Free trade/currency devaluation [merged Le Jacquelope threads]

[Le_Jacquelope]

@straight_man

Firstly, the cites you provided do not say what you wanted them to.

Actually, yes they do. Your denials do not negate the fact that they back up what I say.

Have a nice day.

Correlation does not prove causation

Seeing money missing from a cash register on an employee’s watch once is correlation.

Seeing it happen for decades on end is causation.

Secondly, it is not my job to do your homework for you. You cited the TAA as evidence of free trade failing, even though pro-free trade economists explicitly say that organizations like the TAA must exist in a free trade system. However, since you can’t be bothered to do research that might oppose your preexisting ideology, here are the stats. Assuming I’m reading this correctly, about 50,619 trainees exited the TAA between October 1, 2009, and September 30, 2010, of whom either 53% or 58.83% (depending on how you count) found jobs by the time states finished getting info for the November 17 submission, of which either 86.23% or 80.47% retained their jobs through the same period, with an average six month earning of either $14,213.60 or $14,696.21. So yes, particularly when the data is for the depths of America’s recession, that’s far more than just “a meaningful number”.

So half of those people got their jobs back. At a lower wage, no less. And you’re declaring victory?

Finally, your last point simply makes no sense. The whole point of outsourcing is that the workers abroad cannot demand anywhere near as high a wage as the workers here.

They don’t need to. They’re still moving up in life. While workers here are moving down. Really? You don’t realize this?

China’s middle class, because of the jobs we’re bleeding to them, is set to be 700 million by 2020.

[emacknight]

@Le_Jacquelope

Seeing money missing from a cash register on an employee’s watch once is correlation.

Seeing it happen for decades on end is causation.

No, that is not causation. When did this concept get so hard for people to understand?

If it happens a bajilion times you still don’t have causation, you simply have a lot more correlation. If you plotted employee vs missing cash what you would see is correlation, but that’s it. Correlation does not imply causation, it simply points to it.

If you want to put the employee in jail you’ll need a hell of a lot more than a lot of correlation, you will need actual causation, like video of her stealing. As long as there are other reasons for causation, you will only have correlation.

So as far as off-shoring and free trade go, what we have is at best some correlation.

When come back, bring real data.

@Le_Jacquelope

So half of those people got their jobs back. At a lower wage, no less. And you’re declaring victory?

You’ve been shown proof of people getting their jobs back, do you have a proof that they are working at a lower wage? My guess is no, you have no proof.

@Le_Jacquelope

They don’t need to. They’re still moving up in life. While workers here are moving down. Really? You don’t realize this?

When the average household income is zero, it’s hard not to move up. Data has been shown that the average household income in China rose $2000 making the new average just slightly more then $2000.

Meanwhile, the “moving down” here involved going from an average of $52k down to $50k.

An interesting lesson in how a lack of integrity allows someone to misrepresent data to support a flawed premise.

@Le_Jacquelope

China’s middle class, because of the jobs we’re bleeding to them, is set to be 700 million by 2020.

And what was that number 20 years ago? Right now the best guess is about 50 million, out of a billion. Add to that the fact that to be middle class in the US means an income over $20k per year, in China that’s a fortune thanks to both a government housing policy, and an insanely low cost of living.

Lastly, the point that is so frequently ignored is that the growing middle class in China want American products. When they buy iPods made in China it’s from an American company, employing Americans.

Free trade is improving life in China, making a larger market for American exporters. Wait, what’s that? Export? Yes, people in the US export stuff to other countries thanks to free trade. The US exports $91.9 billion worth of goods to China. Their growing middle class will mean more exports.

[Le_Jacquelope]

Who can win this game of devaluing currencies?

China obviously has the cojones to play hardball about it, and whether America wants to admit it was intended, QE1 and QE2 clearly had the effect of devaluing the dollar. The results of QE1 and QE2 was also obvious: imports got more expensive and some slivers of manufacturing work started coming back to America. The G20 is bullshitting the world about how they pledge not to get into this game, even as the biggest countries are already playing. Er, no wait, they’re saying they’re not. But the currency devaluation patterns say otherwise.

Clearly, if the U.S. jumps fully into a competitive devaluation, other countries will try to follow suit.

Who can win in the end? Can America’s stability keep it from melting down while it devalues the dollar until China and other nations are forced to give up? Would such a thing end up with the status quo but with higher inflation, or would America wind up with the world’s cheapest and most skilled labor force and the biggest trade surplus ever?

[John_Mace]

I think Queen Elizabeth is a lovely monarch, and she has some delightful grandchildren.

[Marley23]

Le Jacquelope, I’m merging this thread [“Competitive Devaluation = the new trade war?”] into your previous opus, which hadn’t been active since Friday but was still on the front page. One thread at a time is plenty since all of yours are about the same issues. Don’t open another one until this thread is off the front page of Great Debates, meaning it has been inactive for 10 days.

[XT]

Competitive Devaluation = the new trade war?

No.

Who can win this game of devaluing currencies?

The only countries who would win such a thing are countries with emerging manufacturing or trade who are trying to protect that trade (at the expense of their own peoples welfare and prosperity) by deliberately devaluing their currency to keep a high trade imbalance. You can only keep that up for so long, though, before it causes other problems with your own systems, and problems with your trading partners.

China obviously has the cojones to play hardball about it, and whether America wants to admit it was intended, QE1 and QE2 clearly had the effect of devaluing the dollar. The results of QE1 and QE2 was also obvious: imports got more expensive and some slivers of manufacturing work started coming back to America. The G20 is bullshitting the world about how they pledge not to get into this game, even as the biggest countries are already playing. Er, no wait, they’re saying they’re not. But the currency devaluation patterns say otherwise.

The difference is that China deliberately devalues their currency, while the US dollar has been manipulated (through market means) to be artificially high. It needed an adjustment and still probably is valued higher than it should be, but that’s what you get when you are considered ‘safe’ and everyone uses you as a de facto currency. That might be ending soon, though, and I expect the dollar to drop some. The dropping part isn’t really so bad, it’s the lost of de facto currency status (lots of stuff are bought and sold using the dollar as currency…oil, for instance…and the loss of the dollar as the de facto currency will mean we pay more for stuff than we do today).

China is only going to be able to keep up this deliberate devaluation of their currency for so long, however…eventually they will have to allow their currency to reflect it’s actual value. Mature economies like the US and the EU couldn’t really get away with trying stuff like that.

Clearly, if the U.S. jumps fully into a competitive devaluation, other countries will try to follow suit.

If the US tried to artificially devalue it’s currency to play this sort of game we’d most likely lose the confidence of other nations who buy dollars as their reserve. The dollar would no longer be the de facto world currency. It would probably do real damage to the currency markets world wide if we tried to do this.

IOW, it would not be a smart thing for us to DELIBERATELY do this.

Who can win in the end?

The countries who choose not to play this silly game I should think. The US would lose if we tried to play the same game that China is playing. Something you never seem able to grasp, the fact that the US and China are different and can’t act in the same ways as each other. China will eventually lose if they try and play this game for too long.

Can America’s stability keep it from melting down while it devalues the dollar until China and other nations are forced to give up?

It would accelerate the US losing it’s status as a safe haven for other countries to put their reserve in, and as the world de facto currency. That would hurt us but it’s something that will happen eventually anyway. When it happens we won’t HAVE to play games with artificially devaluing our currency…the currency market will do that for us.

Not sure why I’m bothering here since even if you didn’t have me on ignore you never want to actually debate anything…just hammer your views and slam anyone who disagrees with your rather odd understanding of how markets, free trade and all the rest works.

-XT

[Le_Jacquelope]

We’d better win this competitive currency devaluation war soon.

China is now excluding Americans from work inside the United States.

It’s bad enough that Americans cannot find work outside the country; at this rate they’ll be entirely excluded from their own country’s job market by foreign cheap labor. All because other nations are engaged in currency devaluations.

[Really_Not_All_That_Bright]

What the hell are you talking about?

[XT]

From Le Jac’s cite:

The assembly work in California, and the pouring of the concrete road surface, will be done by Americans. But construction of the bridge decks and the materials that went into them are a Made in China affair. California officials say the state saved hundreds of millions of dollars by turning to China.

In New York City alone, Chinese companies have won contracts to help renovate the subway system, refurbish the Alexander Hamilton Bridge over the Harlem River and build a new Metro-North train platform near Yankee Stadium. As with the Bay Bridge, American union labor would carry out most of the work done on United States soil.

The new Bay Bridge, expected to open to traffic in 2013, will replace a structure that has never been quite the same since the 1989 Bay Area earthquake. At $7.2 billion, it will be one of the most expensive structures ever built. But California officials estimate that they will save at least $400 million by having so much of the work done in China. (California issued bonds to finance the project, and will look to recoup the cost through tolls.)

A joint venture between two American companies, American Bridge and Fluor Enterprises, won the prime contract for the project in early 2006. Their bid specified getting much of the fabricated steel from overseas, to save money.

-XT

[XT]

@Really Not All That Bright

What the hell are you talking about?

Le Jac’s point is obviously that California should have used good American companies and American labor (leaving aside the fact that Americans in fact ARE working on this project) instead of Chinese companies who cut costs by using Chinese foundries, Chinese logistics and transport and Chinese workers for final assembly. It doesn’t matter (to Le Jac) that this was a bid process and that American companies (well, ALL American companies, since the prime contractor does seem to be an American company) COULD have won…but didn’t. California should have rejected a bid (despite being hundreds of millions of dollars cheaper) from such a mongrel company and gone with a higher priced company that used good, honest and trustworthy American labor!

Or something.

-XT

[Really_Not_All_That_Bright]

It’s a little weird that CA would buy a bridge in China when it’s only $400m cheaper (out of $7.2bn) considering that it lost federal subsidies for doing so. I just don’t see how this constitutes “Americans being excluded from work inside the US”.

[XT]

I assume it meant that it would save the state $400 million dollars over what it would have cost had they gone with federal funding and used all American companies. I’d have to see the bid process and look at the analysis, but that seems the most logical thing to me. Why would California have gone this route if it cost them more, after all?

And it doesn’t constitute ‘Americans being excluded from work inside the US’…that’s how Le Jac read it, but he didn’t actually read the article for detail, merely looked at the parts he wanted to see that reinforced his rather odd world view and philosophy.

-XT