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Post by fredorbob on Jul 15, 2010 8:21:07 GMT -6
Yes, but most services are something you can do without, if push comes to shove. If I don't have much income, I'm not going to be paying money to a dog groomer, I'm going to wash Fido myself. The only services I'm going to pay for would be something like automotive repair. When I lost my job and had minimal income, I did not avail myself of a hairdresser, a laundry, a pet groomer, or even a doctor. The guy lives in la-la land.
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Post by fredorbob on Jul 15, 2010 8:23:45 GMT -6
Nope nope nope nope aaaaand nope. Everyone in the world cannot be in service. We all cannot be lawyers and sue each other, or doctors and over-charge each other. Dishwashing is a service job and leeches off of manufacturing. No it doesn't. Services are one form of wealth, there is goods as well (manufacturing). In fact, much manufacturing couldn't exist without services. Who would maintain the industrial equipment and machines and so forth. Goods and services tie together nicely. Of course not everyone in the world can be in service. Everyone in the world cannot be in manufacturing either because then there'd be no one to maintain anything or clean anything. Wrong wrong wrong wrong wrong. I can't believe someone would dispute this: "Everyone in the world cannot be in service. We all cannot be lawyers and sue each other, or doctors and over-charge each other. Dishwashing is a service job and leeches off of manufacturing." You're a nut.
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Post by fredorbob on Jul 15, 2010 8:30:43 GMT -6
^^Free Traders^^
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Post by unlawflcombatnt on Jul 16, 2010 2:25:28 GMT -6
Yes, that's what happened until it became easy for productivity-increasing American capital to flow into cheap foreign labor markets. Thanks to American overseas investment, many foreign workers have been made nearly equally productive as American workers, but still produce at a fraction of the cost. It's impossible for American workers to compete with such low-wage workers on the basis of production costs, when American capital equipment investment has made them equally productive. For a lot of industries, this may be the case, but you are forgetting that there are a great many industries where this is not the case. Also remember the following that goes back to a central point of mine: even if somehow China was capable of producing anything with lower costs than America or better quality or whatever (on quality they are very questionable), there is no way they could produce everything cheaper. Not true. With equal capitalization, assuming it increases productivity anywhere close to that of American workers, China could produce everything cheaper. And so far, everything they're producing that competes with American production they are producing cheaper. And even better (for American free traitor-investors), the stuff China produces breaks down sooner, causing an increase in production demand in American markets for replacements of the now non-functional Chinese-produced goods. Finally, remember that if Chinese workers get to be equal in productivity with American workers, their wages will not remain lower, they will become equal with Americans. No, they will not. There's no reason or logic as to why they would. Workers are paid according to the demand for their labor, not by how much they produce. Employers won't pay them a dime more than they have to pay them to keep them working, regardless of whether they produce 10 units of goods or 10,000 units of goods. It's the demand for labor and the supply of labor that determines wages, not how much labor produces. Comparative advantage, as I described in an earlier post, is one of the primary reasons why free trade works. Because even if one nation can produce things more cheaply than another nation, it cannot produce everything cheaper. As I stated in an earlier post, if capital flows across international borders it invalidates the Comparative Advantage doctrine. These aren't my words, these are the words of Comparative Advantages originator--David Ricardo. Why do you think foreign workers have lower wages in the first place? It's because they are not as productive. Productivity is the primary reason why American workers are paid so much. Half-way true. American workers were paid so much in the past because they were the only source of production for American markets, so the demand for their labor was high. Now that there are nearly as productive foreign workers available for a fraction of the cost, American labor is in lesser demand. As a result, jobs flow out of the United States into foreign labor markets. This happens because the price of foreign labor is much lower, despite them being somewhat less productive. Wages are exclusively the function of labor supply & demand, and have no direct relationship to productivity. If that Chinese labor sees the productivity of its workers begin to increase to American levels, then the wages of those workers begins to increase to American levels as well. Absolutely wrong. But more importantly, completely illogical. What mechanism would cause Chinese wages to rise when productivity rises? If the supply of labor still greatly exceeds the demand, then wages will not rise. Employers increase wages when they're forced to in order to keep workers, not because the workers produce more. Reduced demand will only occur with a fixed number of jobs, which doesn't happen. Again, use the machines and technology example. You could replace all sorts of jobs with machines and technology in manufacturing, and this is exactly what has happened over the years, it is why American manufacturing is so productive but also why employment within American manufacturing has fallen to an all-time low. You're contradicting yourself. If productivity increases--in theory--then demand for labor goes down, and jobs decline. That, as you're acknowledging here, would reduce demand. You're describing a scenario where the number of jobs decreases due to automation. That most certainly would reduce labor demand, employment, aggregate wages, consumer buying power, and production demand. My point is not even that extreme. My point is that even if there is no replacement of workers with machines/automation, there will be a loss of labor income if higher-wage workers are replaced 1:1 with lower-wage workers. And if aggregate labor income is decreased, so is buying power and the production demand so created. The end result would be a snowballing, self-perpetuating cycle of declining wages--> declining purchasing power--> declining sale of production--> declining demand for production--> declining demand for labor to provide production--> declining wages--> declining buying power--> declining demand for production--> declining labor demand------and on and on. But notice all this new technology is not destroying the economy or destroying jobs. No one is proclaiming we need to revert our industry back to 1800s technology You're right on that. What we are "proclaiming" is that production for the US consumer market needs to take place in the US. Also remember that 20 million American workers are not going to be replaced by 20 million Chinese workers, not unless the Chinese were equally as productive as the American workers, Actually, that's exactly what has happened, and is still happening. 20 million American workers have already been replaced by 20 million Chinese workers. That's because American capital has flowed into China to make those workers equally productive to American workers. And look at what the wages are of those equally productive workers--1/36th as much as those of American workers. Kyle, you need to get over the idea that increased productivity increases wages. It doesn't. It makes no sense that it would. It's an economic myth that has not only been conclusively disproven, but a myth that never made sense to begin with. You could have 5 million very productive American workers replaced by 30 million highly unproductive, low-wage Chinese workers, but this only would happen if overall production costs were still lower with the Chinese. Yes. That's exactly the point. It's a point I've made repeatedly, using actual numbers. If American workers are 10 times as productive as Chinese workers, but cost 36 times as much per unit produced, American worker will be replaced every time by greedy American free traitors. Infringe on free trade and this will happen, because the rest of the demand from all the countries outside America will be cut off. That cut in demand will reduce production, and will kill jobs. 90-95% of US production is purchased by US consumers at present. Cutting off the production demand from foreign countries would make a minuscule amount of difference on our economy. In contrast, cutting off the supply of imports that usurps production demand from American producers (and labor) would make a huge difference on domestic production demand, domestic labor demand, and the wages, buying power, and living standards of American workers. Now imagine a small country like South Korea or Japan being cut off from world demand, or even the United Kingdom. They could never sustain their economies on their domestic populations. Without free trade, they're back to Third World status. The British would starve because they would not be able to grow enough food to sustain themselves. And their population would be too small for any heavy-duty industrial products that need to be produced in large numbers. With world demand, they can produce far more and focus on the things they have a comparative advantage in, and trade those things for food. Immaterial. We're not any of those countries. The American consumer market is 20% of the world economy. Unlike Britain, South Korea, and Japan, we do have enough domestic production demand to sustain our economy. Unlike the aforementioned countries, we are not dependent on foreign demand to sustain our domestic industries. Again, our problem is that foreign production is displacing our own domestic production in the American consumer market. It will also result in cuts in all the things the American economy needs to import, further killing jobs. Wrong again. America needs to import oil and aluminum for production. And some food products (such as coffee) which are not essential. Cutting off anything other than our oil and aluminum imports would not be catastrophic to our economy (Though a lot of us coffee drinkers might have some issues.) Steel tariffs are a perfect example. Yes they are. They're a perfect example of absolutely necessary Tariffs, as cheap foreign steel has killed the US steel industry. If you enact more protectionism, you just make American goods even less competitive Wrong again. Tariffs make American goods more competitive in the American domestic market, where 90-95% of all American-produced goods are sold to begin with. And again, with the exception of oil & aluminum, there are no industrial materials we need to import. If productivity increases, incomes will increase, because workers are producing more. And because they produce more, they have more to trade, which means higher incomes..., If workers produce more, they essentially have more to trade, which thus means the company must trade them back equally No. The workers don't "trade" the goods. They produce them for the ownership. The ownership "trades" the goods. How much management receives in "trade" for the goods has no direct bearing on what they pay workers. If ownership can sell the production of a worker for 10 times as much as previously, there's no reason they'll pay workers a penny more. They'll only pay workers more if they must do so to keep them working. The demand for labor directly determines wages, not the sales revenue from the goods workers produce.
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Post by Kyle on Jul 16, 2010 9:41:52 GMT -6
Not true. With equal capitalization, assuming it increases productivity anywhere close to that of American workers, China could produce everything cheaper. No they can't. No country could do that. For certain things, they might be able to produce anything cheaper, but not everything. and that's just manufacturing, for everything overall, no way they could. For example in food production, we are far superior. Everything they produce that competes with American production is not cheaper, just a lot of stuff. As for if it breaks down sooner, that if anything will prevent a lot of American people from buying the Chinese-made products. I mean you could do that kind of thing domestically as well. Just produce a crappier product that is cheaper and see if people buy more of it. It's really their decision (pay less for a crappy product, or more for a quality product). Yes they would and yes there is plenty of reason and logic, namely that increased productivity increases incomes. That is how Third World economies rise to First World status. Of course demand comes into play, but the more productive workers are, the more they get paid. That is why the incomes per capita in the United States are among the highest in the world, because we have among the most productive workers. Supply and demand yes (that's why I have emphasized the minimum wage is bad, because it artificially increases the price of workers) determine incomes, BUT productivity plays a huge part as well. Remember, in a free-market economy, you're paid according to what you produce ultimately. Whoever can produce more is going to get paid more. You're misunderstanding the concept of comparative advantage. As I also showed, David Ricardo demonstrated the concept of comparative advantage with wine and cloth wih England and Portugal. What you are saying is true only if applied to certain industries. There are a whole lot of other industries where that is not true. For certain industries, yes, the pay was higher because American workers were the only source of labor. With competition from foreign workers, it can drive down pay in those industries. But jobs will only be outsourced in that instance for those particular industries and only if the cost of production is ultimately lower. Workers in American industries also came into more and more competition with machinery and technology over the years as well. But you have to keep in mind comparative advantage, along with the fact that when an industry was limited to high-priced American labor, the American people were limited to high-priced products. It's like with steel. Steel tariffs make the economy have to make due with higher-priced steel. This has effects on the rest of the economy. Today, incomes are among the highest they have ever been, and there are mulititudes of other industries that create jobs fo the economy. Again, remember it is not a zero-sum system. Cheaper foreign labor no more destroys jobs than machinery and technology that replace workers. Wages have a direct relationship to productivity across an economy. Keep in mind as well, more productive workers in an industry will mean fewer workers for that industry as well after a certain point. Nothing illogical about it. Chinese wages will rise because each worker now can produce far more than they previously could. This can decrease the demand for labor in the particular industry it occurs in, with lower costs of labor, but increased incomes for the workers. Increasing wages to keep workers is part of it, but productivity also plays a big part. Remember, the demand for workers in a particular industry is influenced a lot by how productive the workers are. The more productive the workers, for a given amount of demand, the fewer that are needed. But the productivity increases their incomes. Americans don't magically have very high incomes per capita because of nothing (or protectionism), we developed them from productivity. That's not what I'm saying and it would not reduce demand. Demand in fact will increase because the workers in the fewer jobs are paid higher incomes. It also frees up labor that is needed for other industries. Automation will decrease labor demand for that particular industry, employment for that particular industry, it will increase aggregate wages because the workers in said industry are so productive, plus more jobs are created elsewhere by the advances in technology and new industries, all of which increases consumer buying power, and hence production demand. Otherwise are you saying we should undo all of the automation and high technology that make our manufacturing sector so productive?? That would lower wages because the productivity of the workers would decline. Except most higher-wage workers are not replaced 1:1 with lower-wage workers, unless they were overpaid to begin with, which would mean the American people are having to pay higher prices for the goods being produced to protect that industry. Using lower-wage workers allows lower prices for the product being produced to be offered to the American people, which saves them money and allows increased demand for elsewhere. Higher-wage workers who are higher-wage because they are more productive would not be replaced 1:1, if at all. If so, it might be because the cost of production is still lower elsewhere, say due to cheaper steel for example (using the steel example again). There is no way everything the American consumer consumes could be produced within the U.S. Trying to do so would infringe on the ability to produce lots of other things that the U.S. is very good at, thus forcing Americans to have to pay for higher-prices and more lackluster quality all around for everything, as opposed to focusing on doing certain things very good and allowing other countries to produce other things that they have a comparative advantage in. Trying to do this as well would be the equivalent of trying to revert back to 1800s industrial technology to "create" a bunch of new jobs that have been "stolen" by machinery and technology. If they become equally as productive as American workers, their wages will become pretty similar. Cost of production could be lower if they have say an absolute advantage in a particular industry (say it is easier to acquire a certain raw material needed, or geography is a factor and theirs is more favorable, etc...). For example if tropical banana farmers become as productive as Alaskan banana farmers (I know there are no Alaska banana farmers, just making an example), the tropical bananas will have lower cost of production because the climate needed to grow them is provided for free, whereas in Alaska, it costs money. If wages are not equal, then they're not as productive. More productivity will mean fewer workers for that particular sector of the industry and wages will go up. Actually, it makes perfect sense and it has in no way been disproven, or the United States would not have the highest per capita incomes in the world. Increased productivity allows the economy overall to produce more goods and services, and hence more wealth. Because the country has more "stuff" to trade with other countries for other "stuff," standard of living goes up. That is virtually impossible; you are confusing cost of labor with wages. Cost of labor is measured in per unit of output. Wages are measured in per hour of work. American workers who are more productive will usually have a lower labor cost (lower cost per unit produced) than Chinese labor, even though their wages are higher. It would hurt it, and could really hurt certain industries, however because America consumes so much and has a large enough population, demand from the rest of the world could likely be cut off a good deal without necessarilly devastating American companies. But this debate is about free trade. Very few nations have any such ability. They have to have access to global demand for their goods and services, or it would devastate them completely. It also would make little sense to cut off foreign demand from American companies because what demand is cut off will result in lost jobs as production declines. Plus American consumers now have to make due with higher-priced products in many industries, which hurts the other sectors of the economy. Yes, in a negative direction. Cutting off imports would mean cutting off all of the goods and services that other countries have a comparative advantage in that America doesn't, which would force Americans to either: 1) Have to do without those products altogether, or 2) The domestic economy would have to try diverting resources to the production of those products, which would come out higher-priced and likely lacking in quality than they otherwise would, while at the same time all the things America is very good at producing because it has a comparative advantage in them would also be produced with lackluster numbers and quality as the country tried to produce the other things. So overall Americans would end up with higher-priced, and lackluster quality in everything. Again, no country can produce everything. It would also have the affect of giving certain industries a monopoly they otherwise wouldn't have, which would lead to higher prices as well and hurt the overall economy. But that isn't the argument. The debate is over free trade. What you're now essentially saying is that for most every country, free trade is essential, and enhances their standards of living but because of some cult of wanting everything consumed by Americans produced in America, you want to cut it off here (which has multiple problems as I've explained). Furthermore, I have had multiple people accusing me of being a "slaver" on this forum. What do you think happens to all those foreign nations if American demand is cut off from them? Third World farmers who can earn a good living by selling the crops they can grow better than America to America, while buying food grown elsewhere, are now back to square one. Workers in developing nations who can do work for wages higher than anything else available to them, are now out of a job and back to true slavery. What you are arguing for is a system that would hamper the American domestic economy and standard of living while destroying it outright for almost everyone else. It would condemn many people throughout the rest of the world to living in squalid poverty, while Americans would have to make due with less and lackluster quality of everything. You are using the zero-sum fallacy again. Some production in America will always be displaced by foreign production because of comparative advantage and absolute advantage. No country can produce everything, and even if it could, it could never produce everything of the quality it could be produced at if the country focuses on a few things and leaves the others to be produced by countries with advantage in those areas. You might be able to build better homes than me, be a better farmer than me, be a better clothing knitter than me, etc...but even if you can do anything better than me, you can not do everything better. If you tried to build houses, make clothes, farm food, etc...all at once, while I focused on just farming, I would produce more and better food than you. Even if you were so talented that you could farm food as good as me while also producing houses and clothes, you would come to realize that if you just focused on one item, you'd be able to produce it really good. The same applies to countries. America imports a heck of a lot more than that. The U.S. imports 100% of its bauxite, alumina, manganese, strontium, yttrium, along with others. It also imports 99% of its gallium, 91 percent of its platinum, 88 percent of its tin, 81 percent of its palladium, 76 percent of its cobalt, and 72 percent of its chromium. Who are you to say? Why should American consumers be forced to pay higher prices for domestically-grown coffee, when it is a lot cheaper to let the countries with advantages in growing it grow it, and trade it with us for the things we are truly good at growing? See above, our economy is far more dependent on imported materials than you might think. But for imported materials that we could mine here, but don't because of costs or environmental reasons, why should we then force American businesses to have to make due with higher-priced materials for everything? This again would yank up prices for all American goods and services that are somehow tied to those raw materials. You are ignoring the fact that in protecting the U.S. steel industry, you force American industry to have to purchase higher-priced domestic steel, which has led to a net loss of jobs in the American economy. It also artificially makes foreign countries cheaper to produce goods in simply because the price of steel domestically was yanked up. So basically to protect the U.S. steel industry, a whole lot of other workers had to lose their jobs because of overpriced steel. I meant on the global market, because protectionism will lead to shoddy quality. If 90-95% of American produced goods are consumed by Americans, than protectionism specifically benefits those companies, but it doesn't benefit the American consumer who have to make due with higher-priced products that are of likely lower-quality as the companies lose all incentive to keep innovating and investing. This also will hurt the rest of American industry, for example retailers, because products will now cost more. You are also infringing on people's right to buy from whomever they would like. The workers are trading their skills and services that lead to the production of the goods the company then trades. In a monopoly no, but with competition, wages get driven up. Or prices get driven down. Or both. If a company can get 10X the production out of one worker, they can pay their workers more to attract workers from other companies, or they can lower their prices to undercut their competitor. More productivity from workers means they can produce more however, which drives up their incomes, and/or allows the company to cut prices against competitors.
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Post by unlawflcombatnt on Jul 17, 2010 4:09:56 GMT -6
No they can't. No country could do that. For certain things, they might be able to produce anything cheaper, but not everything....Everything they produce that competes with American production is not cheaper, just a lot of stuff. Kyle, you can't just keep denying stuff that's obvious to everyone else. With equal, productivity-increasing capitalization, Chinese workers can produce everything cheaper. It's not even debatable. If you pay workers a 1/36th as much as American workers, they're more cost effective if they're greater than 1/35th as productive. And if they're only 1/18th as productive, then the labor cost per unit is 1/2 that of American workers. If wages are low enough, foreign workers can ALWAYS produce a good for less cost than American workers. This isn't just economics, it's common sense. As for if it breaks down sooner, that if anything will prevent a lot of American people from buying the Chinese-made products. Not true, and for several reasons. 1st, consumers don't know if it's going to break down so quick as to negate the price reduction. And since products are changed constantly, consumers never know the answer to that question. Consumers live in a constant state of suboptimal knowledge about the durability of any foreign made products, because the products are changed from 1 year to the next, to make any statistical analysis impossible. In other words, American consumers never know if the decreased durability of a cheap Chinese product will negate the price reduction or not. But what they do know is the current price, and how much less in the short-run it will cost to buy the Chinese product over the American product. Consumers purchase on what they're sure about, not what they perceive as a possible long-term shortcoming. Yes they would and yes there is plenty of reason and logic, namely that increased productivity increases incomes. Again Kyle, you can't just say there's logic when there is not any. There is no mechanism or logical reason why increased productivity would increase wages. None. Only increased demand for labor will increase wages, and that has nothing to do with increased productivity. If anything, there would be a negative correlation, as more workers would be needed for a given amount of production if their productivity fell. That is how Third World economies rise to First World status. No, it is not. 3rd world economies often rise because treasonous American investors chase the cheapest slave-labor on the planet they can find, which is typically in these 3rd world countries. Thus the capital that should have been going to make American workers more productive (and just keep them employed), has instead gone to 3rd world countries to exploit the impoverished state of 3rd world workers--who'll work for practically nothing since they have no other options. Of course demand comes into play, but the more productive workers are, the more they get paid. You just keep stating this, when neither facts or logic support it. You still haven't given a reason why wages would rise, despite being asked to do so multiple times. And you'll never come up with a reason, because there is none. Remember, in a free-market economy, you're paid according to what you produce ultimately. Whoever can produce more is going to get paid more. Kyle, have you ever had an economics course? Products and labor are priced according to their supply and demand. Whether labor produces a lot or a little has no direct bearing on labor price. Only the demand for labor in relation to the supply matters, just like with any other product or commodity. You're misunderstanding the concept of comparative advantage. As I also showed, David Ricardo demonstrated the concept of comparative advantage with wine and cloth wih England and Portugal. No, Kyle, it is you who misunderstands it. I know all about the comparative advantage examples given between England and Portugal. But the part you seem to be missing is that when production factors (capital) can move across international borders, it invalidates the doctrine of Comparative Advantage. Once again, these are Ricardo's own words. For certain industries, yes, the pay was higher because American workers were the only source of labor. With competition from foreign workers, it can drive down pay in those industries. But jobs will only be outsourced in that instance for those particular industries and only if the cost of production is ultimately lower. Exactly right. And that's exactly what's happening. American workers who are losing jobs to Chinese workers despite they're higher hourly productivity, because American labor's price exceeds they're increased productivity. If an American worker gets paid 36 times as much as a Chinese worker, he'd have to be 36 times as productive to compete on labor cost. Since it is impossible for an American worker to be 36 times as productive as an equally well capitalized Chinese worker, the American worker will always cost more on a per-unit basis--and thus will always be laid off in favor of a Chinese worker making 1/36th as much. The only exception is when there are no Chinese workers in a particular field that can compete with American workers. But you have to keep in mind comparative advantage, along with the fact that when an industry was limited to high-priced American labor, the American people were limited to high-priced products. It's like with steel. Steel tariffs make the economy have to make due with higher-priced steel. This has effects on the rest of the economy. Yes, it does. Higher wages provide Americans with more buying power, thus increasing the wage-financed demand for domestic goods, which fuels further American employment. Today, incomes are among the highest they have ever been, Just because you keep repeating a lie doesn't make it true. Real incomes for the top 2 % are off the charts. In contrast, the real incomes of the other 98% of Americans have fallen, and continue to fall. Wages have a direct relationship to productivity across an economy. Keep in mind as well, more productive workers in an industry will mean fewer workers for that industry as well after a certain point. Yes. And that would reduce the demand for labor--since less workers are needed, which would reduce wages. If anything, increased productivity REDUCES wages, because it reduces the demand for labor. Nothing illogical about it. Chinese wages will rise because each worker now can produce far more than they previously could. This can decrease the demand for labor in the particular industry it occurs in...but increased incomes for the workers. You're kidding, aren't you? Are you saying that Decreased demand for labor will Increase the price of labor? (i.e., "increased incomes for the workers") The more productive the workers, for a given amount of demand, the fewer that are needed. But the productivity increases their incomes. Are you completely oblivious to the contradiction here? If fewer workers are needed, there is less demand for their labor, and thus they can be paid less by employers to keep them employed--because the workers have less other job options (the definition of decreased demand for labor) That's not what I'm saying and it would not reduce demand. Demand in fact will increase because the workers in the fewer jobs are paid higher incomes. Workers in fewer jobs will be paid higher income? Really? So if there is less requirement for labor, management will pay workers MORE out of the goodness of their heart? If management suddenly has twice as many workers as it needs, it certainly is not going to pay the remaining workers more. Automation will decrease labor demand for that particular industry, employment for that particular industry, it will increase aggregate wages because the workers in said industry are so productive, Illogical gibberish again. Explain why workers are paid more when there is less need for them. If I have 2 jobs and 100 workers are applying for them, I can pay those workers peanuts. But if I have 2 jobs and only 2 workers applying for the jobs, I'll have to pay those workers a hell of a lot more to get them to work for me. I'm far more desperate for their labor if there are only 2 of them, than I would have been if there were 100 of them.
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Post by Kyle on Jul 17, 2010 8:52:32 GMT -6
Kyle, you can't just keep denying stuff that's obvious to everyone else. With equal, productivity-increasing capitalization, Chinese workers can produce everything cheaper. It's not even debatable. If you pay workers a 1/36th as much as American workers, they're more cost effective if they're greater than 1/35th as productive. And if they're only 1/18th as productive, then the labor cost per unit is 1/2 that of American workers. What is "obvious" to many people in economics is completely, 100% wrong oftentimes, that's why there are so many misconceptions. And yes, it is very debatable. No country can produce everything cheaper. That's an impossibility, because too much is produced. Now in some areas, a nation may be able to produce anything cheaper, but not everything. No it isn't. Because if their productivity is significantly less, their cost of labor can be higher. So it depends. There are other things that affect cost of production as well. Not at first they don't, however as reputation gets around, provided they are after a quality product, they'll start buying the more expensive brand that is of good quality. What would happen is that the people would stop buying the product (or products) from that particular company because of the low reputation for quality. But people also can remember. And if a company has a reputation for manufacturing products that are of shoddy quality, it's going to get noticed. If their products consistently have a reputation for higher quality, that will get noticed as well. Increased demand for labor will increase wages, but so will productivity (also keep in mind increased supply can decrease wages). And there is most certainly logic. It's basic economics. With increased productivity, more gets done. More gets produced. The wage a worker earns, if measured in units of output, equals the amount of output the worker can produce. If not, competitive firms have an incentive to modify the number of workers they hire in order to bring wages and productivity in line. If the wage was below productivity, firms would find it profitable to hire more workers. This would put upward pressure on wages and, because of diminishing returns, downward pressure on productivity. If the wage was above productivity, firms would find it profitable to shed labor, putting downward pressure on wages and upward pressure on productivity. The equilibrium requires the wage of a worker equaling what that worker can produce. Again, remember, you are paid according to what you produce in a market economy. Produce more and you get paid more. Also remember productivity is the most fundamental aspect of a nation's standard of living. Produce less and standard of living goes down. On the surface it may appear that way, but that is not how it works. This is like saying we should get rid of all the high-tech machinery and equipment that has allowed our manufacturing sector to become so productive over the years. By getting rid of it, we increase the need for workers in that industry. Increased demand for workers = lots of new jobs and increasing wages. Except that is wrong. Dangerously wrong. It would increase the need for workers, but their productivity would decline mightily. It would also short the economy of all the workers needed for all the other jobs that have been created from the gains in productivity over the years. Whether through decreased manufacturing output or decreased output elsewhere, it would cause the economy to take a net loss in production somewhere. With each worker producing less, they would be paid less. You seem to be hung up on the whole "slave labor" thing. You ignore that what can be legitimately called slave labor only occurs in certain countries. Of course the system is not perfect, but slave labor does not bring a nation out of Third World status, true slave labor in fact is what keeps them there. Third World nations rise out of poverty because they gain access to global markets where they can trade the goods and services they have an advantage in producing for goods and services produced elsewhere. In order to start economic development in such a nation, oftentimes the workers are going to work for far less than what American workers work for, even though to them those "slave wages" are among the highest they have ever seen. As economic development occurs, and competition occurs, productivity increases and wages get driven up. The country begins to produce more and more and thus, having much more to trade on the global markets, can then increase its standard of living a lot more as well. What you call "practically nothing" is oftentimes very high pay to them. On exploiting, that's a little more complex of an issue. Yes, big corporations oftentimes will exploit workers in ways they never could get away with in America, but the reason the workers work for them in the first place is because of the wages being better than anything else available. In general, provided the country develops correctly (which isn't always the case), economic development, laws, etc...are established as the country becomes a developed nation and thus such exploitation is ended. Most nations go through such a period early on in their conversion from undeveloped to developed nation. I'm not saying they should (I am sure most companies can provide safe working conditions for foreign workers even if they pay them far less than American workers, but not all do this unfortunately). I also find it odd that you have no problem harming these workers by destroying their nations' economies by cutting off all American demand for their goods and services, but then you accuse free trader supporters of wanting to do these people harm. On investment, plenty of investment goes to keep American workers employed, some of it foreign investment as well (foreigners invest in America too). But investment also goes elsewhere. Investors look to where they can create wealth. See above. Also see the nation's income per capita. Productivity, output per unit of input, is the fundamental determinant of the growth of a country's material standard of living. Americans are not among the highest-paid in the world due to high demand. Demand is not the sole driver of wages. Productivity is a huge driver as well. Workers get paid according to what they produce. Yes, supply and demand control pricing, but productivity also influences supply and demand. The main influencer of aggregate supply of goods/services, for example, is productivity. Whether labor produces a lot or a little has a significant bearing on labor price. In a free-market economy, anyone who produces little is paid little. Anyone who produces a lot is paid a lot. In addition to this, productivity influences demand for labor in a few ways, such as decreasing demand for labor in one industry while create a multititude of demand for labor in other industries as new jobs are created from new technologies and goods are made cheaper for the rest of the economy due to the increased productivity. Capital moving across borders can mess with comparative advantage and absolute advantage certainly. It can increase the productivity of a nation. But that doesn't change the fact that no nation can produce everything. Which means all nations will have a comparative advantage in certain things (also almost all nations retain an absolute advantage in certain things as well). It goes back to the chair and televisions example. Even if the U.S. has an absolute advantage in the production of chairs and televisions in comparison to another nation, it will only have a comparative advantage in one of them. Capital flowing to the competitor nation can change the degrees of this, but even if the competitor becomes equal in productivity with the U.S., both nations still only have comparative advantage with certain goods and services. An equally-well capitalized Chinese worker is going to end up with wages approaching those of the American worker due to their productivity. But you are also forgetting about absolute and comparative advantage for the production of goods and services. No it doesn't. Because while protecting one industry, you destroyed a bunch of jobs in others. You get a net loss of demand. The reality is that incomes per capita have been increasing constantly (up until this recession anyway). A true example of one group really gaining wealth at everybody else's expense would be the public-sector employees unions. They have consistently seen the incomes (wages, benefits, etc...) of their members rising, but they do this by robbing the public treasury, as all that is paid for with taxpayer money. These aren't workers producing wealth, they are organizations that take it to redistribute it to themselves. By that definition, American workers should have wages lower now than what they were in 1850. Yet the average American enjoys a wage so high that they are rich by global standards. You are ignoring two things: 1) Increases in productivity drive up wages as workers are producing more, even if fewer workers are demanded in said industry 2) Increases in productivity allow for cheaper goods and services for the rest of the economy which creates jobs, while new technologies also create new jobs. This is why even though we have seen consistent declines in farming employment, and in manufacturing employment, job creation and economic growth, along with income growth, has been consistent. If productivity goes up, of course it can. If the economy was a zero-sum game, maybe not, but the economy is not a zero-sum game. Increases in productivity create new jobs elsewhere. You are wrong. Your example only holds if you have a total decline in demand for labor across the whole economy, with no new jobs created. That isnt how productivity works. Productivity creates new jobs and allows workers to produce more for a given amount of work. So while demand for workers within one industry may decline with increased productivity, demand for workers in a multitude of other industries goes up. And the amount each worker can produce in the industries increases as well. This raises incomes. No, management will be forced to pay workers more because they are producing more. Again, think to machines and technology. By your understanding of it, increases in productivity via machines and technology in industry should have by now led to a permanent massive unemployment rate. This of course has not happened, because productivity leads to new job creation elsewhere by cheapening goods and services (which leads to new job creation), and creating whole new jobs. If those remaining workers are more productive, it is going to be forced to, because increases in productivity drive up incomes across the economy. This happens in all developed economies. It is why developed economies have among the highest GDPs per capita. They are producing more. Of course. But you have to take into account the economic affects of productivity across the economy.
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Post by fredorbob on Jul 17, 2010 17:44:45 GMT -6
Hehe, uhhh, no. If you ever had a real job in your life you'd know that producing more doesn't mean higher pay. There are plenty of people earning minimum wage who "produce more" then rich lawyers who don't "produce" anything at all. This guy is turning me into a Socialist. Oh well, that's what Free Traders do, they make Socialists, they are like Socialist Factories, turning out little Socialists left and right.
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Post by unlawflcombatnt on Jul 18, 2010 2:56:35 GMT -6
Kyle, you can't just keep denying stuff that's obvious to everyone else. With equal, productivity-increasing capitalization, Chinese workers can produce everything cheaper. It's not even debatable. If you pay workers a 1/36th as much as American workers, they're more cost effective if they're greater than 1/35th as productive. And if they're only 1/18th as productive, then the labor cost per unit is 1/2 that of American workers. What is "obvious" to many people in economics is completely, 100% wrong oftentimes, that's why there are so many misconceptions. Yes. And the oft-repeated statement that increased productivity increases wages is one of those "misconceptions." if a company has a reputation for manufacturing products that are of shoddy quality, it's going to get noticed. If their products consistently have a reputation for higher quality, that will get noticed as well. That's true in some a few areas, but not in most others. In many areas there are no higher quality alternatives, as in computers and accessories. Everything is made in China (or at least overseas), and all of it is garbage. There are no alternatives. If you want to use a computer, you buy from an American or Japanese-owned Chinese production facility. The performance, quality, and models available change so rapidly that previous reputation has no application. Everything is different with each new model and there is no way to compare previous reputation of a computer from 2002 with a computer from 2010. With computers, previous reputation means nothing--it is inapplicable to what's currently on the market today. Increased demand for labor will increase wages, but so will productivity (also keep in mind increased supply can decrease wages). Yes, to the latter (increased supply can decrease wages), but no to the previous (increased productivity increasing wages0. In fact, you've just elucidated the contradiction in that very sentence. Increased productivity increases supply, while increase supply decreases wages. So adding the 2 together, increased productivity decreases wages. Which makes perfect sense. If I'm paid hourly, and I routinely finish all my work 2 hours before my shift ends, then eventually my shift will be reduced by 2 hours. In this case, my increased productivity has reduced my overall income, by reducing the hours I asked to work. And there is most certainly logic. It's basic economics. With increased productivity, more gets done. More gets produced. The wage a worker earns, if measured in units of output, equals the amount of output the worker can produce. The wage a worker earns, has nothing to do with his output, unless he's being paid piecework (which is rare today). In fact, most worker are paid either salary or by the hour, neither of which income is affected by how much is produced. What they are paid is determined by what the employer must pay them to keep them employed, and whether there are enough workers of similar skills that they will work for less. In some limited areas--such as Wall Street bankers--they are paid more if they produce more phony profit. But even there, they are not paid a higher salary because of their increased pseudo-productivity. Instead, they are paid lump sum bonuses at the end of the quarter or year. Thus even here, increased productivity does not lead to baseline increase in wages. But most industries don't work that way. Doctors are paid by Medicare-determined fee schedules. Attorneys are paid by the number of billable hours they accumulate. Production workers are paid an hourly wage with their income being determined EXCLUSIVELY by how many hours they work, not by how much they produce. If the wage was below productivity, firms would find it profitable to hire more workers. No, they would not. This is your basic logical error. If the wage was below productivity (whatever that means, exactly), the company would not simply hire more workers. The company would only hire more workers if they needed them to produce more goods to fulfill increased consumer production demand. If there was no increase in consumer production demand, companies would not hire any more workers. The hiring of more workers has nothing to do with productivity, and everything to do with demand for the goods produced by those workers. If consumer demand increased, and worker productivity increased, LESS workers would need to be hired to fulfill the increased demand, than would have been needed if workers were less productive. This would put upward pressure on wages and, because of diminishing returns, downward pressure on productivity. This is wrong on 2 counts. 1st, it doesn't put upward pressure on wages. 2nd, nothing "puts downward pressure on productivity." That's an oxymoron. Companies always try to increase productivity because it reduces their labor costs for a unit of production, and it reduces the demand for labor, and thus puts downward pressure on wages. Increased productivity suppresses wages, because it reduces labor demand. Again, remember, you are paid according to what you produce in a market economy. Produce more and you get paid more. No, that's not true. You are not paid more for producing more if you work for wages or are on salary. Produce more and management gets paid more, not the hourly-waged or salaried employee. Also remember productivity is the most fundamental aspect of a nation's standard of living. Produce less and standard of living goes down. That's true. But the standard of living only goes up to those who share in the rewards of that increased productivity. And if management keeps all the gains from increased productivity, then no one's standard of living increases except that of management. This is like saying we should get rid of all the high-tech machinery and equipment that has allowed our manufacturing sector to become so productive over the years. By getting rid of it, we increase the need for workers in that industry. Increased demand for workers = lots of new jobs and increasing wages. At least on the last sentence, you're right. Increased demand for workers absolutely means more jobs and increased wages. Except that is wrong. Dangerously wrong. It would increase the need for workers, but their productivity would decline mightily. It would also short the economy of all the workers needed for all the other jobs that have been created from the gains in productivity over the years. No, to the contrary, what you've said is wrong. There is no such thing as "shorting the economy of workers." When the economy is "short of workers," it's forced to pay them more to get them to work. And that increases wages. And with 99 million non-employed workers at present, it is absolutely impossible for this country to ever be short of workers--at least not in our lifetimes. Whether through decreased manufacturing output or decreased output elsewhere, it would cause the economy to take a net loss in production somewhere. With each worker producing less, they would be paid less. No. Workers would only be paid less if there was less demand for their production. You seem to be hung up on the whole "slave labor" thing. You ignore that what can be legitimately called slave labor only occurs in certain countries. What is can be legitimately be called slave-labor income occurs in a lot of countries. Historically slave-owners have taken care of their slaves, providing them with food and shelter. Today's slave-labor wages don't even provide for that, in many cases. So today's slave-labor is in many ways worse off than actual slaves were historically. True slaves were rarely in jeopardy of starving to death, unlike today's slave-labor in China. Third World nations rise out of poverty because they gain access to global markets where they can trade the goods and services they have an advantage in producing for goods and services produced elsewhere. No, the functional owners of these 3rd world slaves (often Americans), are the ones who reap the benefits of slave labor. These modern day Simon Legrees treat their slaves no better than they have to in order to keep them working. If they'll work for $1/day, that's what today's Free-Traitor Simon Legrees will pay them. If they starve to death on that amount, it's no problem to Free-Traitors. There are plenty more impoverished workers where those workers came from. In order to start economic development in such a nation, oftentimes the workers are going to work for far less than what American workers work for That's because that's all that America's Free Traitors have to pay them to get them to work. And with starving, unemployed workers, any income is better than none. And slimebag Free-Traitors take full advantage of these workers' easy exploitability, and use them to replace less-exploitable American workers. And as a direct result, aggregate world wages are driven downward, because higher paid workers are replaced with lower-paid workers. And when aggregate world wages are decreased, there is decreased aggregate worker-consumer buying power, decreased sale of production, decreased demand for production, decreased demand for labor to provide production, and decreased wages and employment as a result. Thus, the end result of replacing higher-paid American worker with lower-paid foreign workers is decreased world employment and wages. As economic development occurs, and competition occurs, productivity increases and wages get driven up. The country begins to produce more and more and thus, having much more to trade on the global markets, can then increase its standard of living a lot more as well. Finally. Yes, they CAN increase the living standard of their workers. But they are not forced to, either by economic demand or by law. And as a result, their standards of living do NOT increase. In fact, they are worse than ever for the average 3rd world worker (as opposed to the new slave-owner corruptocracy class that has developed in places like China. Interestingly enough, it is these parasites who are interviewed by the American media to show how "good" things are in these 3rd world countries, not any of the large majority who live in abject poverty.) What you call "practically nothing" is oftentimes very high pay to them. On exploiting, that's a little more complex of an issue. Yes, big corporations oftentimes will exploit workers in ways they never could get away with in America, but the reason the workers work for them in the first place is because of the wages being better than anything else available. Yes, anything is better than starving to death in the next 24 hours, which is exactly the situation most of China's 100 million transiently employed workers live in. In general, provided the country develops correctly (which isn't always the case), economic development, laws, etc...are established as the country becomes a developed nation and thus such exploitation is ended. You're kidding, aren't you. China has developed into a combined Corporate Fascist--Crony Capitalist state, where the workers are treated worse than Americans treat their own farm animals. I also find it odd that you have no problem harming these workers by destroying their nations' economies by cutting off all American demand for their goods and services, but then you accuse free trader supporters of wanting to do these people harm. Truth be told, I'm most concerned about American free traitors wanting to lower American living standards to those of the 3rd world workers they exploit, by forcing American workers to compete for wages with foreign slave labor. That's what I'm "accusing" you American free traitors of.
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Post by Kyle on Jul 18, 2010 9:19:34 GMT -6
Yes. And the oft-repeated statement that increased productivity increases wages is one of those "misconceptions." Productivity increasing incomes is a basic facet of economics. It is one of the principle determinants of a nation's standard of living. All of it is not garbage. There are high-quality computers and accessories out there. You can also have a shop custom-build you one or custom-build your own if you prefer. Most PCs are just assembled using parts made in special manufacturing manufacturing facilities. Apple makes some very high-quality products. Would have to disagree; if a company is reknowned for putting out shoddy-quality computers, that will get around, especially today with the Internet. Packard-Bell had this reputation for example. No it doesn't. Increased productivity helps increase the supply of workers overall by creating new jobs elsewhere by allowing for new and more products and markets. This increases the production of goods and services, which raises incomes and raises standards of living. You also need to look to reality; what you claim simply doesn't happen. No economy experiencing consistent increases in productivity consistently sees declining wages. You are ignoring that increased productivity allows a worker to produce more. If the company you work for provides you with some form of tool or machine or whatnot that allows you to become significantly more productive, and even for the company to not need as many workers for that particular job, this contributes to incomes across the economy to begin increasing. Because workers are able to produce more for a given amount of time and also more workers are now freed up for new job creation. That's the thing, jobs are created faster than people in the economy. The reason there's enough people to consistently fill all the new jobs created is because of consistently increasing productivity in various industries which allows fewer workers to do the work for those particular industries, thus freeing up workers for new jobs. They're both affected by how much the worker produces. Supply and demand will affect pricing as well, but the annual increases in incomes are because of increasing productivity. That is part of it. But they are also paid according to how much they are able to produce. Wall Street types are paid by how much wealth they produce; if they create more wealth, they will be able to demand a higher pay later on or at other firms. Not all Wall Street folks create phony wealth. Wall Street is a crucial part of the economic system, and no more, or less, corrupted than labor unions, or any other big corporations or the government agencies. That's not free-market, that's quasi-socialist. Medicare is essentially a single-payer government-run health insurance company. I would not use lawyers as an example either. The legal profession protects itself enormously. That said, lawyers will see their overall incomes increase over the years as the economy gains in productivity as well. It is determined by how much they produce as well. This is just a basic facet of all industrialized economies. As workers become more productive across the economy, they are paid more. Remember, increased productivity allows new job creation as well, so the economy is constantly producing more goods and services, which increases GDP per capita. You basically have constant new job creation and constant increases in productivity in all those jobs, followed by even more job creation, and so on. This increases incomes consistently. And their income is not determined exclusively by how many hours they work, it is also determined by the supply and demand of the workers, as you've said before. If the wage is below productivity, it means that the worker is being paid a lot less than what they should be. What this tells the company is they can then hire more workers and thus get a lot more stuff produced for a cheaper amount of money. They could then in theory offer cheaper prices then competitors. However, hiring more workers forces wages up because in order to attract said workers, the company is competing in the free-market with other companies for them. And if you could steal some of that demand from competitors by being able to produce the same amount for lower prices, you'll seek to hire some more workers. You're making a logical error here though, assuming that the economy is just a zero-sum game. Again, this is why with massively increased productivity in fields such as agriculture, manufacturing, etc...we have seen employment within those particular industries decline, but we have seen massive job creation overall within the whole economy, and continued increases in standard of living. It's not an oxymoron. Seeking additional workers means you have the company competing for more workers, which puts upward pressure on wages. Diminishing returns puts downward pressure on productivity. This is a concept of economics that basically holds that if one input in the production of something is increased while the other inputs are held fixed, eventually you reach a point where additions of the input yield smaller and smaller increases in output. Companies increasing productivity does reduce their labor costs for a unit of production and it does reduce the demand for labor within that particular specialty or industry, etc...but it also leads to much more job creation elsewhere through cheaper, and more, goods and services, freeing up of labor for other industries, and the fact that the workers within the now more-productive industry are producing more, all of which drives up incomes across the economy, including among the more productive workers. No it doesn't. The economy is not fixed. It grows constantly. Increased productivity is part of what allows it to continue growing, by freeing up labor for the new jobs and by leading to cheaper goods and services, which then makes the new jobs more productive, thus leading to more job creation, and so forth. Your scenario only works if the economy is fixed in size, in which no new jobs are ever created, in which case then yes, increased productivity will reduce labor demand throughout the overall economy. But that doesn't happen. Keep in mind, a lot of things people think are fixed in an economy are not. The supply of money is not fixed. Wealth is not fixed. The number of jobs is not fixed. What you're claiming will cause declines in employment within certain industries, but that is made up from all the new jobs created elsewhere due to freed up labor and cheaper good/services available to them. That would happen if there's only one employer within an industry. But there isn't. There is competition within most industries and companies have to compete with one another for workers, which forces gains from productivity to be shared with workers. Management doesn't keep all said gains though. They will try, but there are other variables affecting that, such as competition with other firms for workers, shareholders, competition with other companies over who can offer better prices, etc... Completely wrong. Increased productivity in things such as manufacturing and agriculture are what has allowed people to be freed up to produce other goods and services in the economy. If you remove that productivity, in which far more workers are needed again for manufacturing and agriculture, all those workers in other industries are going to be needed for manufacturing and agriculture. Which means either those other industries would lose a massive number of workers, or manufacturing and agriculture would drop in output a massive amount due to lack of workers to make up for the lost technology. You don't understand. You destroy productivity, pay will go down, not up, because each worker produces a lot less and there simply are not enough workers to meet the demand, no matter what anyone is willing to pay (which wouldn't be much because the industries would be being destroyed). You might increase worker pay within a certain industry, but you are going to do it by cutting pay or raising prices elsewhere. You will either raise prices in certain industries due to offering increased pay to attract workers (which then will cut other industries of the workers they need and raise prices in them as well), and what this will do is thus lower pay across the board because the entire economy is now having to make due with far more expensive goods and services. You essentially will turn back into luxuries what were commodities. We are in a recession right now. During periods of full-employment, it is quite easy for the nation to be short of workers if you short productivity. If everyone is employed, aside from the few changing jobs here and there (which leads to the normal low amount of unemployment seen in a healthy economy), and then you make it where 20 million new workers are needed because you destroyed productivity, the economy is simply going to produce less, because there are not enough workers to make up for the lost productivity. Prices will skyrocket for the industries with a lack of workers, which will hurt the whole economy, thus cutting off production even further. So the economy will produce fewer goods and services, and standard of living will decline. That will happen when the prices of what they produce go way up due to the shortage of labor and lack of production in the economy. Other jobs only can exist due to previous jobs having increased productivity. End that productivity, and someone takes a loss, which means higher prices, which hurts the whole economy and reduces production. You keep thinking of this stuff in terms of individual industries and zero-sum economies, instead of how the economy works as a whole. Not true. Otherwise, no one would work for those wages in those countries. They work for those wages because they are a good deal higher than what they've been able to work for before. Depends on the type of labor in China. Also, foreign labor is not all in China. Much foreign labor work hard for their "slave" wages because they are high wages to them. They don't work for that amount in the first place unless it is high pay to them. That's how they attract such workers in the first place. Also, you're ignoring my point, which is that Third World nations rise out of poverty because they gain access to global markets where they can trade the goods and services they have an advantage in producing for goods and services produced elsewhere. You cut them off and THAT enslaves them as they cannot produce and trade anything. They have alternative incomes, those particular incomes are among the highest however. You also just made part of my point: suppose they do have no alternatives? So you want them to remain in squalid poverty the rest of their existence? Even if foreign companies pay them less than you think they should, at least they are paying them something, and as economic development occurs within the nation, this leads to increasing pay and rising standard of living. That is what happened in Chile, in Taiwan, in Japan, in South Korea, Britain early on, etc... You also made another point: let's say foreign companies go and pay foreign workers equally with what they pay American workers. In many an instance, foreign workers are STILL going to be cheaper overall to use for production, because their country has an absolute advantage or a comparative advantage in the production of goods and services. So outsourcing will still occur. You call them that but then you have no problem cutting off such countries from American demand, which would hurt them a lot. You are again assuming the economy is a zero-sum game and forgetting about job creation, productivity, and comparative and absolute advantage. What you claim simply doesn't happen. In fact, free trade consistently has been driving up incomes in both First-World countries and the developing nations. For example, America has seen consistent increases in incomes and China has been seeing consistent increases in incomes. Doesn't happen. America is made up of 50 economies, and they all trade with one another (and compete with one another). You do not see free trade among the 50 state economies driving down incomes. You do not see free trade among the 50 state economies reducing demand. The reality is that free trade, by allowing goods and services to be produced in the most ideal places for their production, along with increasing productivity, leads to increased incomes across the board, and rising demand for everything. This happens within the United States, it also happens within the global economy. Zero-sum fallacy again and ignoring of how free trade works. You are assuming there's some fixed number of jobs countries have to compete over (which isn't true). You are ignoring the facts of comparative and absolute advantage. It's the same fallacy as in claiming that replacing higher-paid American workers with machines decreases employment and incomes. Doesn't happen. The above won't remain in liberal democracies. As economic development occurs, and competition occurs, wages, incomes, productivity all get driven up, simply via natural economic forces. Laws and regulations are created. That is what happened in the United States, that is what happened in England, in Japan, in Taiwan, in South Korea, etc...it may struggle to some degree in China because China is not a liberal democracy. They are governed by a thuggish dictatorship. So you want to cut off demand for the goods/services of all foreign nations, which would condemn these people to poverty forever? You are also forgetting that not all developing nations are dictatorships. Japan wasn't. South Korea wasn't. Taiwan wasn't. England wasn't. Chile wasn't. India, one of the primary developing nations right now, most certainly is not. Liberal democracy is a key component for developing nations. With a dictatorship, that messes things up. See above. China is not a liberal democracy. But many other nations are (that started off as developing nations) and you would destroy their First World status by cutting off a huge chunk of the demand for their products. You have no understanding of how free trade works. If you want to lower American living standards to those of the Third World countries, infringing on trade is exactly what you want to do. It will destroy jobs by forcing much of American industry to make due with higher-priced goods and services, it will cut off a lot of goods and services that cannot be produced in America, it will force goods to become overpriced because people will have to buy from domestic companies solely, and also because in trying to produce goods that previously were produced overseas, it will mean half-heartedly producing the goods we are very good at. Which means everything will be produced with lower quality.
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Post by waltc on Jul 18, 2010 11:11:47 GMT -6
ULC
I doubt kyle has ever set foot in let alone worked in a manufacturing environment given his comments. Because if he had he wouldn't be spewing the bullshit he has wrote so far on the topic of wages and productivity.
In short the guy is a troll.
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Post by Kyle on Jul 18, 2010 11:50:44 GMT -6
ULC I doubt kyle has ever set foot in let alone worked in a manufacturing environment given his comments. Because if he had he wouldn't be spewing the bullshit he has wrote so far on the topic of wages and productivity. In short the guy is a troll. Nope, just stating facts. The facts are pesky things, but they are what they are. And the fact is that increasing productivity causes incomes across the economy to increase.
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Post by fredorbob on Jul 22, 2010 0:14:28 GMT -6
ULC I doubt kyle has ever set foot in let alone worked in a manufacturing environment given his comments. Because if he had he wouldn't be spewing the bullshit he has wrote so far on the topic of wages and productivity. In short the guy is a troll. Nope, just stating facts. The facts are pesky things, but they are what they are. And the fact is that increasing productivity causes incomes across the economy to increase. Only for the rich.
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Post by fredorbob on Jul 22, 2010 0:15:04 GMT -6
ULC I doubt kyle has ever set foot in let alone worked in a manufacturing environment given his comments. Because if he had he wouldn't be spewing the bullshit he has wrote so far on the topic of wages and productivity. In short the guy is a troll. He's a spewer of talking points, nothing more.
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Post by unlawflcombatnt on Jul 25, 2010 4:16:10 GMT -6
Yes. And the oft-repeated statement that increased productivity increases wages is one of those "misconceptions." Productivity increasing incomes is a basic facet of economics. It is one of the principle determinants of a nation's standard of living. I just can't let this one go. "Productivity increasing incomes" is a basic fairy tale of economics. There is no logical mechanism that forces workers' incomes to rise, simply because they produce more. And, if demand remained constant, the increase in productivity would decrease the demand for workers, thus DECREASING incomes. Yes, the "productivity increases wages" myth has been espoused by economists--liberal and conservative alike--and it still has no logical basis. The following statements epitomize the illogical arguments Kyle makes: You have no understanding of how free trade works. If you want to lower American living standards to those of the Third World countries, infringing on trade is exactly what you want to do. It will destroy jobs by forcing much of American industry to make due with higher-priced goods and services, Even if that were true, how does that destroy jobs? If those "higher-priced goods and services" come from American production, it will increase employment in the the areas that make those "higher-priced goods and services." it will cut off a lot of goods and services that cannot be produced in America What goods are you referring to? There are few goods and services that can't be produced in America. We need to import some aluminum if we can't recycle what we already have. We can't supply enough oil to supply our own energy needs. At present, can't grow enough coffee and bananas to supply our own needs (but could certainly do so if the demand was high enough). But there's not any manufactured good we can't produce in this country, and there's not any manufactured good that wasn't already produced in this country at some earlier time. So there certainly are not "a lot of goods and services that cannot be produced in America." it will force goods to become overpriced because people will have to buy from domestic companies solely Yes, it will probably raise prices some. But it will increase employment more, and the end result will be that, in aggregate, Americans will have more wage-financed buying power due to increased employment and upward pressure on wages from increased domestic demand. and also because in trying to produce goods that previously were produced overseas, it will mean half-heartedly producing the goods we are very good at. Which means everything will be produced with lower quality. That's outright ridiculous. It make no sense, and is the thought product of someone who lives in a closet, and who's only source of news is Fox News (at best). Assuming there's even a thread of logic in the above statement, it insinuates that there aren't enough workers in the US to produce all the goods we need. And if that actually is what you are insinuating Kyle, you're out to lunch. There are almost 100 million working age Americans who are not working. There are thousands, if not hundreds of thousands of engineers who are out of work in this country. There are thousands, if not hundreds of thousands of high-skilled industrial workers in this country who could be working in manufacturing, but are no longer doing so due to outsourcing. Your suggestion that Americans aren't capable of producing a sufficient amount of high-quality goods for themselves is idiotic, and frankly, un-American.
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Post by waltc on Jul 25, 2010 9:27:51 GMT -6
Kyle is just a collection of Free Trade talking points as pointed out by Fred.
His whole modus operandi has been from the beginning to bowl us over with his torrent of talking points. He didn't even care from the outset that a lot of his talking points are really insulting to working class people besides being bullshit.
I'm sure he'll go places in economics or being a shill for CATO as both put a premium on promoting toxic economic agendas that are deadly to the West and enrich a relative handful of people.
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Post by Kyle on Jul 25, 2010 14:10:56 GMT -6
I just can't let this one go. "Productivity increasing incomes" is a basic fairy tale of economics. There is no logical mechanism that forces workers' incomes to rise, simply because they produce more. Yes there is, as I have explained above. That is how GDP per capita increases; by increasing productivity. Zero sum fallacy again. You keep assuming that there is a fixed number of jobs and a fixed amount of wealth. There isn't. Again, see my posts above. By your standard here, we should rid industry of all productivity and resort back to the most unproductive means possible to "create" a bunch of jobs. The problem is then you destroy all the other jobs that the produtivity resulted in. Wrong. Productivity is the fundamental means by which economies increase a nation's standard of living. Yes, and it will correspondingly destroy employment in all the other areas that now must take a hit because of the increased prices of those goods and services that could have been acquired cheaper elsewhere. It also shorts the areas of goods and services the U.S. is very good at of labor they need. Steel tariffs protect the steel industry, but they force the rest of the economy to make due with higher-priced steel, which kills jobs. Various goods that cannot be produced in America, or that can be produced far cheaper and better elsewhere due to advantages in other countries. Again, no country can produce everything. At the detriment of the things we are good at. So we'd end up with over-priced, lackluster quality coffee and bananas and over-priced and lackluster, and fewer numbers of the things were are truly good at. Much better to focus on the things we're good at, and leave coffee and bananas to the countries good at those. This way everyone gets good coffee, bananas, potatoes, corn, oranges, etc... The Untied States can produce mostly anything, but again, being able to produce anything is not the same as being able to produce everything, which the U.S. cannot. There are certain things that other countries are much more advantaged at producing than the U.S. This is a myth. You will see increased employment in the protected industries, which will be at the detriment of the rest of the overall economy, where unemployment will occur. Higher prices will mean people and businesses have overall less money and will buy fewer goods and services. That's outright ridiculous. It make no sense, and is the thought product of someone who lives in a closet, and who's only source of news is Fox News (at best). Assuming there's even a thread of logic in the above statement, it insinuates that there aren't enough workers in the US to produce all the goods we need. It actually makes perfect sense. No nation can produce everything. All nations have certain advantages in producing certain things over others. A nation has to focus on the things it is good at producing, and then trade those for things it doesn't produce with nations that produce them well. Look at England. The English haven't produced enough food to feed themselves in decades. They import a lot of it. Because other countries are advantaged in food production much more so. To try to force all food production to be domestic in England, it would mean lackluster food quality for the English and lackluster quality in all the things they are good at producing as those things have to be sacrificed to focus on food. Most unemployed right now are due to the recession, not the outsourcing. Yes, certain individual industries lose out to outsourcing, but those lost jobs are replaced by the creation of new jobs, which occur due to productivity increases and cheaper goods/services available. I could take your quote and apply it to machinery and technology: "There are thousands, if not hundreds of thousands, of highly-skilled industrial workers in this country who could be working in manufacturing, but are no longer doing so due to machines and automation." Yet machines and automation increase productivity, and free up labor, and cheapen goods, which allow far more jobs to be created elsewhere. You try to employ all your manufacturing workers through protectionism, you'll protect those industries, but you'll destroy far more jobs elsewhere. America can produce plenty of high-quality goods for itself and does so, but it cannot produce everything for itself. The high-quality goods it produces for itself are due to allowing other countries to focus on other goods we are no advantaged in producing.
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Post by proletariat on Nov 5, 2010 16:02:27 GMT -6
This is the biggest neo liberal fairy tale. goo.gl/Z0BWg The Hawley-Smoot had absolutely no effect on the depression. In 1929 the trade balance was .3 billion and dropped to .1 billion. In contrast GDP fell from 103 billion to 56 billion. What does this mean our trade balance worsened 1/5th of 1% of 1929 GDP. This is hardly a rebuttal of tariffs. Most of our history we have relied on tariffs and it has created a strong U.S. manufacturing base that is directly connected with our national security. Today we have the opposite problem as the Hawley-Smoot myth. I put into evidence GW Bush's 2006 hanger tariff as a result of unfair trade practices. Unlike the Big O he chose the highest level and two American hanger factories that were shut down since the 80's opened their door. One of those hanger factories was in WI. Tariffs do change the balance of power. We have an 80-90% consumption based economy. Every ounce of consumption or stimulus goes to fund another country's economy. In our current economy the only thing tariffs will do is create an atmosphere of US production. Tariffs need to be at such a level where corporations lack the incentive to move over seas or at least to make foreign products cost neutral with American regulations.
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Post by waltc on Nov 5, 2010 19:02:10 GMT -6
Proletariat
The Kyes, Goolsebees and Krugmans of the world couldn't care less. All they care about is keeping people ignorant and passive enough so they don't notice they are getting poorer and poorer while other nations enrich themselves at our expense. And don't forget all the American executives, academics and politicians who benefit $$$ as well.
But soon Americans will notice the evil that has been perpetrated on them by the likes of these men and their associates in banking, Wall Street and the various "think tanks" and their collective fates won't be pretty.
Just wait when the GOP gets rid of the 99 month unemployment extension and all the other jobless benefits, we'll start seeing ugly real fast.
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Post by unlawflcombatnt on Nov 6, 2010 1:17:22 GMT -6
This is the biggest neo liberal fairy tale. goo.gl/Z0BWg The Hawley-Smoot had absolutely no effect on the depression. In 1929 the trade balance was .3 billion and dropped to .1 billion. In contrast GDP fell from 103 billion to 56 billion. What does this mean our trade balance worsened 1/5th of 1% of 1929 GDP. This is hardly a rebuttal of tariffs. That was my main point when I started the thread. I actually hadn't been aware of this prior to writing it. I had assumed--wrongly--that times were different then, and since we had an alleged trade surplus (which I later found out was minuscule), that Tariffs would have a beneficial effect today--despite their effect in the 30's. Of course as statistics now show, the Smoot-Hawley Tariff made practically no difference on the Great Depression. Today, however, Tariffs would make a huge difference in a positive direction for the US, since we sell little in the way of exports, compared to what we import. Moreover, most of what we export are raw materials, which will not be affected by retaliatory Tariffs--since countries importing raw materials from the US will still need those raw materials. In contrast, Tariffs on imported manufactured goods will have a tremendously positive effect on our trade deficit and our economy. There are NO manufactured goods we can't produce in the US. A complete cut-off of manufactured imports to the US would be a huge plus and huge stimulus to our manufacturing sector. A 100% Tariff on anything from China is the bare minimum we need to impose. A 200% to 300% Tariff would be much better. So what if they go to the WTO and claim unfair trade practices. We just won't pay the fines the WTO imposes. And if they don't like it, tough sh**. Our so-called trading "partners," are nothing but parasites to begin with, and are feeding at the American taxpayer trough through US taxpayer-funded stimulus that is leaking out into purchase of foreign imports. It's time for an out-and-out trade war. This is one war the American people are guaranteed to win, since it is their jobs, spending power, and standard of living that are being exported. Meanwhile, Wall Street and Corporate American are reaping the benefits from shipping jobs overseas, and the offsetting of the resultant decreased consumer spending power with increased credit. Amen. That level is at least 100%, and probably more like 200-300%.
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Post by judes on Nov 6, 2010 11:59:51 GMT -6
Exactly!! What I'd like to see is a study showing the damage that has been done to the economy since tariffs were removed, that is so obvious anyone can see but where are all the academics on this issue, instead they all want to point to non existent harm done by imposing tariffs when so much damage has been done by removing them and it's obvious to anyone with a brain just look at where we are in the face of all this free trade, how's it working out for everyone??
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Post by proletariat on Nov 7, 2010 5:23:03 GMT -6
Yes but even liberals and progressives take the myth as fact.
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Bobby the Back Judge
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Post by Bobby the Back Judge on Feb 11, 2011 17:51:10 GMT -6
I rule that Kyle has won by 17-6.
I also rule that, as a continent, Africa has won the tariff war by a landslide.
PS. Angola's capital Luanda is the proud owner of the number 1 spot as the most expensive city in the world to live in. I suggest one should look at what your hardearned dollars will buy you in a country with high tariffs. $15.000/ month for a studio anyone?
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Post by fredorbob on Feb 11, 2011 18:34:04 GMT -6
Reading Boby the Back Judge's comments got me thinking.
You know if a miracle did happen and we did manage to elect true American pro-Tariff patriots and actually pass Tariffs, then Free Trader's would practice economic terrorism against this country.
Libertarian hackers would attack websites with viruses.
The Federal Reserve is run by Free Traders, they could jack up interest rates real high.
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Post by waltc on Feb 12, 2011 0:26:11 GMT -6
Judes
The academics for the most part are tools for the corporate elite. You have a few outliers like Michael Hudson and Ravi Batra but they are considered heretics by the academic community.
And worse the few that do criticize it, get almost zero air or print time. You don't see Hudson or Batra getting column space in the NYT or LAT even though these are supposedly liberal newsrags(they're only liberal on social issues in reality). TV media is even worse.
Proletariat:
The reason many progressives and liberals either support or don't care about the damage free trade is they are Marxist in their social outlook but when it comes to economics they side with the elite.
BTW this isn't my view but one taken from a Michael Hudson interview when he was asked why liberals in America have often sided with the corporate elite over the people.
One only has to examine the lack of traffic to those sites hosted by liberals who condemn free trade and off shoring. It's of no interest to these people.
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Post by unlawflcombatnt on Feb 12, 2011 1:22:15 GMT -6
Judes The academics for the most part are tools for the corporate elite. You have a few outliers like Michael Hudson and Ravi Batra but they are considered heretics by the academic community. Exactly. Funny thing is, if you ever read Hudson or Batra, their assertions are really indisputable. Both back everything with logic and statistics and make such airtight arguments that free traitors hate to acknowledge that they even exist. Batra declared outright that he was a protectionist back in the 1990's. And then he laid out a perfectly reasonable and logical case as to why why he was. But the Corporatist media just hates logical arguments that make them look like the lying, greedy, stupid, self-serving asses that they really are. Such arguments get you banished from mainstream coverage. ---------- One of Hudson's contentions is that the Democrats have become a party of interest groups only, not a party of the people in general. My interpretation is that they've focused almost entirely on social issues, while ignoring the economic issues that affect the overwhelming majority of Americans. Of course it's convenient and expeditious to focus on social issues alone. That way they can avoid pissing off their rich campaign contributors who would oppose economic positions that benefit the middle class and working class, at the expense of the rich elite. Obama is a classic example of one such phony liberal/progressive/centrist. He works against anything that might be detrimental to the economic interests of his rich globalist, financial industry, and Wall Street friends. He even parrots the B.S. from the military-security-spy industry complex--since they're also major benefactors of Federal Government largesse, and big contributors to his election and re-election campaigns.
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Post by fredorbob on Feb 12, 2011 6:55:14 GMT -6
While the intellectuals in their monocles debate and analyze the Great Depression, free trade, tariffs, international trade; American lives are being destroyed by the tens of millions, and the world's largest Communist country with the world's largest ethnic group (Han Chinese) is being heavily industrialized and militarized.
*takes off monocle* This shit can get real bad, real fast.
*puts monocle back on* Indubitably Watson.
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Post by blueneck on Feb 12, 2011 8:08:41 GMT -6
This is one of the globalist statements that always defies logic. they throw it out there like gospel yet can point to nothing to support it
what new jobs, what new investment elsewhere? the capital that gets "freed up" just goes into the latest bubble - it generally does not get reinvested in actual productive pursuits
also the automation statement - usually made by those with no knowledge of automation or manufacturing. I have asked many times what new automation technology has been created that accounts for the precipitous loss of jobs and factories in the last decade? robots? - nope not changed much in 20 years, machine tools? nope - mature technology, machine controls? like PLCs and CNC? been around 30 years plus.
the fact is that automation requires high volume repetitive operations to justify its cost. high volume production of course is the most vulnerable to offshoring because its more profitable to produce in a low cost country than it is to invest millions in complex automated equipment
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Post by blueneck on Feb 12, 2011 8:36:24 GMT -6
ULC I doubt kyle has ever set foot in let alone worked in a manufacturing environment given his comments. Because if he had he wouldn't be spewing the bullshit he has wrote so far on the topic of wages and productivity. that is exactly right waltc. anyone who makes such blanket assumptions and generalizations as well as spout unsubstantiated "facts" about manufacturing and automation couldn't possibly have any real world knowledge of or experience with manufacturing and automation
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Post by unlawflcombatnt on Feb 12, 2011 10:59:15 GMT -6
I just can't let this one go. "Productivity increasing incomes" is a basic fairy tale of economics. There is no logical mechanism that forces workers' incomes to rise, simply because they produce more. Yes there is, as I have explained above. That is how GDP per capita increases; by increasing productivity. No, Kyle, you haven't explained anything. You've simply made unsubstantiated and illogical assertions--none of which are true. Increased GDP per capita does not mandate wage increases. It is permissive for higher wages, but in no way does it increase them by itself. Only increased demand for labor increases wages. And if that demand can be suppressed--such as by outsourcing jobs to another (and cheaper) labor market--then labor demand does NOT increase, and neither do wages. All one needs to do is look at China for proof. Increased productivity has very little wage-increasing effect on Chinese wages, because there is a huge surplus of labor in China. It's estimated that 100 million Chinese workers are transient, temporary workers with no permanent jobs. This makes them readily available for any employment where there might be a shortage of labor, thus muting the effect of any localized increase in demand for labor. The end result is that the typical Chinese production worker still makes less than $1/hour. And this makes him an ideal candidate to replace an even 2-fold more productive American worker making $18/hour. In this scenario, the labor cost of a unit of Chinese product vs. US cost is 1/9th as much for the Chinese worker. This labor cost gap is not something that can be bridged by "increased productivity" by American workers, who are no better capitalized than their Chinese counterpart. The American worker's "deficit" is not in lack of training, education, or job skills. It is the American worker's deficit in survival skills that is lacking. It is the American worker's inability to survive on the $4-$8/day wages of his Chinese counterpart. No. Yours is a "zero sum" argument, with "zero" logic behind it. If the increases in productivity are shared with workers via wages, it increases their ability to purchase their own production, thus increasing demand for production, thus driving and motivating increased productivity. No. Increased productivity increases the potential to increase a nation's standard of living. But if the benefits of the increase go only to the select few at the top--as they have in this country--it does not increases anyone else's standard of living. Yes, they CAN produce everything. In fact, we DID use to produce everything we needed in this country. And we still could, if it wasn't more profitable for traitorous American Corporations to ship production and jobs overseas to take advantage of slave-wage labor. Bullshit. We'd end up with better coffee and bananas. Yes, it might cost more. But it would be more than made up for in aggregate by the employment of more workers, coupled with the overall wage-increasing effects of increased American labor demand. On that we agree. Wrong again. The increased employment in the "protected industries" will more than offset any theoretical unemployment elsewhere. Much of the newly unemployed may be due to the recession. But even here, production jobs are being actively lost due to outsourcing, as plants close in the US and move production overseas. But worse still was the pre-recession, pre-existing loss of jobs to outsourcing, which is making it much harder, if not impossible, for us to come out of this recession.
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