Toward Sensible Debt Reduction

[Andrew D]

You do not understand the facts.

You should try presenting some relevant facts instead of just a suggested reading list. (You should also learn how to spell "comparative".)

Yes, we have a trade deficit. And?

And? And? And it blows this:

The wages paid in India or Jordan raise their std of living and allow them to buy US-made goods.

completely out of the water.

Even if people in India or Jordan (or any of the many other countries which I already mentioned) have had their standards of living raised, they are not buying enough US-made goods to alleviate our trade deficit.

No one is buying enough US-made goods to alleviate our trade deficit. All the countries in the world combined are not buying enough US-made goods to alleviate our trade deficit.

You should just admit that you do not care about most Americans' standards of living.

[Andrew D]

I said once before:

You are way too focussed on who produces the cheap shit you consume. Here's a not-so-much-a-secret: China is already moving its economy away from producing cheap shit for Walmart. They have already figured out that it's a dead end. In 50 years time the world's most powerful economies will not be manufacturing-based.

Somebody is going to be making things. It can't be a dead end for everyone, unless no one makes anything anymore.

You have one of the world's most educated workforces, and you want them to, what? Sit on a line making sneakers? Your economy could do that when you had an underclass of black and hispanic and female workers who were ready to work for pennies. You don't have that anymore, unless they are illegals. Time to move on.

There are millions of adults in the US who do not have even high school diplomas. (The highest State-by-State high-school-graduation rate in the US is 88%.)

They are not equipped for work requiring advanced education. But they are well equipped to sit on a line making sneakers.

And they could feed and house and clothe and educate their families by sitting on a line making sneakers, if sitting on a line making sneakers were a good-paying job.

Which it would be, if the people doing it did not have to "compete" with workers in

the Czech Republic. Or Hungary. Or Poland. Or Russia or Mexico or Romania or Brazil or South Africa or Thailand or Tunisia or Ukraine or Jordan or Morocco or Egypt or Sri Lanka or Senegal or India or Kenya or Vietnam or Ghana or Pakistan or Bangladesh or Madagascar or ....

I am not "way too focussed on who produces the cheap shit [which many Americans] consume."

My focus is on ensuring that Americans have good-paying jobs (with decent hours, working conditions, etc.), so that they can buy the things which those good-paying jobs produce. (Remember Ford?)

What we have now is a classic race to the bottom. So-called "free trade" depresses wages in all high-wage countries. And that impoverishes working people in those countries. And the US is -- or, at least, was and should be again -- one of those countries.

And the US has the muscle to change that. What we evidently lack is the will. And specious anti-"protectionist" arguments contribute to that lack.

[Scooter]

Somebody is going to be making things. It can't be a dead end for everyone, unless no one makes anything anymore.

Manufacturing is going to be the province of emerging economies where wages are still low enough to make it profitable. That's just the way it is going to be.

There are millions of adults in the US who do not have even high school diplomas. (The highest State-by-State high-school-graduation rate in the US is 88%.)

They are not equipped for work requiring advanced education. But they are well equipped to sit on a line making sneakers.

And they could feed and house and clothe and educate their families by sitting on a line making sneakers, if sitting on a line making sneakers were a good-paying job.

You're missing the big picture. Right now, the cost of manufacturing the sneakers amounts to pennies on the dollar of the retail price. Increase the cost of manufacture to provide a "good-paying job" for American workers, and the price of those sneakers increases beyond the point that most people would want to buy them, including those workers with those new, "good-paying" jobs. Not only does that mean that there won't be anywhere near the number of "good-paying" manufacturing jobs you anticipated, but that there will be "good-paying" American jobs lost in product development, marketing, distribution and retail that currently account for 85-90% of the value of those sneakers.

The question you need to ask yourself is whether it is better for American workers to share in 85-90% of a larger pie, or whether you insist on 100% going to American workers, except out of a much smaller pie, such that, overall, American workers are actually worse of.

And much the same principle applies to a whole host of goods that are manufactured overseas.

My focus is on ensuring that Americans have good-paying jobs (with decent hours, working conditions, etc.), so that they can buy the things which those good-paying jobs produce. (Remember Ford?)

And my pont is that a lot of good-paying American jobs are dependent on being able to manufacture products cheaply overseas, and use the talents that Americans are good at to bring them to market at home. Insist on manufacturing everything in the U.S., and a lot of those jobs disappear.

[rubato]

You do not understand the facts.

You should try presenting some relevant facts instead of just a suggested reading list. (You should also learn how to spell "comparative".)

Yes, we have a trade deficit. And?

And? And? And it blows this:

The wages paid in India or Jordan raise their std of living and allow them to buy US-made goods.

completely out of the water.

Even if people in India or Jordan (or any of the many other countries which I already mentioned) have had their standards of living raised, they are not buying enough US-made goods to alleviate our trade deficit.

No one is buying enough US-made goods to alleviate our trade deficit. All the countries in the world combined are not buying enough US-made goods to alleviate our trade deficit.

You should just admit that you do not care about most Americans' standards of living.

I presented some relevant facts with the chart showing how much of a pair of $100 sneakers goes to china.

I can buy the same shoes today for almost exactly the same price as I did in 1984 (about $70 +/- ) because manufacturing is cheaper in other countries and thus I can spend more on vacations, dinners out &c. In other words my standard of living is higher than it would be because this job went to someone overseas (whose std of living is higher as well); I can pay for "shoes + a dinner out" where if the shoes were made here and the wages paid were as high as I would like I would get "Shoes" only and some American would have a dead-end job which will probably give him a repetitive motion injury and the waitress (who we usually tip $20) cook, restaurant owner, would lose income as would the local farmers &c.

And you really need to read some of the basics. You are making a really dead argument here. The history of the corn laws, JS Mill, and Ricardo really hammered the idea that restricting trade, in the way you suggest is an advantage, to death.

Ricardo pointed out that it made more sense for Portugal to make wine and England to make cloth and then have them trade with each other. England got better and cheaper wine from Portugal and Portugal got better and cheaper cloth than they could make for themselves. In other words both were better off and both had a higher std of living by doing the things for which they have a comparative advantage. The same is often true of labor costs.

Because of free trade there is nearly always a deficit in some direction or other. It does not matter as much as, or in the way, you think it does. Currently, part of the difference is returned by people buying 10-year US securities for 1.27% (fri.).

(You should also learn how to spell "comparative".)

Perhaps I should learn how to type more accurately too. But you should learn to leave out uselessly pissy comments, especially when you are arguing a dead point.

Let me just leave you with something else to think about. The enormous hydroelectric dams on the Columbia river produced a huge surplus of electricity once wartime arms production shut down. And when you have a large surplus of something it is cheap. The process to refine aluminum from bauxite requires large amounts of electricity so it made sense to locate aluminum production along the Columbia river and ship the bauxite (or some intermediate like aluminum oxide) there to be refined.

You can see here that the comparative advantage of cheap electricity helped make the US the global leader in Al production until sometime after 1990 and by 2000 as the w. coast electricity shortage drove prices up our advantage has been reduced and production has gone down. Japan made a significant amount of Al for only 15 years and then shut down in about 1980 because it made no sense to make it with their very expensive electricity.




yrs,
rubato

[Andrew D]

Right now, the cost of manufacturing the sneakers amounts to pennies on the dollar of the retail price.

Because the companies which manufacture the sneakers -- or which own the companies which manufacture the sneakers, etc. -- are able to pay the people who actually make the sneakers wages which do not enable them to buy the very sneakers which they actually make.

Increase the cost of manufacture to provide a "good-paying job" for American workers, and the price of those sneakers increases beyond the point that most people would want to buy them, including those workers with those new, "good-paying" jobs.

Do you have evidence that paying those who actually make the sneakers a decent wage would increase the prices of the sneakers beyond the point that most people would want to buy them? I very much doubt that such evidence exists.

If it is true, as one of rubato's charts apparently indicates, that wages account for only 0.4% of the total money spent on on making and selling Nike shoes, then what happens if the workers are paid a decent wage? If the workers' wages are increased by a factor of 10, the total cost of making and selling Nike shoes goes up by a factor of 0.25.

Do you really think that an increase in the prices of Nike shoes from $59.97 to $62.37 -- or from $79.99 to $83.19, or from $89.99 to $93.59, or from $99.99 to $103.99, or from $109.99 to $114.39 -- is going to cause the market for Nike shoes to collapse? I do not.

On the contrary, I find absurd the suggestion that someone already willing to pay more than $100.00 for a pair of Nike shoes would balk at paying an additional $4.40. Or that someone already willing to pay just shy of $60.00 for a pair of Nike shoes would balk at paying an additional $2.40.

Remember Henry Ford? He famously paid his workers more than other companies were paying workers in comparable jobs, because he wanted his workers to be able to afford the products which they were making.

The result was an automobile company which thrived and which, unlike the other major automobile companies, did not need a government bailout to keep on thriving. He had the right idea.

[Crackpot]

Ford? You mean the same coompany that was probably the worst offender at the time of unionization?

[oldr_n_wsr]

The USA is becoming a third world country. While I am not a big fan of unions, their role is not to be understated. They keep (or have kept) the USA worker firmly in the middle class (USA middle class, not China's middle class) and they are to be commended for that. But given the "global economy" sonner or later, the wages will all be equalized and that does not bode well for the USofA. Wages, benefits and standard of living WILL go down as the USA tries to compete against countries who's citizens are able to live on $5 a week. I can't even get to work on $5 a day.

Forget the fiscal cliff (just declare bankruptcy and let the world deal with it). We make next to no goods and that alone is enough to alarm those who might understand where we are going.

But don't worry, we'll all be on teh government teat and sucking off the rich. Meanwhile if we took all thier money we might fund the feds for a month, although 8 days seems to be the figure.

[dgs49]

With apologies, I agree with everything rubato has posted in this thread, and he has said them better than I could.

The arguments posted by the initiator of the thread reflect logical conclusions based on what is observable, but a complete obliviousness to what is inferable and not easily observable.

It is like editec railing about "living wage" laws, and believing that if only we required our employers to cough up more money, all would be prosperous. It seems logical but is dangerously ignorant of economic realities.