Are you really going to hang your hat on the fact that I picked numbers out of the air? Maybe the numbers are 20 and 10 rather than 30 and 15. How long do you think the construction season is? How steady do you think construction work is?
No, its not fear of losing moeny across the border. Its a response to your claim that all that money just recirculates in our economy so we should therefore be indifferent.
BTW, the money doesn’t EVER have to come back to America in the form of new economic activity, it can come back to America in the form of interest on loans or investment in treasury bonds (so we can buy more stimulus).
Pick any numbers you want; if your job can be that easily taken away by someone making half the money then you were being overpaid. There’s a reason than unskilled immigrants tend to take minimum wage jobs. People who make more than minimum wage are almost invariably skilled; they can’t be replaced as easily as you’re suggesting.
Indifferent to what, precisely?
I’m not advocating turning a blind eye to illegal immigration. I’m trying to point out that many of the assumptions being implied in this thread are not necessarily based in reason or science.
The economic argument against immigration is always - ALWAYS - that “They take away our jobs.” The fact that human beings also create jobs, and in fact tend to create jobs in proportion to the value of the jobs they take, is always forgotten, always brushed aside.
The economic argument against international trade is, again, ALWAYS “the foreigners take our jobs.” And always, always forgotten is that efficiencies can create jobs, and that Americans are generally competing against other Americans, not foreigners, in terms of whose industry is most competitive on the international playing field.
The flip sides of immigration and international trade, the reasons that the USA does not have 99% unemployment despite two centuries of immigration and international trade, are always ignored. I find it puzzling.
If it comes as investment in a Treasury bond, you’re saying that isn’t money coming back to the USA? Who do you think sells American Treasury bonds?
My sister is a doctor and my brother in law is an engineer and both of them have fully competent analogues in India that would do the same work as they do for half the pay. Does that mean my sister and brother in law are overpaid? Then who isn’t overpaid?
Construction is not exactly unskilled labor any more than a seamstress at a sewing factory is unskilled. Carpenters and masons are not really in the same category as “would you like fries with that”.
Indifferent to illegal immigrants entering the country and taking jobs that would otherwise go to legal residents.
I gave you examples of jobs by illegal aliens that would not exist if the illegal alien was not here. For example, I would cut my own grass if I had to pay the sort of rates that a legal resident would charge for mowing our lawn and my wife would stay home and watch our kids if we had to pay the sort of rates that legal resident nannies demand. These folks are nto taking jobs from anyone.
The illegal immigrant construction worker who works for half of what a legal resident would demand takes a job that would have gone to a legal resident, they do not create a job that wouldn’t exist but for their low wage (you can make the argument that the lower construction costs translates into lower home prices which mean more home sales, which means that some of the effect is muted but i don’t have confidence that the home builders are passing on enough of those savings to amke enough of a difference).
Yes efficiencies CAN create jobs, as in COULD, MIGHT, MAY, PERHAPS. But the fact of the matter is that they don’t seem to have created as many jobs as they have taken away. The trade deficit bears this out.
How can you look at unemployment rates and find this puzzling? Our economy can abosrb these sort of shifts over time but over the last 30 years the influx of illegal aliens and the outsourcing of jobs and industry has been at much faster rates than our economy’s ability to absorb.
You don’t see the difference between money entering the country through foereign investment and money generated and spent in teh country by a consumer?
There is a big difference between improving productivity which causes job loss but results in more Domestic production which creates more domestic demand which creates mroe jobs on the one hand and shipping jobs overseas.
I agree with most of what you’ve written in this thread, RickJay.
Naturally, I’m going to quote the post I disagree with.
You’re absolutely right that the spike in unemployment was about the same in 82. But the duration won’t be the same. The Fed had plenty of room to lower interest rates in the 80s (most especially because they were a primary factor in exacerbating the recession, to fight inflation, by pushing rates up–what went up can come down). Today they’ve reached zero, and inexplicably concluded that they shouldn’t do more. This recession is, unfortunately, strikingly similar to the Depression in many ways. Not in severity, of course, but definitely with respect to the cause of the downturn, and the potential length, and potential Fed complacency. It is, without doubt, going to be much longer than the 82-83 problem if you look at unemployment figures instead of focusing only on GDP.
No, the trade deficit doesn’t bear it out.
That’s a symptom of the problem, not the cause. This isn’t at core a trade problem, or an immigration problem, or an automation problem. These forces have been going on for centuries, literally centuries, and there have been always new jobs created to replace the old. I’m not saying the process is clean. It sometimes isn’t. But there’s no good option in interfering with the forces that have led us to the prosperity that we currently enjoy.
What we have right now is the aftermath of a massive financial crisis, a near meltdown of our banking sector. What we have is a money problem.
Things got back on track over the crushingly long Depression. They’ll get back on track for us, as well. I wish our policymakers were more on the ball, but in order to get them focusing on the right things, you have to be focused on the right thing yourself.
You need to actually look at the data.
Our economy can and did absorb the influx of workers for almost the entirety of those 30 years. Not perfectly, no. We had some jobless recessions, where unemployment lagged far behind other economic indicators like GDP. Still, the economy was eventually able to absorb the available workers… until the financial crisis caused a massive shock to aggregate demand. Look at the money. Always look at the money. Nominal GDP dropped at its fastest rate since the Depression. Accompanying that drop was the biggest recession since the Depression.
This is not some ridiculous coincidence. It is the core of our problems.
Everything else is a red herring. It’s the usual short-sightedness to use Jose and Rohan as scapegoats.
No, there is not a big difference.
A richer China means a richer partner to trade with. Richer trade partners increase domestic demand.
This isn’t something you can predict. You can’t pick an industry and go: “That’s the one! That’s where future job growth will be!” This is why investment is so risky. People who get it right are considered geniuses. Some of them are geniuses. Many others are merely lucky. We don’t know what they’ll want in the future. But we do know they’ll want something, if we get this dollar situation worked out. Look to the money, and we’ll be able to supply whatever it is that they demand. What we shouldn’t do, though, is interfere with the very processes that led us to the prosperity that we currently enjoy.
It’s whining to say, in essence, that it’s too hard to retrain, and why should you, since businesses should (presumably) just protect your job (forever) and you should be able to work it throughout your life, regardless of circumstance…which is what good ole gonzo was basically saying there, and what you were seemingly agreeing with.
-XT
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Exactly! Everyone suck the free market’s cock, don’t you worry your pretty little face questioning the race to the bottom.
[QUOTE=The Tao’s Revenge]
Exactly! Everyone suck the free market’s cock, don’t you worry your pretty little face questioning the race to the bottom.
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So, if I’m understanding you correctly, it’s a cock race to the bottom?? Where do I sign up?!?!?
If someone in India can do the job exactly as well as they can in every respect - even after you account for the logistical difficulties of them being in India - for less money, then yes, they are overpaid.
But quite obviously your sister, at the very least, cannot be replaced by a call centre in India, can she? I sure as hell wouldn’t want my doctor giving me a checkup by Skype, would you? Your sister cannot be equivalently replaced by outsourcing to India. You could bring an Indian doctor over here, but if that doctor was truly equally as skilled and qualified, s/he would probably want the big bucks.
When did I express an opinion that illegal immigration should be ignored?
Actually, no, there isn’t. Trade with a foreign nation is really quite similar to building a giant machine right off the coastline that produces stuff you bring back on ships. China, to the USA, is effectively a big device into which you pour stuff the US sells, like semiconductors or medical gear, and out the other end comes stuff China sells like clothing, iron castings, and stuff like that.
No, we’re positing that illegal aliens are a legitimate source of pricing pressure. Just like the guys losing their jobs to illegal aliens are overpaid because there is someone (an illegal alien) that will do it for less, why isn’t my doctor overpaid if there is an Indian that will do it for less if he could only gain entry into the USA.
Not if they are currently making a fifth of what they make here.
No you didn’t say that it should be ignored entirely but you did say that people were afraid of illegal immigrants sucking money out of our economy when the money HAS TO RETURN so we shouldn’t really be concerned with money being sucked out of our economy. And I was pointing out how that was not really true.
Are you serious? You think we sell nearly as much stuff to China as they sell to us?
China isn’t some place we send our raw materials to get processed and returned to us. And even if it were, the economic effect of exporting raw materials and importing finished products is the basis for third world economies.
If there was a giant machine right off our coast where we sold our raw material and bought back finished products and the profit from the giant machine went to China, there is a HUGE difference between THAT and building the huge machine on shore worked by American workers who will spend the money in America.
I’m not saying that we should shut our doors but this faith that people have that everything evens out is utter nonsense. Even Milton Friedman inserted a couple of assumptions into the model of free trade. One of them was free floating currency, in fact its pivotal to the free trade argument, something China does not have.
I see the situation with China as similar to the one in the late 1960’s, with Germany.
Because of the post WWII Bretton Woods agreement, the German currency (the Mark) was pegged at a ridiculously low value, relative to the US dollar. I think it was like 5 marks = 1 USD. This meant that german made products were cheap-you could buy a Volkswagen car for about 1/3 the price of a comparable US made car. I also remember that german-made toys, cameras, and clothing were also common.
Then came Vietnam and huge deficits…and the exchange rate was dropped (under Nixon).
German prices soared, and a VW now became more expensive than an American car.
The Chinese situation is the same-we pay artificially cheap prices for Chinese-made goods…that will be coming to an end.
No, I see outsourcing (to China) as a major reason why recovery isn’t happening.
Because we have no domestic manufacturing anymore, the people who made cars, electric blankets, tools, etc., don’t have any place to go for work..except a low wage job at Walmart or McDonalds.
Their new mercantilism isn’t very friendly, but it’s also not permanently sustainable. They can’t sit on their dollars forever. A trillion greenbacks don’t do them any good gathering dust forever in bank vaults. The currency peg will have to loosen eventually.
And even right now, without waiting, we can give them a nudge in the right direction with a better monetary policy on our part. Their wealth will lead to more wealth for us. They just appear to need a little push in the proper direction. And we are fully empowered right now to give that push, as our own policymakers would realize if they were paying more attention.
China has a very controlled economy and is doing quite well. But that’s because they moved away from an attempt at total control toward liberal market reforms – they’ve made strong moves, but they still have a ways to go. We’d be making a mistake if we attributed their current success to the remaining economic controls, instead of the reforms. They will soon have need of more reforms if they want their success to continue. Of course, there’s no need to do it all at once. They have reason to take their time with it.
A lot of other countries face similar problems. It’s one thing to make up ground with the first spurt of industrialization. It’s something else again to maintain consistent strong growth after the easy fruit has already been plucked. It’s always possible to transition from economic miracle to stagnation with the wrong policies. Just look at Japan.
Perhaps they are. Perhaps not. Little evidence has been provided.
I was specifically, in that case, referring to the common (and silly) fear that immigrants - it doesn’t matter if they’re legal or not, if you stop and think about it for longer than two seconds - are bad for the economy because they allegedly send all their salary out of the country.
In the specific case of China, not at the present time, though as you yourself have pointed out that’s a monetary issue, not a trade issue. But the U.S. has trade surpluses with other nations and might well have one with China in the future.
Not really, no. Importing goods, after all, requires labour.
If it doesn’t even out, you might want to consider the possibility that the problem is not trade, but monetary policy and debt.
As for China, as Hellestal points out, China can DELAY the purchase of U.S. goods, but they cannot avoid it forever.
[QUOTE=ralph124c]
Because we have no domestic manufacturing anymore…
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We definitely do have domestic manufacturing in the U.S. We just don’t make the type of things you buy at Walmart. We make airplanes, pharmaceuticals, medical devices, etc. The kind of thing that is difficult to make, that need highly skilled people to make. These are huge export industries for us.
