade (instead of the WTO), and to apply Tariffs when it is in the majority of Americans' best interests, and allow imports when it is in most Americans best interest.

How are they to decide what is, and is not, in the majority of Americans best interests? Sounds like a good way to infringe on freedom to me.

But in a time of falling employment, a recent loss of 8 million private-sector jobs, and decades of stagnant wages, it's generally a good policy to impose Tariffs on almost all imports--especially manufactured goods. The increased price Americans might pay in the short-run will be more than offset by the increase in aggregate wages, and aggregate consumer buying power.

Other countries would retaliate with their own tariffs. Not only would prices increase, but companies would cut production and lay off employees. You would begin to see massive unemployment and a stagnating economy. Higher wages don't help much if there's only a few people that have them.

And wages have not been stagnant. They have increased consistently over the years. Household incomes have been stagnant, but that is due to how families are structured. Incomes per person have risen constanly every year.

Agreed. Tariffs should be completely under the control of the People's representatives--Congress--and should be raised or lowered according to the needs of the People. At present, high Tariffs (or outright embargoes) should be placed on 100% of manufactured imports, because that is in the best interests of the American People.

Says who? What if a person prefers to buy foreign products because they perceive them as higher in quality or they are cheaper in price? Who, and how, is a government to decide what is in my best interest?

There is no manufactured item Americans can't make for themselves, and there's no manufactured item we should not be currently making ourselves. The only reasons foreign manufactures are cheaper is due to cheap slave labor in those exporting countries, currency manipulation, illegal subsidies, and complete absence of environmental regulations.

You force a lot of firms to make things stateside and the costs would drive them out of business period. Remember, not all firms outsourcing production are big business. Plenty of small firms do this too. On slave labor, some of it is slave labor, for others, it is the best opportunity those people have to advance their way of living. Their conditions will only get worse if the American companies (which often pay them very highly for their area) leave.

I agree on currency manipulation, absence of environmental regulations, and subsidies, but this has little to do with what's best for the American people, but more about what is moral. Again, no one forces any American to buy those products. If Americans truly care about those things, they would buy the domestic-made stuff despite the higher price, and companies would move production of such goods back here.

That might be true with Japan and Germany, but definitely not with China (or Mexico, or Taiwan, or any southeast Asian countries).

That's because they hadn't developed their economies enough at the time. China is still working on developing their economy and their quality control for quite a few products is crap literally, but they will fix that in due time I believe. Mexico is collapsing to the cartels and never quite "made it" as a nation. Taiwan makes quite a few products, such as consumer electronics now.

As anyone who has worked with tools knows, Chinese-made tools are garbage. (They should be outright banned from the US, based on their deplorable quality, non-existent durability, and outright potential for causing injury.)

No product should be banned from the U.S. based on deplorable quality or non-existent durability. No one forces anyone to buy those tools. Again, voluntary contracts. If the tools are truly crappy, they won't sell.

Now tools that can potentially cause injury, that's a different matter, and any such tools should be banned I think. You don't want a powersaw where the blade will go flying!

Again, you might be "qualitatively" right, but you are "quantitatively" wrong. The overwhelming majority of American-made products are better than their foreign counterparts--especially those coming from China.

Of course they are, or else the companies would not be in business, or they'd have outsourced the manufacturing overseas. Those American companies that have had to outsource the production overseas, could not produce as good a product stateside as they can get overseas. Or they could, but it would be incredibly expensive to do and would put them out of business.

Businesses that make things in America that are good quality are able to do so at a cost that allows them to sell the products at a competitive price. Businesses where it would be very expensive to make good products stateside, must outsource.

Remember there are two types of foreign-made products though: Those designed by American companies, but manufactured overseas, and those designed by foreign companies and made overseas (these tend to be the really crappy products).

Now you're just espousing typical globalist B.S.

Nothing BS about it, if a developed country's industries still cannot compete with foreign firms, then they need to get their act together or get out of the business. People should not be forced to buy their product.

American workers are more productive than any others on earth. But they're not as cost-effective. And it is the cost-effectiveness, not productivity, that determines where treasonous American capitalists invest their money. Worse still, it is the short-term returns, not the long-term returns, that malevolently direct the flow of American capital.

You invest your money where it is most cost-effective. American workers are very cost-effective for many things, but overpriced for certain other things.

BTW, do not confuse wage rates with labor costs. Workers in a country can be paid wages twice as high as those in another country but if they have three times the output per hour, then the higher-paid workers have lower labor costs per unit of output.

Foreign workers that are lower paid are not per se cheaper.

It's all about the quickest buck, not about the long-term profitability or viability of a firm or producer.

Very true, but I do not see how using cheaper labor overseas is going to hurt the long-term viability of a firm. Unless there is a specific moral component (literal slave labor or something like that), a company should go with what is most cost-effective.

Remember, many of these companies are not just competing stateside, they must compete globally. In a global economy, you cannot manufacture things in America if it will cost far more then in say China. You are competing with other companies around the globe.

No. You're forcing American companies to pay workers what they ARE worth, instead of allowing them return to Slavery--which is what paying workers 50¢/hour essentially is.

Sorry, but that is nonsense. The economy decides what a worker is worth, not some bureaucrat. And someone working an assembly line that doesn't require any kind of really valuable technical skill, is not worth that much in terms of $$$. It's a starter job. If they want more money, they need to gain more skills and become truly valuable to society in some way.

Wrong again. It is workers who provide the wages to purchase production. If you reduce their wages (or eliminate their income altogether through outsourcing)--you reduce spending power and production demand--which reduces demand for workers to provide production--i.e., it INCREASES unemployment.

What you are saying is impossible in a free-market economy. It only holds if wages are set at the market rate and the workers had nowhere else to go. Normally, you artificially reduce their wages, and they will find jobs elsewhere at places that pay better. You'll end up with a shortage of workers, which will force your wages back up.

That is how a free-market economy works. Now Big Businesses can try to group together to form a cartel so they can fix prices, but this is not workable in a free-market economy. Cartels always break down.

Only if they had nowhere else to go, and this happened across the entire economy (wage drops), would what you are saying occur.

The reality of your description is in the real world, you are talking about lowering TO the market rate wages that are already artificially high, which means unemployment would also be artficially high. This is what happened during the Great Depression, with price controls.

With artificially high wage rates, and high unemployment, allowing wages to return to the market rate would bring down the unemployment level. Wages could not go below the natural rate, or else workers would leave the business, thus forcing wages back up, as I explained.

And workers do not provide wages. Businesses provide wages to the workers. And most businesses are small businesses. Workers are a commodity from a technical standpoint. If you artificially increase the cost of workers to a business, businesses will hire fewer workers and unemployment will go up. It is basic supply and demand.

Yes, if you eliminate their jobs altogether through outsourcing, they become unemployed, but most will find jobs elsewhere. Some will not (say too old and no one will hire them), but for that, we can have social safety nets to help out.

Even more wrong. The higher wages of American workers will INCREASE demand {which is directly related to aggregate income--(#of workers X wages)--which rises when wages rise}.

You're trying to have your cake and eat it too. I do not understand this. It's like an oil company executive saying, "If we raise the price of gasoline by $10 a gallon, it will bring in far more profits." That's assuming people continue to buy the same amount of gasoline at the increased price, which they would not. You'd see an enormous glut in the supply of gasoline as people purchased less and switched to more fuel-efficient vehicles.

The same is with wages and employees. Yes, for the employees whose wages were increased, there'd be an increase in demand as they could buy more stuff, but there would also be a massive corresponding decrease in demand from the skyrocketing unemployment rate as a great many other workers lost their jobs, because workers had become so expensive to businesses. You'd see a sudden glut of workers in the labor market.

Again, remember, most businesses are small businesses. Massive corporations love things like a "living wage" precisely for this reason: because it crushes their small competitors, and allows them wipe them out of business or gobble them up and dominate the industry completely.

Wrong as above. Rising wages increase aggregate consumer buying power, which INCREASES production demand.

Rising wages for few workers with zero wages for a bunch of newly unemployed will do no such thing.

Who cares? We sell very little of our manufactured goods in foreign markets.

80-90% of American production is sold on the American domestic market. It makes no sense to sacrifice 80-90% of our consumer market to make gains on the other 10-20%--especially when the involved foreign countries are guaranteed to implement policies to counteract an increase in American imports.

We aren't sacrificing 80%-90% of the consumer market for the other 10%-20%. American products sold only in America can compete fine with foreign products that are sold here as well.

This is supposed to be a free country, not a collective BTW. If one starts a business and wants to sell stuff overseas as well, that is their right.

[unlawflcombatnt]

Jul 6, 2010 2:02:19 GMT -6 @Kyle said:

But you are again using the zero-sum argument, the idea that moving production to China or Asia eliminates U.S. jobs without any gain somewhere. Making the products cheaper causes people to buy more, which creates other jobs elsewhere and economic growth overall

Yeah, it creates more jobs in China or Asia. If cheaper foreign-made products "cause people to buy more," it's those foreign-made products they're buying more of. That doesn't create any more jobs in the US.

Jul 6, 2010 2:02:19 GMT -6 @Kyle said:

Jul 5, 2010 23:58:48 GMT -6 nailbender said:

When US industries are off shored, the US consumer still purchases the consumable, but the US economy is hurt/crushed because the production workers wages no longer circulate through the US economy, it circulates through the foreign economy, reducing not only the amount of money circulating, but the velocity. Globalization is an economic death spiral.

This is simply not true. That is again the zero-sum fallacy, that there is a limited supply of money and jobs.

The company saves money via outsourcing, and with cheaper products, generates more wealth, which allows for more job creation.

How does it "generate more wealth"? How does replacing American workers with cheaper workers create more wealth?

Yes, it creates more profits for American multinationals (at the expense of aggregate American wages). How is that creating more wealth? What's the logic behind that?

Is it because American multinationals will allegedly invest more in capital equipment, because they have more money to invest? That would make no economic sense, unless the demand for the production such capital equipment would produce increases. And that demand is NOT going to increase, when American consumer spending power from wages declines.

In fact, the opposite is true. By shipping jobs overseas to make cheaper products for the increasingly wage-deficient American market, wealth is being destroyed. There will be less demand for productive capital investment, and the additional profits will be spent on non-productive financial assets (like bonds, derivatives, CDOs, etc)--as well as on non-productive fixed assets like homes.

This "generating wealth" hocus-pocus is exactly what pro-Globalists always fall back on in their arguments. There's no logic behind it. It's essentially magical thinking--along the lines of such oxymorons as "the invisible hand" and "endogenous growth." It's an unsubstantiated, illogical economic fairy tale.

Nothing is produced unless someone can buy it, or at least unless someone is anticipated to buy it. If you reduce spending power by replacing higher-paid workers with lower-paid workers, you reduce aggregate wages, and the aggregate ability to purchase goods.

Free trade redistribute wealth upwards, and reduces its production by reducing the ability of worker-consumers to purchase it.

---------

Jul 6, 2010 2:02:19 GMT -6 @Kyle said:

Jul 5, 2010 23:58:48 GMT -6 nailbender said:

Who will be doing the consuming when they no longer have a job (because they've been exported)

Again, zero-sum fallacy, there is not some limited number of jobs that countries have to compete over.

Wrong again. Jobs are determined by the demand for production, which is determined by the amount and willingness of consumers to spend. If income is shifted upward from American workers to rich Corporate management and investors--as occurs with outsourcing, it reduces the number of jobs, since the marginal propensity to consume is lower as income rises, which reduces the amount of aggregate demand created per $ of income.

To simplify, the upward redistribution of wealth from outsourcing reduces aggregate production demand, thus reducing the demand for workers to provide that production.

-------------

Jul 6, 2010 2:02:19 GMT -6 @Kyle said:

Jul 5, 2010 23:58:48 GMT -6 nailbender said:

Balanced trade must be a balanced trade ratio of Total Value/Jobs to be beneficial to both parties, even if they are democratic/evironmentally conscious equals.

Not sure if I get this. In free trade, trade will ONLY occur if it is mutually beneficial to both parties. If one party is a net loser, they will not engage in the trade.

That's only true if that "one party" is an individual multinational. But if it's an entire nation, it's not true at all. And the originally-claimed benefit of Comparative Advantage was for nations as a whole, not for individual firms only--at the expense of the nation as a whole.

The way it actually works in reality is that if it's beneficial to American multinationals in the short-run (who depend on the debt-financed spending of wage deficient American consumer spending), then trade will take place. It may be a "win" situation for the outsourcing American multinational, but it's a loss to the nation as a whole. Once enough companies ship their jobs overseas, then aggregate American wage loss becomes noticeable, and wage-financed consumer declines.

This reality has been completely obscured by the explosion of debt-financed consumer spending. While wage-financed consumer spending has stagnated, debt-financed spending has moved in and offset the decline. The rise in consumer spending needed to maintain production demand over the last decade has been largely due to credit expansion and wealth extraction from overvalued assets--not from rising wages.

Had there not been an asset value & credit creation explosion over the last decade, the aggregate wage-suppressing effect of outsourcing would have long-since become apparent--and massive declines in aggregate consumer spending and production demand would have occurred.

(On a side note, the explosion of credit and borrowing ability has led most economists and analysts to ignore the necessity of production demand. Since the ability to expand borrowing has been almost limitless, the concept of deficient consumer demand has been largely ignored. Worse still, in the rare instances where it has been addressed, it's been viewed as a lack of credit--not a lack of income.)

[Kyle]

Jul 6, 2010 11:50:16 GMT -6 unlawflcombatnt said:

Yeah, it creates more jobs in China or Asia. If cheaper foreign-made products "cause people to buy more," it's those foreign-made products they're buying more of. That doesn't create any more jobs in the US.

On the contrary, it does. Remember, trade must be mutually beneficial or it will not occur. Jobs are created when both sides prosper.

How does it "generate more wealth"? How does replacing American workers with cheaper workers create more wealth?

If you have a business and you must buy fuel, do you think your business will prosper more if fuel is cheaper or more costly? Cheaper workers means cheaper prices, which means more products sold, and hence more wealth.

Yes, it creates more profits for American multinationals (at the expense of aggregate American wages). How is that creating more wealth? What's the logic behind that?

No it doesn't. Aggregate wages increase when companies make money. Wages increase according to productivity. A company is more productive when using labor that costs it less.

Is it because American multinationals will allegedly invest more in capital equipment, because they have more money to invest? That would make no economic sense, unless the demand for the production such capital equipment would produce increases. And that demand is NOT going to increase, when American consumer spending power from wages declines.

Zero-sum fallacy again. Consumer spending power from wages will not decrease, because job creation continues to be plentiful in the economy as long as businesses prosper.

In fact, the opposite is true. By shipping jobs overseas to make cheaper products for the increasingly wage-deficient American market, wealth is being destroyed.

Shipping jobs overseas does not destroy wealth. Again, transactions will not occur between parties unless they are mutually beneficial. No business is going to actively destroy its wealth. By sending certain jobs to where they can be done more efficiently, we allow businesses to produce products that they can sell at a competitive price.

There will be less demand for productive capital investment, and the additional profits will be spent on non-productive financial assets (like bonds, derivatives, CDOs, etc)--as well as on non-productive fixed assets like homes.

Providing products at a competitive price does not decrease demand. And prospering businesses will provide plenty of jobs.

This "generating wealth" hocus-pocus is exactly what pro-Globalists always fall back on in their arguments. There's no logic behind it. It's essentially magical thinking--along the lines of such oxymorons as "the invisible hand" and "endogenous growth." It's an unsubstantiated, illogical economic fairy tale.

Nothing is produced unless someone can buy it, or at least unless someone is anticipated to buy it. If you reduce spending power by replacing higher-paid workers with lower-paid workers, you reduce aggregate wages, and the aggregate ability to purchase goods.

Free trade redistribute wealth upwards, and reduces its production by reducing the ability of worker-consumers to purchase it.

This would only hold true if the economy was zero-sum. It never has been. Replacing higher-paid workers with lower-paid workers allows companies to offer more competitive prices and cheaper products and also to become more prosperous and grow larger, which creates more jobs and increases demand.

Wrong again. Jobs are determined by the demand for production, which is determined by the amount and willingness of consumers to spend. If income is shifted upward from American workers to rich Corporate management and investors--as occurs with outsourcing, it reduces the number of jobs, since the marginal propensity to consume is lower as income rises, which reduces the amount of aggregate demand created per $ of income.

Except income does not get shifted upward from American workers to rich corporate management and investors. Again, it isn't only big corporations even that outsource. Plenty of small businesses that manufacture products do it as well.

Income won't get generated in the first place if the company can't offer products at a competitive price on the market.

But a corporation doesn't remain a static size when outsourcing. It isn't as if it continues to make identical revenue, but now less money goes to workers and thus more is kept for management or investors. The company will offer products more cheaply when it can outsource, which allows it to grow revenues and thus create more wealth (and hence more jobs).

If Nike had to manufacture all of its shoes domestically for example, it would destroy a lot of jobs because the company would have to raise its prices significantly.

To simplify, the upward redistribution of wealth from outsourcing reduces aggregate production demand, thus reducing the demand for workers to provide that production.

I'd say this would only happen if there is a fixed amount of wealth. Prosperous companies create wealth, and jobs, for the economy.

That's only true if that "one party" is an individual multinational. But if it's an entire nation, it's not true at all. And the originally-claimed benefit of Comparative Advantage was for nations as a whole, not for individual firms only--at the expense of the nation as a whole.

The nation is made up of the various firms engaging in the trade, so how would it not benefit the nation? Again remember trade itself does not need to be balanced per se for wealth to increase.

The way it actually works in reality is that if it's beneficial to American multinationals in the short-run (who depend on the debt-financed spending of wage deficient American consumer spending), then trade will take place. It may be a "win" situation for the outsourcing American multinational, but it's a loss to the nation as a whole.

How so? How is a prosperous company a loss for the nation? Consumers do not become wage-deficient due to outsourcing because jobs are constantly created.

Once enough companies ship their jobs overseas, then aggregate American wage loss becomes noticeable, and wage-financed consumer declines.

This doesn't happen though. It again is assuming there is a fixed number of jobs in the economy, and that if too many go overseas, then wage loss becomes noticeable and consumer spending declines. But free-market, prosperous economies constantly create jobs. For example, businesses in different states engage in trade with on another, and businesses in different nations engage in trade with one another.

If two businesses in California and Texas engage in trade, it benefits both parties and creates jobs for both the Texas and California economies.

This reality has been completely obscured by the explosion of debt-financed consumer spending. While wage-financed consumer spending has stagnated, debt-financed spending has moved in and offset the decline. The rise in consumer spending needed to maintain production demand over the last decade has been largely due to credit expansion and wealth extraction from overvalued assets--not from rising wages.

Debt-financed consumer spending did rise a lot, creating a bubble and a false prosperity, but that was not due to lack of wages, so much as people just over-spending and using their homes like a piggy bank. When people relied more on wages for spending, they were far more fiscally prudent, saving a lot more and spending less.

Had there not been an asset value & credit creation explosion over the last decade, the aggregate wage-suppressing effect of outsourcing would have long-since become apparent--and massive declines in aggregate consumer spending and production demand would have occurred.

I wouldn't say massive declines in aggregate consumer spending or production would have occurred, just the phenomenal bubble of the 2000s would never have occurred.

I do agree that there likely was a lot of false consumer demand which led to thus false economic expansion due to the credit and real-estate bubble, so that when that demand collapsed due to the bubbles bursting, it harmed much of the global economy. But had those bubbles never occurred, the economy would never have grown to support such demand in the first place.

[fredorbob]

Jul 6, 2010 13:37:31 GMT -6 @Kyle said:

trade must be mutually beneficial or it will not occur.

Wrong, trade is not mutually beneficial when there's a trade deficit.

Cheaper workers means cheaper prices, which means more products sold, and hence more wealth.

Only the plantation owners get rich off cheap foreign slave labor. Slaver.

Wages increase according to productivity.

I'm sure the slaves agree with you.

A company is more productive when using labor that costs it less.

A rich man gets richer when using cheap foreign labor, everyone else gets screwed.

Zero-sum fallacy again.

Libertarian Utopianist fallacy again.

Consumer spending power from wages will not decrease, because job creation continues to be plentiful in the economy as long as businesses prosper.

I guess you haven't been paying attention to current events but there is massive unemployment.

Shipping jobs overseas does not destroy wealth.

Shipping jobs overseas transfers wealth from the non-rich to the rich.

Again, transactions will not occur between parties unless they are mutually beneficial.

I guess you never heard of the trade deficit.

No business is going to actively destroy its wealth.

Unless you consider the Republican Party as a business.

By sending certain jobs to where they can be done more efficiently,

Using 10 unskilled Chinese, to do the job of 1 American is not what I call "efficient", it's de-mechanization.

Providing products at a competitive price does not decrease demand.

Last time I checked consumer prices have increased.

This would only hold true if the economy was zero-sum.

Click your heels together 3 times and say, "There's no place like home, there's no place like home."

It never has been. Replacing higher-paid workers with lower-paid workers allows companies to offer more competitive prices and cheaper products and also to become more prosperous and grow larger, which creates more jobs and increases demand.

Replacing higher-payed workers with lower-payed FOREIGN workers enriches the rich and screws Americans over, and some would say disenfranchise the foreign workers.

Except income does not get shifted upward from American workers to rich corporate management and investors.

Income does get shifted from American workers to the rich, in addition to promotes socialism at home and abroad.

Income won't get generated in the first place if the company can't offer products at a competitive price on the market.

Income is generated irregardless of price competition.

But a corporation doesn't remain a static size when outsourcing. It isn't as if it continues to make identical revenue, but now less money goes to workers and thus more is kept for management or investors. The company will offer products more cheaply when it can outsource, which allows it to grow revenues and thus create more wealth (and hence more jobs).

Cheap foreign labor has never resulted in cheaper consumer items.

If Nike had to manufacture all of its shoes domestically for example, it would destroy a lot of jobs because the company would have to raise its prices significantly.

Last time I checked, the price of Nike shoes has gone up drastically.

I'd say this would only happen if there is a fixed amount of wealth. Prosperous companies create wealth, and jobs, for the economy...

...for themselves.

How so? How is a prosperous company a loss for the nation?

"How is a prosperous cotton plantation a loss for the nation?" They enrich themselves at the expense of everyone else.

Consumers do not become wage-deficient due to outsourcing because jobs are constantly created.

Consumers:

A) Earn slave wages, and can't afford to purchase the...

B) The substandard products cheap foreign labor produces at high prices.

It again is assuming there is a fixed number of jobs in the economy, and that if too many go overseas, then wage loss becomes noticeable and consumer spending declines.

Wage loss is noticeable, and consumer spending has declined.

But free-market, prosperous economies constantly create jobs. For example, businesses in different states engage in trade with on another, and businesses in different nations engage in trade with one another.

And slave labor throws a monkey wrench into the entire equation.

If two businesses in California and Texas engage in trade, it benefits both parties and creates jobs for both the Texas and California economies.

Thankfully California or Texas isn't a Soviet or Chinese Communist Republic who enslaves their own people.

But keep it up free traders. While you talk the big talk about how wonderful it is to have the largest TRUE free trade zone in the world (the 50 states), like the Confederate free-trade hypocrites you wish to break up America into smaller states into where there is no longer a Commerce Clause.

At the heart of every Free Trader is an secessionist, a Monarchist traitor.

[Kyle]

Jul 6, 2010 14:18:51 GMT -6 fredorbob said:

Wrong, trade is not mutually beneficial when there's a trade deficit.

A purely equal amount of goods do not need to be exchanged for the transaction to be beneficial.

Only the plantation owners get rich off cheap foreign slave labor. Slaver.

Only certain foreign labor is what could be considered actual slavery. Much foreign labor provides the people with what to them is a very high-paying job, better working conditions then they would have at other jobs, and the beginnings of real economic progress in their nation so they can become a first-world nation.

A rich man gets richer when using cheap foreign labor, everyone else gets screwed.

You know I was reading the other day about a small, publicly-traded pet products company, makes about $14 million in revenue per year. They outsource production of the products overseas. I highly doubt anyone is getting super-rich off of that operation at the moment!

Libertarian Utopianist fallacy again.

I am not one of those libertarians who wants no government intervention, ever, no tariffs ever, of any kind, no matter what, believes the private sector can do every sinle thing, etc...however economies aren't zero--sum. Jobs get created, and destroyed, in economies, wealth gets created and destroyed.

I guess you haven't been paying attention to current events but there is massive unemployment.

My answer was with regards to the consequences of free-trade's economic effects, not the effects of a massive housing bubble burst and then a credit crunch brought on by the near collapse of the financial system.

Shipping jobs overseas transfers wealth from the non-rich to the rich.

It allows the company to offer cheaper goods, which helps the majority of people. Or, it can allow them offer higher benefits to shareholders, many of which non-rich working class people. Remember, institutional investors like mutual funds, pension funds, etc...look at British Petroleum right now.

The British we upset about the company maybe going under because such a massive portion of the British population relies on BP for retirement.

I guess you never heard of the trade deficit.

I have, but as I said, a trade deficit does not mean mutually beneficial trade is not occuring. Again, countries do not trade, individuals and businesses trade.

I do agree however that China has the system twistedin their favor if a nation wants to do business with them and something needs to be done about that.

Using 10 unskilled Chinese, to do the job of 1 American is not what I call "efficient", it's de-mechanization.

What makes you think they are using ten unskilled Chinese workers to do the job of one American? Many of the jobs the unskilled Chinese are doing were performed by unskilled Americans in the past, who technically were paid a lot more money than they were worth for said jobs.

Last time I checked consumer prices have increased.

Consumer prices have increased over time due to inflation.

Replacing higher-payed workers with lower-payed FOREIGN workers enriches the rich and screws Americans over, and some would say disenfranchise the foreign workers.

It enriches society by allowing lower-prices goods and services to be available, and only disenfranchises foreign workers under certain conditions.

People should not have to pay higher prices for products so some unskilled worker can earn a wage they technically are not worth.

Income does get shifted from American workers to the rich, in addition to promotes socialism at home and abroad.

Income isn't a fixed entity either remember. If for example Wal-Mart sold only domestically-made goods, many of their prices would be higher. That would help the workers who make the products perhaps, who earn a higher wage, but it hurts all of the poore people who can no longer afford the goods, which in turn then hurts employees in other businesses tied to Wal-Mart (distributors for example). Other retailers selling the products and their distributors get hurt as well.

Income is generated irregardless of price competition.

Income is not generated irregardless of price competition. That's why companies engage in price competition in the first place. To earn more income then the other guy. Otherwise Wal-Mart's slogan would be, "Always High Prices."

Cheap foreign labor has never resulted in cheaper consumer items.

Consumer items are pretty cheap nowadays and many are made overseas. Almost anyone can afford everything from a computer to basic appliances to home electronics, etc...

Last time I checked, the price of Nike shoes has gone up drastically.

Nike shoes have always costed a lot, and I am sure have gone up with inflation over the years. But to manufacture them stateside would make them cost fare more, or cut the company profits significantly which would lead to lower payouts to shareholders (many of whom are not rich), higher prices, lower benefits, etc...there'd be a trade-off somewhere.

...for themselves.

Well technically, everyone provides a service to benefit themselves ultimately, but each human pursuing their own individul interest benefits the overall economy.

"How is a prosperous cotton plantation a loss for the nation?" They enrich themselves at the expense of everyone else.

That is socialist thinking.

Consumers:

A) Earn slave wages, and can't afford to purchase the...

B) The substandard products cheap foreign labor produces at high prices.

If they were sub-standard and produced at a higher price businesses would in no way outsource the labor. The opposite has often proven to be true, which is why it gets outsourced.

There are exceptions of course, such as Mattel finding its toys are made with paint heavy in lead. People in this instance will either see if Mattel fixes the problem or they will buy toys elsewhere, and if necessary by domestically-made toys even if they cost more.

Wage loss is noticeable, and consumer spending has declined.

Right now of course, due to the recession.

And slave labor throws a monkey wrench into the entire equation.

Cheaper labor doesn't equate to slave labor.

Thankfully California or Texas isn't a Soviet or Chinese Communist Republic who enslaves their own people.

Not so sure about California there. Texas I agree. China does have a lot of human-rights violation issues, and I agree from a MORAL standpoint, I don't know if it's per se ethical to do business with the Chinese, BUT that is a separate argument from whether or not free trade creates or destroys jobs.

[fredorbob]

All you neocon/Libertarians do is repeat your own brand of political jargon like an automaton, you have no idea what you are saying or else you wouldn't make absurd statements like, "Income is only generated in a situation of price competition.."

WRONG! Income (wealth) is always generated by someone unless they are sleeping or idle like watching television. You neocon/Libertarians never think anything through, stop repeating political jargon like the Liberal who you revile, and try to think for a second about the lame ass embarasing bullcrap coming out of your mouth.

And you're precious free trade promotes idleness by killing jobs en masse.

[fredorbob]

Jul 6, 2010 20:50:23 GMT -6 @Kyle said:

A purely equal amount of goods do not need to be exchanged for the transaction to be beneficial.

Your definition of "Beneficial" is where the rich get richer.

Only certain foreign labor is what could be considered actual slavery. Much foreign labor provides the people with what to them is a very high-paying job, better working conditions then they would have at other jobs, and the beginnings of real economic progress in their nation so they can become a first-world nation.

That's exactly what the pro-slavery propagandists in the 18th century said, "Them negros are better off here in American then starving cannibals and chucking spears in Africa." You're so compassionate.

I am not one of those libertarians who wants no government intervention, ever, no tariffs ever, of any kind, no matter what, believes the private sector can do every sinle thing, etc...however economies aren't zero--sum. Jobs get created, and destroyed, in economies, wealth gets created and destroyed.

The Free Trader's definition of wealth is, "Whatever benefits me, MEEE MEEE MEEE!. Or whatever the Free Trader perceives to be a benefit of me, MEEE MEEE MEE, even though it doesn't benefit you, you you."

"Promoting the Common Welfare" is an alien concept to a Free Trader, so is nationalism; nation, state, people, family, loyalty.

My answer was with regards to the consequences of free-trade's economic effects, not the effects of a massive housing bubble burst and then a credit crunch brought on by the near collapse of the financial system.

I guess when people lose their jobs they can no longer afford to pay the house. Wow what a revolutionary concept that requires no mental gymnastics.

It allows the company to offer cheaper goods, which helps the majority of people.

Cheap labor doesn't result in cheaper goods. I guess you haven't noticed but there has been price inflation on practically everything, particularly imported goods, or goods made with illegal labor like say, oh, HOUSING!

Or, it can allow them offer higher benefits to shareholders, many of which non-rich working class people. Remember, institutional investors like mutual funds, pension funds, etc...look at British Petroleum right now.

So what, if you profit off of cheap foreign slave labor then you deserve to lose. Not every slave owner in the south was a Plantation owner with a million acres.

The British we upset about the company maybe going under because such a massive portion of the British population relies on BP for retirement.

Shit happens then you die.

I have, but as I said, a trade deficit does not mean mutually beneficial trade is not occuring. Again, countries do not trade, individuals and businesses trade.

Like I said, the concept of nationalism: nation, state, people, family, and loyalty are alien concepts to a Free Trader. You cannot fathom how a trade deficit is detrimental to anyone. It would be pointless to try to explain to you.

I do agree however that China has the system twistedin their favor if a nation wants to do business with them and something needs to be done about that.

What for, you just said trade deficits are no big deal.

Many of the jobs the unskilled Chinese are doing were performed by unskilled Americans in the past, who technically were paid a lot more money than they were worth for said jobs.

Look the Free Trader puts the welfare of foreign nationals over his own countrymen. And the Free Trader accuses Americans of being "Unskilled", therefore "Worthless", and "Obsolete", and probably worthy of the "Gas Chamber."

Consumer prices have increased over time due to inflation.

Consumer prices have increased over time due to the trade deficit decreasing the value of the dollar, and the monopoly-like-powers big business who exploit cheap foreign quasi-slave-labor have, just like King Cotton.

Did King Cotton (slavery) lower the price of cotton? No, it actually went up in price over the centuries in relation to the price of everything else.

It enriches society by allowing lower-prices goods and services to be available

Nope, free trade increases prices, and destroys jobs.

People should not have to pay higher prices for products so some unskilled worker can earn a wage they technically are not worth.

Oh look, he's accusing Americans of not deserving wages they get, so he replaces them with foreign slaves, what a guy, what a guy.

How can people vote for these Neocon/Libertarians?

Income isn't a fixed entity either remember. If for example Wal-Mart sold only domestically-made goods, many of their prices would be higher.

Oh look, he accuses American business of unable to compete because, well, they are American, no reason given.

Income is not generated irregardless of price competition. That's why companies engage in price competition in the first place. To earn more income then the other guy. Otherwise Wal-Mart's slogan would be, "Always High Prices."

Wrong. Income (wealth) is always generated unless a person is idle or sleeping, and you Free Traders promote idleness by destroying jobs en masse.

Consumer items are pretty cheap nowadays and many are made overseas. Almost anyone can afford everything from a computer to basic appliances to home electronics, etc...

Imports are more expensive then ever, and the only thing that I have noticed which has dropped in price and/or increased in value while price has remained static is the core processor in my computer. Made in Germany or Made in America, not Made by cheap foreign slave labor China or Mexico.

Nike shoes have always costed a lot, and I am sure have gone up with inflation over the years.

Wrong, Nike shoes didn't cost $50-100 in the 1980's, before they shipped manufacturing to sweatshops.

But to manufacture them stateside would make them cost fare more....

Wrooong, wrong wrong. The price have Nikes have gone up, not down.

That is socialist thinking.

When you insult Americans, and try to bring slavery back, they have no choice but to vote for the 2nd party cause you're neocon/Libertarian pro-slavery party is a disgusting putrid alternative. So in a way you promote socialism. I guess you haven't noticed but Democrats control all 3 branches of government, even with a super majority in Congress.

... domestically-made toys even if they cost more.

Behold. By default the free-trader automatically ASSUMES that if it is produced domestically then it is a bad product and/or uncompetative. No reason given, just cause, couse'.

Cheaper labor doesn't equate to slave labor.

Free Trader = Pro Slavery

[nailbender]

Kyle wrote:

International banking cartel? Sounds conspiracy-theorish...

Would you describe the FED as your local friendly lender? What are your views on the FED and the Federal Reserve Notes they issue that you income tax must be paid in? You do understand this is "private" banking money and not Sovereign US Gov. Money don't you?

Kyle wrote:

But you are again using the zero-sum argument, the idea that moving production to China or Asia eliminates U.S. jobs without any gain somewhere. Making the products cheaper causes people to buy more, which creates other jobs elsewhere and economic growth overall for both the manufacturers in China and the U.S. corporations.

You have repeatedly stated trade will only occur if it is beneficial to both parties. This is a a myopic view of how successful international trade occurs IMO which is consistent with the Globalists views.

I agree that making products cheaper causes people to buy more (recently with debt in the US) and creates jobs elsewhere (China and Asia) and economic growth overall for both manufacturers in China and the US corporations that have out sourced their production.

Where is the economic benefit for US labor that is missing in that equation, or the US economic gain? The US corporation pays nothing in taxes and distributes it's gains upwardly to management and stockholders and encourages even more off shoring of work since it's working so well. Corporate America is literally destroying it's consumer market that has sustained it for so long while hoarding accumulated wealth

This destructive cycle continues to erode the productive foundation of the US economic system, thus destroying the middle class that is forced to work at Wall Mart because of the lack of manufacturing jobs in the domestic market. The job at Wall Mart won't last long either as fewer Americans will be afford to shop their because they don't have work either since the local state and municipal jobs have been eliminated because of declining tax revenue collection.

Again, Globalization is an economic death spiral for advanced economies.

Kyle wrote:

This is simply not true. That is again the zero-sum fallacy, that there is a limited supply of money and jobs. The company saves money via outsourcing, and with cheaper products, generates more wealth, which allows for more job creation.

Is this some kind of twisted Globalist theory you read somewhere Kyle? Maybe this creates more jobs and wealth in China, but where are all these productive jobs being created in the US since we've been accumulating trillion dollar trade deficits with China? I've got news for you, there is NO productive jobs creation in the US do to Globalization. This IS that GREAT SUCKING SOUND Perot talked about, it's actually the last gasp of the middle class as it is being destroyed by "free trade" with communistic/3rd world countries.

Kyle wrote:

I think you are putting too much influence in the corporations/bankers. Free trade benefits those that engage in it, and when done voluntarily, it must benefit both sides. As for China, as you said above, what they do isn't exactly free trade.

Where is this Law that states trade, when done voluntarily, must benefit both sides? This is a ludicrous statement at best. When Goldman Sachs worked it's CDS scam on AIG, you claim it benefited AIG? The real world doesn't work the way economic theory works. In the real world, there are winners and losers and in the case of free trade in the US the destruction/export of our productive economic base is the primary casualty. High tariffs are our only hope now to salvage what is left of our manufacturing base and allow time to rebuild/retool.

Kyle wrote:

The middle-class is not being destroyed. If anything, the middle-class is wealthier today than it has ever been.

How can you claim this with a straight face? In the 50's and 60's, a typical middle class family had a single wage earner and comfortably made ends meet. recently it is common for both the husband and wife to hold jobs to make ends meet. Wages have been flat to declining for the past 20 years while the cost of everything one needs has risen in price. The middle class is not only declining, it is certainly being destroyed. Do you make an attempt at keeping up with current economic and societal statistics? There are upward of 40 million Americans on food stamps and the number is exploding. Millions of middle class are being foreclosed on, all of these are not sub-prime borrowers, but now include "Primes" that no longer have jobs do to the miracles of Gloablization and out sourcing.

Kyle wrote:

Again, zero-sum fallacy, there is not some limited number of jobs that countries have to compete over.

Really, that is news to me, maybe you can explain that further. IMO, in a resource limited world, there is only so much an individual can purchase or consume. I am amazed at how easily you are willing to export productive US jobs for short term gain.

Kyle wrote:They will have jobs.

Enlighten me Kyle, why you are so certain US labor that has had their jobs exported/sold for scrap to 3rd world countries in exchange for short term profits/bonus's and the service industry employees that depend on that productive labor "will have jobs". Is this some type of economic theory that supports Globalization and free trade?

Exactly what will be the jobs driver in the near future that will employ the millions of workers that find themselves out of work because of Globalization and wage arbitrage?

Somehow you equate corporate business success utilizing wage arbitrage in China and Asia (Globalization/exporting of productive US jobs) with a sustainable/vibrant US economy. Nothing could be further from the truth.

In past recessions, some intentionally caused to cool the economy, the productive manufacturing base of the US economy lead the way forward with increased wages, increasing labors purchasing power. That economic base has been exported and will not provide support to our economic decline. There will be no bottom to this economic disaster we are experiencing due to to the trade off of our production for short term profits/bonus's by the Globalists.

[nailbender]

Kyle wrote:

If you have a business and you must buy fuel, do you think your business will prosper more if fuel is cheaper or more costly? Cheaper workers means cheaper prices, which means more products sold, and hence more wealth.

Typical Globalist Free Trader Neo-economist garbage here, equivocating labor as only a commodity found in the same expense line as oil.

Labor IS much more than a commodity, labor IS the consumer in a vibrant/sustainable economy. Wage arbitrage is nothing more than 21st century slavery/serfdom.

[Kyle]

Jul 6, 2010 21:36:22 GMT -6 fredorbob said:

Your definition of "Beneficial" is where the rich get richer.

No it isn't. Beneficial means both individuals/companies engaging in the trade benefit, which overall benefits society.

That's exactly what the pro-slavery propagandists in the 18th century said, "Them negros are better off here in American then starving cannibals and chucking spears in Africa." You're so compassionate.

Black slaves in the 18th century were not working in businesses in a developing economy. It also was not work they chose to do in order to be able to improve their lot in life. They were forced into it.

So the slavery argument doesn't hold.

The Free Trader's definition of wealth is, "Whatever benefits me, MEEE MEEE MEEE!. Or whatever the Free Trader perceives to be a benefit of me, MEEE MEEE MEE, even though it doesn't benefit you, you you."

"Promoting the Common Welfare" is an alien concept to a Free Trader, so is nationalism; nation, state, people, family, loyalty.

Actually, I would say it is the people who demand to be paid highly for low-skilled jobs that are the "Meee Meee Meee" people. Free trade is simply aobut allowing individuals to engage in voluntary cooperation and trade with one another.

I guess when people lose their jobs they can no longer afford to pay the house. Wow what a revolutionary concept that requires no mental gymnastics.

The housing bubble caused people to lose their jobs when it burst.

Cheap labor doesn't result in cheaper goods. I guess you haven't noticed but there has been price inflation on practically everything, particularly imported goods, or goods made with illegal labor like say, oh, HOUSING!

Yes it does. And inflation is natural in a modern economy, the important thing is to keep it low.

So what, if you profit off of cheap foreign slave labor then you deserve to lose. Not every slave owner in the south was a Plantation owner with a million acres.

All foreign labor is not slave labor.

Shit happens then you die.

Uh-huh, apparently you take this attitude when it doesn't suit your ideology. You'd chastise me if I took this view with regards to particular jobs lost from outsourcing. Say if a 50 year-old person loses their job and no one will hire them (that is why I said social safety nets are required).

Like I said, the concept of nationalism: nation, state, people, family, and loyalty are alien concepts to a Free Trader. You cannot fathom how a trade deficit is detrimental to anyone. It would be pointless to try to explain to you.

That's because it isn't detrimental. The only times we have ever seen the trade deficit shrink or turn into a trade surplus were in times of economic hardship.

What for, you just said trade deficits are no big deal.

I'm not talking about a trade deficit here, I'm talking about one country doing things like currency manipulation, stealing intellectual property, etc...from another country's businesses that want to do business with it. That has to stop.

Look the Free Trader puts the welfare of foreign nationals over his own countrymen. And the Free Trader accuses Americans of being "Unskilled", therefore "Worthless", and "Obsolete", and probably worthy of the "Gas Chamber."

We are not a socialist society. We are a free society. No one is entitled to employment from a company. If a company can get work done cheaper, and even better quality, with overseas labor, that is its right. It should not be forced to have to employ artificially-higher-priced labor who often (not always) are lazy and entitlement-minded and will not even work hard.

Consumer prices have increased over time due to the trade deficit decreasing the value of the dollar, and the monopoly-like-powers big business who exploit cheap foreign quasi-slave-labor have, just like King Cotton.

Big Business doesn't solely make use of foreign labor. BTW, if you want Big Business to gain a real monopoly, push for a high living wage. You'll destroy all small businesses in America. Also push for high tariffs, as you'll protect a lot of Big Business interests in America as well.

That's what the mining companies who turned their workers into slaves did during the 19th century. They had a monopoly due to no competition from foreign mining companies.

And the trade deficit also does not weaken the dollar. That does not even make sense. The dollar influences the trade deficit. During the 1990s, when we had a strong dollar, so we had a large trade deficit, because our exports were more costly to foreign countries while their imports were cheaper.

Now that we have a weak dollar, imports are more expensive, while our exports are more attractive (which by the way HELPS a lot of domestic manufacturing, it makes their goods more price competitive with stuff made from other countries).

The weak dollar shrinks the trade deficit. And now with this recession, the trade deficit is shrinking even moreso.

Did King Cotton (slavery) lower the price of cotton? No, it actually went up in price over the centuries in relation to the price of everything else.

Slaves cost money regardless of whether you pay them or not. and of course cotton increased in prices over the years, deflation doesn't occur as time goes on.

Nope, free trade increases prices, and destroys jobs.

Accept for the most part, the opposite occurs. Argentina enacted a lot of protectionist measures over the years, only to destroy much of its economy. The United States opened up more trade during the 1980s and in particular during the 1990s. Millions of new jobs were created and the unemployment rate shrank consistently.

The fact is that free trade creates jobs and increases society's wealth. Because that's how humans create wealth in the first place. Through trade.

Oh look, he's accusing Americans of not deserving wages they get, so he replaces them with foreign slaves, what a guy, what a guy.

A relatively unskilled person does not deserve an artificially high wage, they deserve the wage the market will pay them for the value they create for society.

Oh look, he accuses American business of unable to compete because, well, they are American, no reason given.

American business can compete fine so long as it can produce good quality products at a competitive price. you artificially increase the price of something the business needs, there's a tradeoff somewhere.

Wrong. Income (wealth) is always generated unless a person is idle or sleeping, and you Free Traders promote idleness by destroying jobs en masse.

Income is not going to occur if a company's goods are priced significantly higher than their competition's, unless they are of significantly higher quality as well.

Imports are more expensive then ever, and the only thing that I have noticed which has dropped in price and/or increased in value while price has remained static is the core processor in my computer. Made in Germany or Made in America, not Made by cheap foreign slave labor China or Mexico.

Of course imports are more expensive now, as the dollar has weakened. A weak dollar makes imports more expensive, which to you should be a GOOD thing as it helps SHRINK the trade deficit.

Remember, Americans export MORE than any other country. We just happen to import even more than we export. A weak dollar helps our domestic manufacturers by making their goods more affordable to people in other countries, meanwhile it makes foreign goods more expensive, so we import less, which shrinks the trade deficit.

Wrong, Nike shoes didn't cost $50-100 in the 1980's, before they shipped manufacturing to sweatshops.

We've had some significant inflation since that 1980s (I think the dollar has lost something like 90% value since the late 1970s).

Wrooong, wrong wrong. The price have Nikes have gone up, not down.

Yes, and they'd go up a lot more if they had to be manufactured stateside, OR the company would have to cut dividends to shareholders or cut benefits to workers, maybe lay off workers, etc...remember Nike is a huge company, primarily a marketing an design company. They themselves do not manufacturer the shoes they design.

When you insult Americans, and try to bring slavery back, they have no choice but to vote for the 2nd party cause you're neocon/Libertarian pro-slavery party is a disgusting putrid alternative. So in a way you promote socialism. I guess you haven't noticed but Democrats control all 3 branches of government, even with a super majority in Congress.

You want to create slavery, kill free trade. You'll have big American corporations dominate completely certain industries, in which case they can then treat workers however they like because there will be no competition. As I explained above, that's what the mining companies did.

Behold. By default the free-trader automatically ASSUMES that if it is produced domestically then it is a bad product and/or uncompetative. No reason given, just cause, couse'.

No, that's not what I said, I said that if people want, they can purchase doemstically-made toys, which will cost more, but that people would be willing to pay the higher price because they'd be of a higher quality (no lead paint).

Free Trader = Pro Slavery

Nope, free-trade equals anti-slavery. Free traders understand (or hold the worldview, even if you consider it incorrect) that infringing on free trade is precisely what leads to horrible working conditions from big corporations as they can then dominate an industry completely.

Foreign labor does not need to be paid the same as domestic labor, as they are cheaper but for them that is very high pay, however foreign labor that is literal slave labor is wrong.

[Kyle]

Jul 6, 2010 21:52:43 GMT -6 nailbender said:

Would you describe the FED as your local friendly lender? What are your views on the FED and the Federal Reserve Notes they issue that you income tax must be paid in? You do understand this is "private" banking money and not Sovereign US Gov. Money don't you?

The Federal Reserve is not any "private" banking cartel that secretly controls the world. It is a quasi-private, quasi-public institution.

It's purpose is to regulate the banking system, control the money supply, and act as a lender of last resort. You cannot have a purely government-run central bank. We tried two of those and they both had to be shut down due to corruption.

But you also cannot have some privately-owned for-profit corporate bank being the central bank either. The Fed is a hybrid of the two.

What is your definition of "sovereign" money?? And who would you have control the money supply if not the Fed? Congress? The Presidency? (both of those scary). The gold standard? Gold is a worthless metal and historically is very deflationary, hamstringing economic growth.

Who would serve as a lender of last resort to the banking system? Yes, IN THEORY, if we had a full-reserve banking system as opposed to the fractional-reserve system we have now, we wouldn't need a lender of last resort. But we cannot tear down and rebuild the banking and financial system from the ground up, if a full-reserve system could even work properly.

And even if it could, one would still need someone to control the money supply.

You have repeatedly stated trade will only occur if it is beneficial to both parties. This is a a myopic view of how successful international trade occurs IMO which is consistent with the Globalists views.

Businesses and individuals do not engage in trade with one another unless it benefits both parties (unless there is coercion involved).

I agree that making products cheaper causes people to buy more (recently with debt in the US) and creates jobs elsewhere (China and Asia)

It creates jobs domestically as well. If a small company (say $10 million in revenue) has its products made overseas, that creates jobs overseas yes. But when the products are sold, and people buy them, and let's say the company grows from $10 million to $100 million, it's going to create a lot more jobs at that company alone. If the company grows to $1 billion, again that's a lot more jobs created. Not to mention the tax revenue the company pays to the government, or the growth it provides to its local economy.

Then there's the distributors who grow, and the retailers who grow, from the sales of this company's products. So EVERYONE benefits.

and economic growth overall for both manufacturers in China and the US corporations that have out sourced their production.

Economic growth for a business leads to job creation.

Where is the economic benefit for US labor that is missing in that equation, or the US economic gain? The US corporation pays nothing in taxes and distributes it's gains upwardly to management and stockholders and encourages even more off shoring of work since it's working so well. Corporate America is literally destroying it's consumer market that has sustained it for so long while hoarding accumulated wealth

This is simply not true. The economic benefit for U.S. labor is consistently increasing wages as they become more productive (yes, wages have consistently gone up, look to incomes per person), economic growth for the U.S. which creates jobs, and yes lots of tax revenue. Companies pay taxes.

On shareholders/stockholders, remember a lot of them are middle-class folk.

There is not some fixed pie of limited wealth and limited jobs that keep getting hoarded or sent off-shore, thus leaving less and less for everyone else.

This destructive cycle continues to erode the productive foundation of the US economic system, thus destroying the middle class that is forced to work at Wall Mart because of the lack of manufacturing jobs in the domestic market.

The U.S. economic system is the most productive in the world. And the middle-class is not being destroyed. Furthermore, you talk about productivity, why do you think there are fewer manufacturing jobs? We as a nation manufacture more than anyone else.

The reason manufacturing jobs have gone down is due to consistent increases in productivity. Manufacturing is a LOT more automated then it used to be. It's like farming. We grow MASSIVE quantities of food in this nation. But less than 1% of Americans are farmers (and we grow all that food using less land than we did back in the 1930s when we had a larger percentage of Americans as farmers and a smaller population). The reason for this is productivity. Modern farming has gotten so productive that a nation of 320 million people, 5% of the global population, can have less than 1% of that 5% of the global population grow enough food to feed the planet.

Manufacturing is the same. Productivity increases are what have wiped out a lot of manufacturing jobs, not off-shoring. If America's economy was truly experiencing declines in productivity, that would create more manufacturing jobs (and destroy lots of other jobs).

The job at Wall Mart won't last long either as fewer Americans will be afford to shop their because they don't have work either since the local state and municipal jobs have been eliminated because of declining tax revenue collection.

Lost government jobs is not a loss to the economy, it's a gain. Government jobs are a leech on the economy. You fund them by taking wealth that was created by the private sector out of it.

And you can blame that on the ultra-leftwing governments of so many state governments and munipalities who spend money like crazy, never taking into account what would happen if/when a major recession occurred where revenues plummted, along with the greedy public employees unions that think it perfectly fine to rob the public treasury (the whole incentive of a public employee union is to expand the size of government to create more government workers, therefore more union members and thus more political influence, along with demanding higher and higher benefits, all of this paid for by hardworking taxpayers).

The primary growth in state governments have been due to the public employees unions.

Again, Globalization is an economic death spiral for advanced economies.

I disagree.

Is this some kind of twisted Globalist theory you read somewhere Kyle?

Actually, it's basic economics.

Maybe this creates more jobs and wealth in China, but where are all these productive jobs being created in the US since we've been accumulating trillion dollar trade deficits with China? I've got news for you, there is NO productive jobs creation in the US do to Globalization. This IS that GREAT SUCKING SOUND Perot talked about, it's actually the last gasp of the middle class as it is being destroyed by "free trade" with communistic/3rd world countries.

As I explained, job creation occurs from growth of the companies, and growth of the various other businesses interconnected with the selling of that company's products.

As for this great sucking sound, where? The unemployment rate did not go skyrocketing up when NAFTA was passed. It did not skyrocket during the 1980s either. It has gone up right now due to two massive blows to the economy (housing bubble bust and credit crunch). The middle-class today is more wealthy than it has ever been, with an abundance of cheap products and services, many of which were only available to wealthier people a decade or so ago.

Where is this Law that states trade, when done voluntarily, must benefit both sides? This is a ludicrous statement at best.

This is just not true. NO ONE trades anything if there isn't a mutual benefit in return. That's the point of trade. Both parties must benefit. Trade is NOT a zero-sum game. If it was, it would not occur.

When one party gives another party goods or services it has for a net loss, that is called charity. Or it may be forced to give up goods or services for a net loss, that is called theft.

Giving goods or services in return for other goods and services is trade.

When Goldman Sachs worked it's CDS scam on AIG, you claim it benefited AIG?

Notice that was a SCAM. And notice AIG would not have engaged in the trade if they had been aware it was a scam, so technically it was not trade, it was theft, under the guise of trade because one party didn't know better.

The real world doesn't work the way economic theory works. In the real world, there are winners and losers and in the case of free trade in the US the destruction/export of our productive economic base is the primary casualty.

There is no destruction or exporting of our productive economic base. Our economic base is extremely productive, among the most productive, if not THE most productive, in the world. Keeping overpaid labor for jobs that can be done far more cheaply undercuts that.

And in competition, there are winners and losers, not in trade. And of course the world doesn't work perfect. Capitalism unto itself is not a panacea. Everywhere you find capitalism, you do not find freedom, but everywhere you find freedom, you find capitalism, voluntary cooperation, and free trade.

You have to have a system of laws, a legal framework, sound banking and financial system so capital is readily available, etc...otherwise if you start a business and someone steals your idea, what would you do? Kill them? They might kill you. Notice this is how the illegal businesses function (drug trafficking, illegal arms sales, identity theft, etc...because they don't have courts or the law in that system). You also need bankruptcy laws as well so people can start businesses and risk failing.

High tariffs are our only hope now to salvage what is left of our manufacturing base and allow time to rebuild/retool.

Our manufacturing base is more productive now than it has ever been, partially because of foreign competition. You implemented high tariffs and you will inititate a trade war which will hurt our manufacturers as they can no longer sell their products to other nations, and you will incentize manufacturing to become unproductive by protecting them completely from foreign competition.

How can you claim this with a straight face? In the 50's and 60's, a typical middle class family had a single wage earner and comfortably made ends meet. recently it is common for both the husband and wife to hold jobs to make ends meet. Wages have been flat to declining for the past 20 years while the cost of everything one needs has risen in price.

In the 1950s and 1960s, people didn't live on debt and spend everything they made at the time, and lived in cheaper housing. Also, during this period, there was a general shortage of workers for business, because during the Great Depression the birth rate plummeted, so by the time the 50s rolled around, the young men then found jobs. Then came the Baby Boomer era, where people decided to start spending more than they earn. As for jobs, jobs remained plentiful, as the unemployment rate has remained at full employment (up to this recession).

And wages have not been flat or declining, that is a myth. Household incomes have been flat or declining, but household incomes are a lousy way to measure income. Incomes per person have been rising consistently, only slowing down in times of recession.

Prices on things have risen due to inflation over the years, which is natural.

The middle class is not only declining, it is certainly being destroyed. Do you make an attempt at keeping up with current economic and societal statistics? There are upward of 40 million Americans on food stamps and the number is exploding. Millions of middle class are being foreclosed on, all of these are not sub-prime borrowers, but now include "Primes" that no longer have jobs do to the miracles of Gloablization and out sourcing.

You are talking about the effects of the recession, not globalization and outsourcing. Globalization and outsourcing have led to the creation of millions of jobs throughout the world.

People lacking jobs now is due to the recession. If outsourced jobs were brought back stateside, people would have to deal with very low pay in them, as they are unskilled jobs, or higher unemployment than we have now.

Really, that is news to me, maybe you can explain that further. IMO, in a resource limited world, there is only so much an individual can purchase or consume.

Jobs get created in a market economy. Same as wealth. It is created. Wealth and jobs get created when parties engaging in trade PROSPER.

I am amazed at how easily you are willing to export productive US jobs for short term gain.

If the jobs are truly productive, they will not be outsourced most likely. It depends on the employer, but that is the employer's choice. No one is entitled to a job.

Enlighten me Kyle, why you are so certain US labor that has had their jobs exported/sold for scrap to 3rd world countries in exchange for short term profits/bonus's and the service industry employees that depend on that productive labor "will have jobs". Is this some type of economic theory that supports Globalization and free trade?

Because new jobs get created all the time. If you are an unskilled worker in some job that gets exported, then you need to gain some kind of valuable skills to help with the economy, an exception being a person too old to get hired who needs help.

Exactly what will be the jobs driver in the near future that will employ the millions of workers that find themselves out of work because of Globalization and wage arbitrage?

New industries, new technologies, new services, etc...all create new jobs. Again, you are going by the fixed-pie, zero-sum fallacy here.

Somehow you equate corporate business success utilizing wage arbitrage in China and Asia (Globalization/exporting of productive US jobs) with a sustainable/vibrant US economy. Nothing could be further from the truth.[/uote]

The U.S. economy has been very vibrant, except for this recession occurring right now, although it will recover.

I would say somehow you equate a sustainable, vibrant economy with infringing on trade and hence wealth creation, and artificially driving up the costs of things.

In past recessions, some intentionally caused to cool the economy, the productive manufacturing base of the US economy lead the way forward with increased wages, increasing labors purchasing power. That economic base has been exported and will not provide support to our economic decline.

It has not been exported, and no recessions are "intentionally" caused. The manufacturing base employs fewer workers directly now precisely because it is so productive.

There will be no bottom to this economic disaster we are experiencing due to to the trade off of our production for short term profits/bonus's by the Globalists.

We are not trading off production.

Typical Globalist Free Trader Neo-economist garbage here, equivocating labor as only a commodity found in the same expense line as oil.

Like or not, ON PAPER, in terms of MONEY, labor is a commodity. Yes, it may be a commodity made up of proplr, but it is still a commodity. It is subject to the same laws of economics as any other commodity.

Labor IS much more than a commodity, labor IS the consumer in a vibrant/sustainable economy. Wage arbitrage is nothing more than 21st century slavery/serfdom.

Labor is the consumer, but it is also a commodity, and like any commodity, if you artificially increase its cost, you will increase the unused supply of it. For labor, this means increasing the unemployment rate.

[unlawflcombatnt]

But unlike other commodities, labor is also the source of demand--the entire source of demand. And if you reduce the dollar value of demand, you reduce production and the wealth thus created. Reducing the $$ going to labor by shifting them upward results in nothing but excess, non-capital investable $$. Ultimately the excessive capital goes into non-productive endeavors such as "innovative financial instruments.

This is the case where too much is a bad thing. If less money had gone to profits and potentially investable capital--and instead gone to workers who would have created production demand--more capital would have actually been invested, despite lesser availability.

No one invests in anything unless they expect a return on their capital, regardless of how much capital they have. And with deficient consumer demand due to deficient wages, there is reduced capital investment as well.

[Kyle]

Jul 7, 2010 1:24:25 GMT -6 unlawflcombatnt said:

But unlike other commodities, labor is also the source of demand--the entire source of demand. And if you reduce the dollar value of demand, you reduce production and the wealth thus created. Reducing the $$ going to labor by shifting them upward results in nothing but excess, non-capital investable $$. Ultimately the excessive capital goes into non-productive endeavors such as "innovative financial instruments.

I agree they are the demand, but they are still also a form of commodity to a business. I would say that if in a free market, where workers are all being paid the market wage rate, then yes if you artificially undercut the amount of money going to them, you reduce demand (but that would require things like cartels to form, and even then, people could leave the industry for other industries, so it'd be very difficult).

But if one starts here from a standpoint of the workers already being paid above the market rate, there will be a trade-off likely somewhere (usually in the form of a higher unemployment rate---again, remember most businesses are small businesses, not big businesses; big businesses can handle higher wage rates to a degree and like them because they hurt smaller competitors). Here if the wages are lowered down to the market rate, the unemployment rate also comes down as more workers are hired at that lower wage.

This is the case where too much is a bad thing. If less money had gone to profits and potentially investable capital--and instead gone to workers who would have created production demand--more capital would have actually been invested, despite lesser availability.

I wouldn't say so. The thing is that profits go towards new investment (i.e. expanding the business), unless it is a more mature company, in which case profits go towards investment, then afterwards towards paying a dividend to the shareholders, who spend the money.

If you have enough money to give more to the workers, say higher benefits, to attract good employees, etc...that can work, but the company must be making a lot of money and the trade-off is less money going to the shareholders and investment.

For example, Google spends lavishly on employees. But Google is a monster company with huge profits, so it can do this without hurting the company itself.

No one invests in anything unless they expect a return on their capital, regardless of how much capital they have. And with deficient consumer demand due to deficient wages, there is reduced capital investment as well.

This would apply if across the whole economy, wages were artificially lower then they should be, thus consumer demand lower, thus lower capital investment.

But remember wages are a price, they are the price of labor to a business. And like all prices, they cannot be centrally controlled. Artificially increase their cost, and you get a glut in the supply.

[nailbender]

Kyle wrote:

trade must be mutually beneficial or it will not occur.

Nailbender wrote:

When Goldman Sachs worked it's CDS scam on AIG, you claim it benefited AIG?

Kyle wrote:

Notice that was a SCAM. And notice AIG would not have engaged in the trade if they had been aware it was a scam, so technically it was not trade, it was theft, under the guise of trade because one party didn't know better.

Kyle, you stated repeatedly that voluntary trade is ALWAYS beneficial to BOTH parties or it will not occur. This is PROOF you theories/beliefs don't hold up in the real world. Your views and beliefs are founded in a fantastical world of theory where no one gets hurt. You are dangerous and so are your theories, whether you understand it or not.

Well that about sums up the beneficial illusions of Free Trade and Globalization. Neo-economists and Libertarians DON'T KNOW BETTER but continue to support the undeniable reality that it is destroying the US economy and the middle class as we have tried to explain to you. I suggest you open your eyes to what is happening to the US economy, US labor and advanced economies around the world.

Kyle wrote:

If the jobs are truly productive, they will not be outsourced most likely. It depends on the employer, but that is the employer's choice. No one is entitled to a job.

Under the guise of Globalization, it matters not if US labor is productive if production in China is more profitable due to non-existent environmental regulations, lack of social safety nets, and slave-like labor earning minimal wages. This mind set of corporate America is destroying our economic base in return for short term profits and bonus's.

Technology and processes developed in the US, especially with the aid of public subsidies should not be allowed to leave the US, specifically it should not be allowed to be exported to China in order to access their markets.

Trade with China is NOT free trade and should have high tariffs placed on their goods immediately.

Kyle wrote:
You are talking about the effects of the recession, not globalization and outsourcing. Globalization and outsourcing have led to the creation of millions of jobs throughout the world.

People lacking jobs now is due to the recession. If outsourced jobs were brought back stateside, people would have to deal with very low pay in them, as they are unskilled jobs, or higher unemployment than we have now.

The fact is Globalization and Free Trade have decimated the purchasing power of advanced economies. Productive jobs/industry has been traded for service jobs, the fact of the matter is the service industry cannot sustain itself, it survives off the discretionary spending of productive labor.,

You continue to say this recession was caused by the bursting of the housing bubble and asset prices, when you state this it is obvious you don't have a clue as to what you are talking about.

The time frame you are focusing on is much to small to comprehend the "big picture" of the economic destruction and mayhem caused by the export of our production base.

What advanced economies are experiencing is not a recession, but a debt driven credit event that is the direct result of the multi-national corporations exportation of production and technology to China and Asian nations, including India. While it has been very beneficial to these countries, it has gutted and devastated the US economy and other advanced economies. Globalization has reduced labors purchasing power, thus reducing demand, which has resulted in a massive amount of over production capacity worldwide. This unused capacity was built with debt which now cannot be serviced.

If you were alive in the 70's and told people that in the year 2010 interest rates would be near zero and the economy would be in a virtual death spiral, you would have been deemed insane.

The export of the US production started in the late 70's as the miracle of wage arbitrage began to be exploited. Since then, it has taken greater reductions in interest rates and more accumulated debt to keep the US economy growing.

It was the "new economy" in the late 90's where Federal deficits climbed out of control and an explosion in personal debt occurred. Everyone appeared to be rich, but it was an illusion. The jobs and industries were being exported at a furious pace now and the lack of productive earnings had to be masked by increasing levels of debt in order for the appearance of economic growth to continue.

During and after the Dot Com bust, interest rates were drastically lowered in order to sustain the facade of a healthy/growing economy. The total of US debt literally mushroomed at this point as did the export/destruction of US production capacity. Productive earnings of US labor was replaced by debt now at unprecedented levels to mask the detrimental effects of Globalization and the loss of productive domestic US jobs.

In the 2000's it was obvious to those that understood the disastrous and predictable effects of Gloabalization to the US economy, that the tipping point of Free Trade had been reached when the amount of debt fueling the economy went vertical on the charts. The amount of debt incurred was proportional to the long term value of jobs and industry that was shipped overseas in return for short term profits and bonus's.

Very few had money, yet those with money (savings) couldn't make any money on interest. At that point the system was broken and unrepairable. No nation ever borrowed and consumed their way to wealth and prosperity, much to the contrary, they produced and saved their wealth. In order to do this, every productive job and industry was viewed as valuable, none were exported or given away.

The housing bubble was facilitated by a now totally corrupt and out of control financial industry that used easy credit and financial engineering to mask the destruction/export of the US production base, the foundation of the US economy. It mattered not who or what was destroyed in their quest for money, including companies, labor, nations, domestic economies, pension funds, clients or partners.

You see this is NOT your typical recession, this is a credit event. Debt replaced productive earnings to sustain the appearance of a strong US economy. The lack of purchasing power/demand by domestic US labor cannot service the debt payments due to the massive amount of jobs and industry that has been off shored. This is the expected and predicted end result of Globalization and Free Trade.

I'm not only talking about cheap underwear or shoe production, I'm talking about the entire high tech electronics industry for example. The design and manufacture of memory, circuit boards, microprocessors, displays. This industry used to be America's future, until it was exported.

Currently, even as our domestic economy is in free fall, R&D is being exported with "innovation" to soon follow to be closer to the fab centers. Globalization and Free Trade continue todestroy what's left of the US economy. There are NO jobs and NO jobs driver in the immediate future. Even if there was, under current gov policy, it would be exported as soon as feasible.

The only option available to US labor is to place tariffs on most all imports. The multi-national corporations know no borders and could care less who they destroy in there quest to hoard wealth from any remaining purchasing power found worldwide.

Closing this countries borders to both goods and people would be a good start to slowing the economic death spiral the US finds itself in.

[Kyle]

Jul 7, 2010 19:54:04 GMT -6 nailbender said:

Kyle, you stated repeatedly that voluntary trade is ALWAYS beneficial to BOTH parties or it will not occur. This is PROOF you theories/beliefs don't hold up in the real world. Your views and beliefs are founded in a fantastical world of theory where no one gets hurt. You are dangerous and so are your theories, whether you understand it or not.

How does trade not occur where it is detrimental to one party? Also, what fantasy world are you speaking of where no one gets hurt? I have in no way, shape, or form advocated any such world.

I have stated things like regulation, safety nets, and making sure the other side also is playing by the rules, are required.

Well that about sums up the beneficial illusions of Free Trade and Globalization. Neo-economists and Libertarians DON'T KNOW BETTER but continue to support the undeniable reality that it is destroying the US economy and the middle class as we have tried to explain to you. I suggest you open your eyes to what is happening to the US economy, US labor and advanced economies around the world.

Well we can agree to disagree on this however I disagree because you haven't convinced me enough (I can see I haven't convinced yourself either ).

Under the guise of Globalization, it matters not if US labor is productive if production in China is more profitable due to non-existent environmental regulations, lack of social safety nets, and slave-like labor earning minimal wages. This mind set of corporate America is destroying our economic base in return for short term profits and bonus's.

I can understand your point here, when I was speaking of free trade however, i wasn't solely referring to China. China, cheats in certain ways.

Technology and processes developed in the US, especially with the aid of public subsidies should not be allowed to leave the US, specifically it should not be allowed to be exported to China in order to access their markets.

On this I don't know the answer, however I think you have a point here because taxpayers are subsidizing it, so it is reasonable for the government to say, "The tradeoff that comes with US funding your operation initially is you are forbidden to export this technology."

Trade with China is NOT free trade and should have high tariffs placed on their goods immediately.

Not in total agreement here, but I fully understand what you mean about China not playing by the rules and something needs to be done.

The fact is Globalization and Free Trade have decimated the purchasing power of advanced economies. Productive jobs/industry has been traded for service jobs, the fact of the matter is the service industry cannot sustain itself, it survives off the discretionary spending of productive labor.,

I wouldn't say so. Productive jobs and industry have not been traded for service jobs. Remember, America barely has any farmers, but we grow tons of food. The reason? Productivity. We manufacture loads of things, but have fewer and fewer manufacturing jobs. The reason? Producivity. As for service jobs and the knowledge economy, knowledge and service workers are labor who earn discretionary income.

You could inverse your quote and say, "The fact of the matter is the manufacturing industry industry cannot sustain itself, it survives off the discretionary spending of productive labor." That labor can be other manufacturing or services.

You continue to say this recession was caused by the bursting of the housing bubble and asset prices, when you state this it is obvious you don't have a clue as to what you are talking about.

So enlighten me then.

The time frame you are focusing on is much to small to comprehend the "big picture" of the economic destruction and mayhem caused by the export of our production base.

Except we aren't exporting our production base is my point.

What advanced economies are experiencing is not a recession, but a debt driven credit event that is the direct result of the multi-national corporations exportation of production and technology to China and Asian nations, including India. While it has been very beneficial to these countries, it has gutted and devastated the US economy and other advanced economies.

How do multination corporations cause a debt-driven credit event? How have said corporations exported production (we still produce LOTS here). How does the housing bubble bursting NOT hurt the economy?

For one, a real-estate bubble popping on its own is a major blow to an economy. Also look to Japan. Japan has had more protectionism than America (and still does to a degree), that didn't stop their own economy from experiencing a real-estate bubble that burst and almost destroyed their economy. And they haven't really recovered since then either (although there's a few variables likely causing that).

In the U.S., all sorts of securities interlinked throughout the global economy were tied to the U.S. housing market, which then went into a national bubble, which popped, causing disaster.

Globalization has reduced labors purchasing power, thus reducing demand, which has resulted in a massive amount of over production capacity worldwide.

Production hasn't shifted worldwide so much as just increased a lot more, because of a large increase in demand.

This unused capacity was built with debt which now cannot be serviced.

The countries that have truly invested their money properly are the most prosperous and financially sound right now, such as Germany. The countries that went and blew their money on entitlements (which cost money, they do not produce wealth) are the ones on the verge of disaster (Greece is the big one, but also Italy, Spain, Portugal, etc...who now blame Germany for being "too competitive" (!!!)).

If you were alive in the 70's and told people that in the year 2010 interest rates would be near zero and the economy would be in a virtual death spiral, you would have been deemed insane.

Not if you explained that a massive national-level real-estate bubble would grow then pop, which in itself is a massive blow to an economy, but IN ADDITION to that, the entire system of financial securities would be tied into the housing market so when housing prices plummeted, havoc ensued in the entire financial system as well.

The export of the US production started in the late 70's as the miracle of wage arbitrage began to be exploited. Since then, it has taken greater reductions in interest rates and more accumulated debt to keep the US economy growing.

Don't know if I agree there. In fact, many claim now that the Federal Reserve kept interest rates too low throughout the 1990s and 2000s and if anything should have kept them higher.

Much of the current consumer economy I'd agree has been built on consumer debt, but that choice was made by the consumers. If people would have been more prudent in the spending, the economy would have grown accordingly.

Also remember, U.S. production hasn't been exported, again we produce more stuff than any other country.

It was the "new economy" in the late 90's where Federal deficits climbed out of control and an explosion in personal debt occurred.

What Federal deficits of the late 90s are you speaking of? The Federal government ran a balanced bdudget from 1998 to 2000. It wasn't until about 2008 that Federal deficits began to really grow out of control.

Everyone appeared to be rich, but it was an illusion.

That happens in a stock market bubble. We had a stock market bubble during the 1920s as well, and we had more protectionism during the 1920s then we had during the 1990s.

The jobs and industries were being exported at a furious pace now and the lack of productive earnings had to be masked by increasing levels of debt in order for the appearance of economic growth to continue.

Jobs were not "exported" at any furious pace, the 1990s saw the creation of millions of new jobs. The sucking sound of jobs leaving that many claimed would happen never occurred. The unemployment rate came down and the U.S. achieved a balanced budget.

The stock market bubble had to do with possibly keeping iterest rates too low and also the SEC not doing its job and allowing a huge Ponzi scheme to occur (worthless companies being created and taken public). Also just the typical mania that ensues during a bubble.

During and after the Dot Com bust, interest rates were drastically lowered in order to sustain the facade of a healthy/growing economy. The total of US debt literally mushroomed at this point as did the export/destruction of US production capacity. Productive earnings of US labor was replaced by debt now at unprecedented levels to mask the detrimental effects of Globalization and the loss of productive domestic US jobs.

Interest rates likely were too low during the 1990s. After the 1990s, lowering them possibly also extended the bubble, contributing to the housing bubble's growth. However, institutions like Fannie mae and Freddie Mac, and also Wall Street tying a bunch of securities into the financial system, helped create the current crisis.

If there had never been a Fannie/Freddie and Wall Street had not tied securities into the housing market, the current crisis would not have occurred. At most, we'd have had some form of bubble, perhaps a real-estate bubble, from which the U.S. economy would likely have recovered now.

In the 2000's it was obvious to those that understood the disastrous and predictable effects of Gloabalization to the US economy, that the tipping point of Free Trade

What tipping point?

had been reached when the amount of debt fueling the economy went vertical on the charts. The amount of debt incurred was proportional to the long term value of jobs and industry that was shipped overseas in return for short term profits and bonus's.

If you mean consumer debt, that is not caused by free trade. In fact, that doesn't even make sense. Jobs remained plentiful, so lack of them had nothing to do with it. If there had been a lack of jobs, people should have cut spending. But there were plenty. Free trade allows meanwhile for cheap goods to be available. What people did was to spend more than they make consistently, and to turn their homes into piggy banks as housing prices rose. And jobs and industry were not "shipped" overseas. Certain jobs were moved to foreign labor, while other jobs were constantly created in the economy. It's like farming or manufacturing. Certain jobs done by people eventually get moved to machines that can do them better and for cheaper. That doesn't kill jobs though, it leads to more productivity and the creation of new jobs.

Very few had money, yet those with money (savings) couldn't make any money on interest. At that point the system was broken and unrepairable. No nation ever borrowed and consumed their way to wealth and prosperity, much to the contrary, they produced and saved their wealth.

No one ever claimed a nation borrowed or consumed its way into prosperity. America has done fine on the production part, on the saving part, I agree the country has become deplorable. But that isn't due to free trade or globalization, that is due to people no longer remaining fiscally prudent and spending more than they make.

In order to do this, every productive job and industry was viewed as valuable, none were exported or given away.

You are going by the zero-sum fallacy again here. Jobs are not exported or given away, certain jobs get created and others get destroyed all the time, or moved to whatever does them best. Sometimes that is foreign labor. Sometimes it is machines.

But by your standard above, the economy could never grow more productive. You have 100 workers working to manufacture something, and someone invents a machine that lets 30 workers do the manufacturing, well then that would "destroy" jobs according to you. So no making the economy more productive.

Of course, without productivity, people would remain poor. The reason the average American today makes so much more money than say the average Mexican, is because the average American is far more productive.

Productivity leads to economic growth and creates jobs and creates wealth. Free trade is allowing individuals and businesses to engage in voluntary cooperation with one another. The exceptions are with certain areas, say military or national security-related, or with developing economies that just cannot compete without protection initially.

The housing bubble was facilitated by a now totally corrupt and out of control financial industry that used easy credit and financial engineering to mask the destruction/export of the US production base, the foundation of the US economy.

The financial industry did no such thing. And the U.S. production base is not the sole foundation of the economy. Services are a large part of the economy as well. What the financial industry did was to make securities which they tied into the housing market that were extremely complicated and mathematical, and create them so fast that no one could keep up with them. Wall Street didn't understand what Wall Street was doing. There was no active conspiracy going on here.

In fact, during the mid-2000s, it was widely believed we had reached a new era, where the financial sysem was developed to the point that capital went right where it was precisely needed. No one realized the growing housing bubble that was occurring and what it would lead to.

It mattered not who or what was destroyed in their quest for money, including companies, labor, nations, domestic economies, pension funds, clients or partners.

On this I agree, much of the "Street" doesn't care about that stuff in their quest for money, BUT, that is not what led to the curent crisis.

You see this is NOT your typical recession, this is a credit event.

I know! Real-estate bubble burst = HARD BLOW to an economy, COMBINED with a credit crunch.

Debt replaced productive earnings to sustain the appearance of a strong US economy. The lack of purchasing power/demand by domestic US labor cannot service the debt payments due to the massive amount of jobs and industry that has been off shored. This is the expected and predicted end result of Globalization and Free Trade.

Except it's completely wrong. Debt was most certainly used in giving the appearance of an economy in overdrive, but the economy grew to meet the demand of the debt-fueled consumers, it was not the debt-fueled consumers trying to meet any "demand" of the economy. The people should not have taken on so much debt. Also the housing bubble contributed to this debt as well.

Regarding jobs and industry, you are again falling or the zero-sum fallacy. Jobs and industry were created in abundunce. Many have been wiped out right now due to this recession, which was caused by other factors, not globalization or free trade.

People cannot service their debts right now because they have lost their jobs in this current recession and also because they ran up unnecessary debts during the boom times when they should have been saving.

I'm not only talking about cheap underwear or shoe production, I'm talking about the entire high tech electronics industry for example. The design and manufacture of memory, circuit boards, microprocessors, displays. This industry used to be America's future, until it was exported.

Except it wasn't exported. CONSUMER electronics are mostly manufactured overseas, and foreign companies have led the way there for a long time, but that is one portion of the electronics. Microprocessors, circuit boards, displays, memory, and many other very crucial and important forms of electronics and technology, are designed and manufactured in the United States.

And there is nothing to stop anyone from forming any domestic U.S. consumer electronics companies either. Vizio is one that was created in California and is now among the largest producers of flat-panel televisions in the industry. Sure, manufacturing is done overseas, design is done stateside, so that the company can sell its products cheaply enough on the market.

Currently, even as our domestic economy is in free fall, R&D is being exported with "innovation" to soon follow to be closer to the fab centers. Globalization and Free Trade continue todestroy what's left of the US economy. There are NO jobs and NO jobs driver in the immediate future.

In the recession, no, but putting aside the recession, I think you are living in a fantasy land here. You say "what's left' of the U.S. economy, as if it has been under a consistent amount of destruction for decades, which is an utter myth. It has grown to levels of productivity and wealth creation previously unheard of.

Even if there was, under current gov policy, it would be exported as soon as feasible.

Whether or not outsourcing occurs depends.

The only option available to US labor is to place tariffs on most all imports. The multi-national corporations know no borders and could care less who they destroy in there quest to hoard wealth from any remaining purchasing power found worldwide.

Closing this countries borders to both goods and people would be a good start to slowing the economic death spiral the US finds itself in.

If you place tariffs on everything, you can pretty much be guaranteed that would be the creation of an actual death spiral. Many American companies would no longer be able to manufacture goods cheaply, and they would no longer be able to sell them throughout the world. It would destroy millions of jobs and lead to a TRUE economic death spiral and turn this nation into an economic backwater like Argentina is now.

It would protect certain large corporations that don't like foreign competititon, and would allow them to form monopolies, abuse workers more, and produce shoddy-quality products because there would be no competition.

The rest of the world would leave America behind.

[nailbender]

Kyle wrote:


I know! Real-estate bubble burst = HARD BLOW to an economy, COMBINED with a credit crunch.

There is no credit crunch, there is more than ample credit available. The problem is a lack credit worthy borrowers do to the massive export of productive industry/jobs. The is a direct result of Globalization and free trade. It is economic suicide and is resulting in an economic death spiral.

Kyle wrote:

The financial industry did no such thing. And the U.S. production base is not the sole foundation of the economy. Services are a large part of the economy as well. What the financial industry did was to make securities which they tied into the housing market that were extremely complicated and mathematical, and create them so fast that no one could keep up with them. Wall Street didn't understand what Wall Street was doing. There was no active conspiracy going on here.

Wall Street certainly did provide easy credit which masked the destruction caused by Free Trade.

Wall Street didn't know what Wall Street was doing??? LOL, you've got a lot to learn. Wall Street certainly knew what it was doing.

If you place tariffs on everything, you can pretty much be guaranteed that would be the creation of an actual death spiral. Many American companies would no longer be able to manufacture goods cheaply, and they would no longer be able to sell them throughout the world. It would destroy millions of jobs and lead to a TRUE economic death spiral and turn this nation into an economic backwater like Argentina is now.

Look around, the US is in an economic death spiral, which globalization and free trade has played a pivotal role.

[Kyle]

Jul 7, 2010 23:34:44 GMT -6 nailbender said:

There is no credit crunch, there is more than ample credit available.

Not really. Credit literally froze, that is why they had to bail out Wall Street. Then the Federal Reserve had to provide massive liquidity to the economy to keep the entire economy from locking up. The problem though is banks are not lending as much as hoped.

The problem is a lack credit worthy borrowers do to the massive export of productive industry/jobs.

Lack of creditworthy borrowers has nothing to do with any export of productive jobs and industry. All of these people had jobs within industries up until the recession. Too many of them spent a lot more money than they should have on consumer goods via credit card debt and home equity loans.

The is a direct result of Globalization and free trade. It is economic suicide and is resulting in an economic death spiral.

Free trade and globalization did not cause the crisis, because jobs and industry were not exported.

Wall Street certainly did provide easy credit which masked the destruction caused by Free Trade.

There was no 'destruction" caused by free trade. What Wall Street did was to securitize too many assets and tie them into the housing market. No nation has been ruined by free trade (some developing nations have struggled to develop with free trade because they are developing nations however). But no developed nation has ever been ruined by trade.

Wall Street didn't know what Wall Street was doing??? LOL, you've got a lot to learn. Wall Street certainly knew what it was doing.

Not really. If so, it would have recognized the massive risk it was taking on. Part of what triggered the initial crisis was when one of the financial heads of the big institution (I think it was Lehman Brothers) said he did not know how to value that securities of the firm.

Alan Greenspan himself, and many other experts, didn't quite know how to either. The ratings agencies didn't as well, as they rated them all AAA.

[Kyle]

Jul 7, 2010 23:34:44 GMT -6 nailbender said:

Look around, the US is in an economic death spiral, which globalization and free trade has played a pivotal role.

No it isn't. It is in a recession that was caused by two major blows to the economy, which affected the global economy as well. To try to blame free trade and globalization for this just does not hold water.

[fredorbob]

Jul 6, 2010 23:40:35 GMT -6 @Kyle said:

No it isn't. Beneficial means both individuals/companies engaging in the trade benefit, which overall benefits society.

Nope, your definition of "Beneficial" is where the rich get richer.

Black slaves in the 18th century were not working in businesses in a developing economy.

Yes they were. The US was developed, and they were working. A and B.

It also was not work they chose to do in order to be able to improve their lot in life. They were forced into it.

So what, everyone is forced to work less they starve.

Actually, I would say it is the people who demand to be paid highly for low-skilled jobs that are the "Meee Meee Meee" people. Free trade is simply aobut allowing individuals to engage in voluntary cooperation and trade with one another.

No, Free Trade is a transfer of wealth from the non-rich to the rich.

The housing bubble caused people to lose their jobs when it burst.

Wrong, people losing their jobs caused the housing bubble.

And inflation is natural in a modern economy, the important thing is to keep it low.

Gee, didn't you free traders claim there would be price deflation? All we see is price inflation, specifically on imported goods like OIL.

All foreign labor is not slave labor.

All foreign labor the 'Free Traders' which to exploit is slave labor.

That's because it isn't detrimental. The only times we have ever seen the trade deficit shrink or turn into a trade surplus were in times of economic hardship.

Wrong, trade surpluses happen during economic booms, this is an economic hardship, and tadda, guess what, we got a massive trade deficit.

I'm not talking about a trade deficit here, I'm talking about one country doing things like currency manipulation, stealing intellectual property, etc...from another country's businesses that want to do business with it. That has to stop.

Liar, all Free Traders are against the patent system.

We are not a socialist society. We are a free society. No one is entitled to employment from a company.

And if we had it your way, nobody would be employed, hardy har har. Except the super-rich.

If a company can get work done cheaper, and even better quality, with overseas labor, that is its right.

That is slavery without the whips and chains.

It should not be forced to have to employ artificially-higher-priced labor who often (not always) are lazy and entitlement-minded and will not even work hard.

See, by default the Free Trader assumes Americans are:

1) Lazy
2) Entitlement minded
3) Over payed

Big Business doesn't solely make use of foreign labor. BTW, if you want Big Business to gain a real monopoly, push for a high living wage. You'll destroy all small businesses in America.

See, the Free Trader thinks that high wages (for Americans only of course) are bad and do bad things. He wants slaves. All Free Traders want slaves.

That's what the mining companies who turned their workers into slaves did during the 19th century. They had a monopoly due to no competition from foreign mining companies.

LOL, you Free Traders bitch and moan about "Unions", you don't care what working conditions were before the big bad "Unions". Hypocrite.

And the trade deficit also does not weaken the dollar.

Still living in La-La land. Trade deficits do weaken the dollar retardaroono.

That does not even make sense.

You're a free trader, of course it wouldn't make sense, you don't understand anything.

The dollar influences the trade deficit.

No, the trade deficit weakens the dollar.

During the 1990s, when we had a strong dollar, so we had a large trade deficit,

Nooo, During the 1990's the US was growing into a large trade deficit. It is this decade where the trade deficit has really hit.

Now that we have a weak dollar,

Thanks to the trade deficit

imports are more expensive,

Because of the trade deficit

while our exports are more attractive...

Wow amazing, our exports are attractive and we still maintain a 700 billion a year trade deficit. Holey Moley I guess them Chinese still earn 50 cents an hour.

The weak dollar shrinks the trade deficit.

Wrong. The weak dollar did not shrink the trade deficit because the vast difference between Chinese and American wages.

And now with this recession, the trade deficit is shrinking even moreso.

Wrong, the trade deficit has not shrunk.

Slaves cost money regardless of whether you pay them or not. and of course cotton increased in prices over the years, deflation doesn't occur as time goes on.

Cotton increased in price over the years because your beloved slavery acts as a quasi-monopoly.

Accept for the most part, the opposite occurs. Argentina enacted a lot of protectionist measures over the years, only to destroy much of its economy.

China enacted a lot of protectionist measures over the years, and it boosted their economy.

The United States opened up more trade during the 1980s and in particular during the 1990s.

The United States destroyed it's industrial base and middle class in the 1990's.

Millions of new jobs were created and the unemployment rate shrank consistently.

Millions of high paying jobs were destroyed, and the unemployment rate grew consistently.

The fact is that free trade creates jobs and increases society's wealth.

The fact is that free trade destroys jobs and decreases society's wealth.

Translation of term "Society's Wealth": The Rich's Wealth.

Because that's how humans create wealth in the first place. Through trade.

Wrong, labor creates wealth, not trading.

A relatively unskilled person does not deserve an artificially high wage,

Like a Communist, you think you can dictate how much somebody earns, instead of letting the market decide. And if Free Trader's like you deem someone earns too much money, you bring the foreign slaves in.

American business can compete fine so long as it can produce good quality products at a competitive price.

See, by default you assume American business cannot produce good quality products at a competitive price.

Income is not going to occur if a company's goods are priced significantly higher than their competition's

Income always occurs when there is labor.

Of course imports are more expensive now, as the dollar has weakened.

Imports are more expensive because the Trade Deficit has destroyed the dollar.

Remember, Americans export MORE than any other country.

Wow, must be magic, it couldn't possibly have anything to do with the size of the country.

We just happen to import even more than we export.

Noooooo way Jose.

A weak dollar helps our domestic manufacturers by making their goods more affordable to people in other countries

That's funny, last time I checked, the dollar was weakened, and the massive trade deficit remained.

We've had some significant inflation since that 1980s (I think the dollar has lost something like 90% value since the late 1970s).

Inflation primarily from imports, or what the illegals make.

Yes, and they'd go up a lot more if they had to be manufactured stateside,

See, by default the Free Trader assumes that American products are crap. Free Traders hate America, they want to destroy America.

You want to create slavery, kill free trade.

Free Trade=Slavery

You'll have big American corporations dominate completely certain industries,

Which shouldn't bother you Free Traders since Free Traders love monopolies.

Nope, free-trade equals anti-slavery.

Free Trade=Slavery, Confederate Romanticist.

Free traders understand (or hold the worldview, even if you consider it incorrect) that infringing on free trade is precisely what leads to horrible working conditions from big corporations as they can then dominate an industry completely.

That's funny, the total opposite is true. Big corporations dominate certain industries and their cheap foreign labor have horrible working conditions. It's like you say one thing, and the total opposite is true, isn't that amazing.

Foreign labor does not need to be paid the same as domestic labor, as they are cheaper but for them that is very high pay, however foreign labor that is literal slave labor is wrong.

50 cents an hour is slave labor.

[fredorbob]

Jul 7, 2010 23:57:57 GMT -6 @Kyle said:

It is in a recession that was caused by two major blows to the economy

Free and Trade, two major blows.

[fredorbob]

Jul 7, 2010 23:55:09 GMT -6 @Kyle said:

Credit literally froze

No, credit did not freeze.

jobs and industry were not exported.

Jobs and industry were exported.

No nation has been ruined by free trade...But no developed nation has ever been ruined by trade.

Except of course, African colonies, Ming Dynasty, and the BLACK PLAGUE, among many other examples of how trade destroys. lol Morans.

Not really. If so, it would have recognized the massive risk it was taking on. Part of what triggered the initial crisis was when one of the financial heads of the big institution (I think it was Lehman Brothers) said he did not know how to value that securities of the firm.

Alan Greenspan himself, and many other experts, didn't quite know how to either. The ratings agencies didn't as well, as they rated them all AAA.

Alan Greenspan, Lehman Brothers, Goldman Sack. Bohoo, those are "SERVICE" Industries, they are called "SERVICE" industries because they "SERVICE" Industry. No Industry=No Service.

Service Industries are like Utilities, but if nobody is home to buy the water, then the water utility company aint going to get payed. You free traders destroyed Industry, therefore you also destroyed the "SERVICE" Industries that depended on Industry.