Cheap Products vs. High Wages... Americans Want BOTH!

Discussion in 'Economics' started by gnome, Aug 29, 2008.

  1. Joab

    Joab


    He wasn't speaking literally, he was speaking figuratively.

    As a generalization Canadians are far more educated in social matters and human rights.

    Americans are generally educated with the emphasis on making money, rather then contributing to society as a whole.
     
    #41     Aug 30, 2008
  2. awaiting proof of this. wutangdummy is an idiot, so figuratively, he is a moron.
     
    #42     Aug 30, 2008
  3. It's a never ending cycle though. Adapt or die. First your shoe factory clothes down, and maybe (if the region is lucky) a microchip plant is opened down the road. 20 years later that is shut down and (hopefully) a genetic research centre opens up. It's only a matter of time when other parts of the world will catch of in the biotech sciences and threaten those jobs in the US.

    What is the alternative? Shutting down the borders and freezing trade via tariffs? That doesn't increase wealth, it destroys it over the long term.

    There is the fabulous case study of Fiat (Italian car company) - having trouble competing with cheap cars from Japan in the early 80s - asking the government to impose tariffs on imported cars. The government complied - trying to save Italian jobs. What happened is that Fiat over time became a slow and lazy company. Product quality and innovation flatlined as there was no competitive need to improve. 10 or so years later they were almost bankrupt and had to be bailed out by the taxpayer. They were completely uncompetitive and - and as a result almost went under.

    Blocking free trade and imposing tariffs will maybe guarantee a certain job for the next 2, 3 or 4 years as its lifetime is artificially extended, but it will never ever make a job last forever in international competition. It can delay the inevitable, but eventually economic reality will take over.

    Also, let's not forget, the more less complex labor is outsourced to emerging markets, the more time the developed markets can free up in order to work on more advanced things (again, those who don't invest in human capital will lose out over time). If we still spent all our time planting soybeans, wheat and growing rice or sewing shoes and shirts then who would make Swiss watches, Hollywood movies, German cars or develop and market an iPhone?
     
    #43     Aug 30, 2008
  4. Dear Foot In Mouth:

    You are making a statement that if a country opens its borders wide open to foreign competition, it's good for the country and the respective industries, and conversely, if a country closes its borders to foreign competition then it's bad for that country (and the companies in the respective industries).

    So I guess you have been buying up GM and Ford stock since NAFTA and WTO????? How much money are you making on those trades?????
     
    #44     Aug 30, 2008
  5. It doesn't help that the American government encourages debt by making mortgages tax deductible in the US. It's quite easy to use a home equity loan for personal consumption. Very few other countries allow this deduction. It would be virtually impossible in a democratic system for any politician to remove this deduction. The vast majority of voters would never have the foresight to recognize the problem of subsidizing debt with government funds.

    The taxes not taken in because of deductible mortgages also adds to the total debt of the American government thereby compounding the problem. Does anyone know who was the brilliant politician in the US who was behind making mortgages deductible?
     
    #45     Aug 30, 2008
  6. Did you read my post at all? I said uncompetitive jobs must either compete or disappear. If GM can not compete against Asian and European car manufacturers it must a) try to become competitive through efficiency, effectiveness, technology, marketing etc. asap b) close down and its workers must move to other industries which offer better international competitive advantages. What do you think would happen to GM in 20 years if the US would block all foreign car imports and US customers were only allowed to buy Ford, GM and Chrysler. How competitive would GM be in 20 years? Do you realize that without international competition there is no growth in wealth and no incentive to advance technology?

    What country grew rich by blocking trade and closing down its borders trying to shield it's own jobs from international competition? The old Soviet Union? Cuba? Venezuela?
     
    #46     Aug 31, 2008
  7. The real problem is people take too much for granted. My grandfathers both worked union factory jobs but they were hardly "rich" by any means. Both had extremely tiny houses, eating out was a luxury, no cell phone, internet, cable bills, blah blah blah.
    People that make 30k and bitch they have no money simply don't want to live how the people who had good union jobs lived 40 years ago. If they did, the net difference between wealth would be zero between the two.
    If you think our standards of living are not higher today, maybe after you have a 3rd heart attack and are still living you will see that our "high health care costs" are actually worth every penny.
     
    #47     Aug 31, 2008
  8. jdeezero05, excellent post. I find posts that are raving about the 'workers paradise' of the 70s which supposedly had a great standard of living for everyone to be anecdotal at best (if not illusionary).
     
    #48     Aug 31, 2008
  9. A lot of countries are blocking their borders to imports, that's what so hard to understand apparently! The US however is a wide open free market. Illegal immigrants, cheap goods from the 4 corners of the earth, outsourcing, nothing is too difficult.

    Other countries (like the asians) protect their industries at home while encouraging them to compete worldwide. Yes, a soviet union style closed border system won't be good, but that's not what they are doing, they are doing asymmetric trade.

    Not to mention they are not following fair trade, government subsidies, cheap financing from government owned banks (to undersell everyone else) and many other institutions directly put in place to support industry simply don't exist in the US. Add to the fact the average company only cares about the next quarter, and you have a big problem.
     
    #49     Aug 31, 2008
  10. Somebody sure has brainwashed you. I only wonder who it was and what their motive was.

    That speculation as to cause and effect on Fiat is nonsense.

    In the 1950's and 1960's Ford and GM were very sucessful busineses, and more importantly, the towns in which those companies built cars were thriving relative to what has happened to those towns (and companies) since "free" trade has overtaken the globe.

    If you take jobs out of a country, you hurt the economics of the country. Are you going to argue that point? Get your mind off of the bottom line of corporate balance sheets and think about towns and cities. What percentage of jobs has left the US because of what has happened to the automotive industry over the past serveral decades? What does that do to our tax base, our GDP, and our crime rate? Why does Detroit have such a high crime rate? It its day Detroit had the lowest umemployment and highest wealth and now its a sewer. Why should cities, towns, and states spend TAXPAYER money trying to lure business while Washington is running business offshore? It's plain stupid.

    The idiots in Washington are banking on techonology saving us. Well let me fill you in on a little secret - technology can be done fron anywhere. It's only a matter of time before the US crashes bigtime. This financial mess may be the beginning of it and it may not; time will tell. But one day it's going to catch up to us.

    The way a country, city, state, company, family budget or any other entity suceeds is by taking in more then goes out. With all of our trade and jobs going offshore we are sure to fail financially. If you "live below your means, save and invest" you will suceed. Take away the input on that (your income) and where will you be in the future? Dead! Take the jobs out of the US and the US will be dead.
     
    #50     Aug 31, 2008