. Fearless9: How long do you think it will be before Boeing and Airbus pass work along to China. These corps are the flagships of the western world. ******* December 11, 2006 SouthAmerica: Today Embraer the Brazilian company (the third largest airplane manufacturer in the world) â already has an agreement with the Chinese to build jetliners in China. It will be just a matter of time before Embraer move to the number one spot in that industry. .
I haven't forgotten the human side. Im just looking at things from the other side of the fence. Each US citizen that gets fired feeds several Chinnesse citizens. With the model of tariffs you propose you obtain the same result, delaying the problem. You're not dealing with the problem itself. Tarifs might aliviate things in the short term, like taking an aspiring to control an internal infection... it might make you feel better inmediatly, but the solution to the problem becomes more painfull with everyday that goes by. Lets say you're running your own bussiness. A coffee shop. Your income regardless of how many people you employ is $60 an hour. You have to pay $10 an hour to all your workers, so you do your microeconomic analisis and determine that the optimun number of people you can hire is 5 employees. You are giving wages of $50 total per hour with a profit of $10 an hour. One day the unions tell you that your salaries must go up to $12 an hour. Now your costs jumped from $50 to $60 an hour eliminating your profit and you have to fire 1 employees to keep only 4. reducing the wages you pay to $48 in wages and being short handed one employee, but your profit went up to $12 an hour. On the other side of the fence, Jhon got fired from his job at the cofee shop. Since this change came from the unions then all the coffee shops suffered a similar effect, and you have hundreths of unemployed coffee shop operators looking to work. Jhon is willing to work for $10 an hour or even less [anything beats $0] but no one can hire him, since they can't pay him what he's willing to earn. So as Friedman stated many years ago, unions benefit a few people while creating unemployment for most people. According to Friedman's theories. One solution to the outsourcing problem might be getting rid of all unions and letting the labor market float freely. You wont get as good a wage as if you where with the union, but you'll have a job. Plus... if everyone's wages go down, you'll have deflation instead of inflation making everything cheaper, and making the US a less attractive customer to the outside world and solving the trade deficit. So when you lose your job, dont blame the Chinnesse or the Southamericans, blame the unions.
Actually in simple terms it means we buy their stuff, they don't buy ours. We buy their socks and VCRs and they, instead of buying our Boeings or our weapons keep our dollars or buy our debt. Our dollars and our debt are our IOU obligations, we owe them, they own us, or soon will.
Good point SA. Embraer make an excellent product. I live in Buenos Aires and travel alot to Panamà plus I am getting to know Brazil although of course one needs to break it up by region. The potential in latin america is enormous. Whether it can be harnessed properly is quite another story but my advice to anyone thinking of commenting on south america without extensive first hand experience ... dont
Well yes, but if you where to buy your own production you will still lack the money flowing inwards. It's not very different from running a compnay, if others buy what you sale you have cashflow, if you buy your own production you have Enron.
The controlled chaos of latin american countries is quite an interesting economic model. But I agree, you must live it in the flesh to understand it. Is there much outsourcing happening in argentina?
Not really, there is nowhere to send it. Chinese goods are filtering in, but mainly goods are Brazil and Arg. Uruguay has set up a service call centre, now employing 800 people after 3 years. The brainchild of an Uruguayan who got tired of working in wall street and went to India and setup a co operative deal. So you have English speaking Latinos using indian knowhow and it is working very well. The big problem in arg is capital. The arg's are bringing their money back into the country but mainly for real estate since they do not trust the meddling gov and of course the international banks still have bad memories. Chavez has been useful in soaking up local bonds. Anyway, we dont want too much success here as it only causes problems. We have been here for 3 years and it is a great lifestyle. In fact el caribe, Brazil and Arg really know how to live life.
Caribean is great. Live in Costa Rica myself. There's thousands of people being employed by outsources here snd business keeps growign every day.