# It's time to establish trading blocks **URL:** \ **Category:** Great Debates\ **Created:** [October 5, 2010, 1:26pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111 "2010-10-05T13:26:47Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [October 5, 2010, 10:52pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/61 "2010-10-05T22:52:15Z")
Why should we give a shit if another country pegs it’s currency to ours? Thing is, when the Chinese peg their currency at below the estimated fair market value, what does that mean? It means that we are able to buy things from China at below the market value. It means that Chinese workers are forced to sell their labor at a discount. It means we get Chinese goods at a discount. Why is this bad? Because it encourages manufacturing in China? Everyone talks about the scenario where someone sells at below cost until they drive their competitors out of business, and then they raise prices and make back more than they lost by cutting prices. Except that never seems to work, because when you get to the price gouging phase of the plan, suddenly your competitors become, well, competitive again. Maybe they aren’t the exact same competitors, maybe they aren’t the Mom and Pop stores. But there are plenty of other well capitalized businesses out there, who are perfectly able to parachute in a big box store right next to the Walmart. But Walmart isn’t the biggest retailer on Earth because they drove other retailers out of business with their low prices, then charged monopoly prices once they were the only store in town. No, the charged low prices, and then continue to charge low prices. China can’t suddenly reverse their monetary policy and profit, because not every factory on Earth is in China. There are plenty of other low wage countries out there. And it’s not like manufacturing is confined to low wage countries, the American manufacturing sector is much larger than China’s. Our manufacturing sector hasn’t shrunk, contrary to popular opinion. It’s just shrunk as a percentage of GDP. And that’s not because manufacturing is smaller in absolute terms, it’s because are other sectors have grown much faster than manufacturing. It’s like worrying that only 1% of employment is in the agricultural sector, and worrying that this means famine because we’re producing a lot less food than we did back when 50% was in agriculture. No, we’re producing much much more food, it just takes a lot less people to drive a combines over gigantic wheat fields than it does to harvest that wheat by horse-drawn harvesters, let alone scythes and sickles. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [October 5, 2010, 10:59pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/62 "2010-10-05T22:59:32Z")
> [@Damuri\_Ajashi](#): > > What? How? I bet they wish they could. I’m sure they would rather have a countr full of people making about 50K/year than a country full of people making 5K/year. Its the main reason for teh currency peg, they want to get there faster than normal market dynamics will allow and forcing us to accept an economic transition faster than our economy’s ability to absorb such a shift. Exactly. > [@](#): > > Not really our problem unless you think they should be allowed to sanction us until we convert to communism. They are opening up and their democratization is inevitable. They’re free to try. At the moment they’re dependent upon us as an export market. I already cited what happened in 2008 when our economy tanked: 20 million Chinese lost their jobs. A full knock-on wipeout of our currency would set them back a bit. > [@](#): > > They don’t WANT to breathe in coal dust but they want the economic growth. Well, I would note that they are at the forefront of green energy technology. Moreso than us. We import photovoltaic cells from China because no one wants to hire Americans to research or produce them. One more way we let those Godless SOB’s take ownership of us… > [@](#): > > They can point to us as having contributed many of times more in carbon emission and pollution in our history than they have in theirs. Do we get to pollute the atmosphere and then close the door behind us and say noone else can pollute the atmosphere or do we have to provide financial incentives for them to go green sooner. See, that’s why I am opposed to “cap and trade” and more interested in “cap, period”. China would be right about accusing us of that. We need to close the door to ourselves and behind us with regards to pollution. I’d much rather do that than argue about who’s being a hypocrite when we have an acidic ocean overrun by jellyfish. > [@](#): > > This will happen with or without our encouragement. How long will that take? > [@](#): > > Its already illegal, what else do you want them to do? Artificailly inseminate the women with female embryos? I said “Show a drastic decrease in their people’s habits”… that means that despite the fact that gendercide is illegal, it’s their people (not the government) who need to wise up.. I put “people” in there intentionally, as opposed to the government. > [@](#): > > Oh so we can phase in the middle east but China goes cold turkey? If we had a nation of electric cars I’d make the Middle East go cold turkey. Yes, different rules for different countries. I know. But I’m going with what works. Even so I acknowledge that the Middle East could make an alliance with China which could make things get ugly… which is good, since we NEED to develop alternative fuels and that would force us to get back to innovating. Speaking of which, you do know about that Saudi Arabian dude with a big stake in Fox who told Fox to squash stories about alternative fuels, right? > [@](#): > > There’s no coming back from this. The ONLY reason we are not facing teh choices Greece is facing is because of our credibility in the debt markets. Our credibility is our most important econmic asset. I don’t necessarily believe in surrender like that. I believe we should bite the bullet. Or more specifically, I believe that we will have to bite the bullet no matter what we do at this point. We’ve had Depressions before and we’ll have them again. We can use that situation to make serious fundamental changes to our economy. We most certainly succeeded in doing that the last time. > [@](#): > > They never could and they will not do so in our lifetime but they might grow into great trading partners as soon as they drop their unfair tradin practices. Agreed. ---
**Author:** ![Fuji](https://avatars.discourse-cdn.com/v4/letter/f/a9a28c/32.png) [@Fuji](https://boards.straightdope.com/u/Fuji)\ **Post date:** [October 6, 2010, 2:47pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/63 "2010-10-06T14:47:38Z")
> [@Le\_Jacquelope](#): > > Hopefully it won’t result in domestic hyperinflation, but if it does, whoops, there goes the rich. That would be a complete and total reset Apologies for the hijack, but this is not correct from my understanding of history. What has been the case historically (Weimar Republic Germany being a prime example) is that the burden of hyperinflation has fallen hardest on the middle class, not the poor, who have no assets to depreciate and whose debts essentially evaporate, nor the rich, who have real assets (e.g. land) which retains its relative value. I’m pretty sure that the Krupps, Junkers, et al. were still at the top even after hyperinflation. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 6, 2010, 3:26pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/64 "2010-10-06T15:26:28Z")
> [@ralph124c](#): > > Trading blocs have been used in the past..in the days of the British Empire, they had something called “Imperial Preference”. This was a system whereby the British consumers paid higher than world market prices, for stuff like Jamaican bananas, Barbados sugar, Indian cotton,etc. It was a way of subsidizing commonwealth nation’s producers, even if they were smaller and costlier than others. Did it work? Yes-it enabled small islands like Jamaica to maintain employment in the banana growing business. Of course, it made British consumers pay higher prices. > WE could do this with China-but the Chinese would retaliate. I thought the trading bloc idea was retaliation for what the Chinese are doing isn’t it? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 6, 2010, 3:35pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/65 "2010-10-06T15:35:57Z")
> [@Lemur866](#): > > Why should we give a shit if another country pegs it’s currency to ours? > > …It means that we are able to buy things from China at below the market value. It means that Chinese workers are forced to sell their labor at a discount. > > …Everyone talks about the scenario where someone sells at below cost until they drive their competitors out of business, and then they raise prices and make back more than they lost by cutting prices. > > …China can’t suddenly reverse their monetary policy and profit. What do you think, the Chinese are retarded and short sighted? Their currency peg is buying them accelerated growth at the expense of our growth and recovery. They are accumulating comparative advantages in everything from low tech sewing factories to high tech electronics and green technology. Comparative advantage that would be spread more evenly anng developed nations if China didn’t specifically engage in activity to improve its comparative advantages (WTF do you think all the “hand over your patents before we let you do business in China” crap is coming from?). China has a natural comparatice advantege in a highly motivated, highly skilled and very inexpensive work force. Theya re multiplying the effect of that advantage by manipulating their currency, their markets and strongarming companies to give up their intellectual property. They don’t have to suddenly raise their prices, raising their prices is inevitable but the ability of other ecvonomies to comopete with China by that point might be significantly undercut. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [October 6, 2010, 3:50pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/66 "2010-10-06T15:50:36Z")
> [@Giles](#): > > > [@Le\_Jacquelope](#): > > > > How they do that is up to them, just like how the West did it was up to us. The West pulled itself up to prosperity, why can’t India? They have a market of one billion people. They can find a way just like we did. > > Europe did is partly by having colonial empires – including India and China – to exploit. Canada and the U.S. did it by pushing out the native people of North America, and exploiting the resources they found there. Are you going to let China and India have similar resources, and where will you find them? Tibet? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [October 6, 2010, 4:36pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/67 "2010-10-06T16:36:28Z")
> [@Damuri\_Ajashi](#): > > > [@Lemur866](#): > > > > Why should we give a shit if another country pegs it’s currency to ours? > > > > …It means that we are able to buy things from China at below the market value. It means that Chinese workers are forced to sell their labor at a discount. > > > > …Everyone talks about the scenario where someone sells at below cost until they drive their competitors out of business, and then they raise prices and make back more than they lost by cutting prices. > > > > …China can’t suddenly reverse their monetary policy and profit. > > What do you think, the Chinese are retarded and short sighted? Their currency peg is buying them accelerated growth at the expense of our growth and recovery. They are accumulating comparative advantages in everything from low tech sewing factories to high tech electronics and green technology. Comparative advantage that would be spread more evenly anng developed nations if China didn’t specifically engage in activity to improve its comparative advantages (WTF do you think all the “hand over your patents before we let you do business in China” crap is coming from?). > > China has a natural comparatice advantege in a highly motivated, highly skilled and very inexpensive work force. Theya re multiplying the effect of that advantage by manipulating their currency, their markets and strongarming companies to give up their intellectual property. > > They don’t have to suddenly raise their prices, raising their prices is inevitable but the ability of other ecvonomies to comopete with China by that point might be significantly undercut. No, they’re not stupid. But they’re not screwing us over, they’re screwing over workers in other low wage countries that let their currencies float. We’re not a low wage country. We benefit from their willingness to sell us their labor at a discount. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [October 6, 2010, 5:08pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/68 "2010-10-06T17:08:26Z")
As was posted in the other thread, we can replicate what China is doing by a simple plan. We impose a 10% sales tax on domestic consumption, then we take all that money and give it to corporations who sell things abroad, so foreigners can buy our stuff cheaper. How does that plan sound? And to “You think the Chinese are stupid and short sighted to pursue these policies?”, well, you think Americans are stupid and short sighted to pursue opposite strategies. So yes, it is certainly possible for national governments to pursue stupid and short sighted policies, it happens all the time. And China certainly pursued stupid and short sighted policies in the very recent past, read about the Great Leap Forward and the Cultural Revolution. So the argument “1 billion Chinese can’t be wrong” is kind of silly. China is a country with severe challenges, and their current period of rapid economic growth isn’t caused by suddenly becoming economic masterminds. They are experiencing rapid growth because they aren’t hitting themselves in the head with a hammer anymore, and it felt so good when they stopped. Chinese leaders aren’t any wiser than leaders in Japan or Germany or France or Canada or the United States. They are human beings who make mistakes and pursue selfish polices at the expense of the citizenry just like leaders in other countries. And even when they make decisions that work for them, that doesn’t mean countries like the United States or France should emulate them, because the policies needed for a poor developing country (China’s per capita GDP is lower than El Salvador’s) are different than the policies needed for a wealthy mature country. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [October 6, 2010, 5:44pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/69 "2010-10-06T17:44:08Z")
> [@Damuri\_Ajashi](#): > > What do you think, the Chinese are retarded and short sighted? Their currency peg is buying them accelerated growth at the expense of our growth and recovery. They are accumulating comparative advantages in everything from low tech sewing factories to high tech electronics and green technology. Comparative advantage that would be spread more evenly anng developed nations if China didn’t specifically engage in activity to improve its comparative advantages (WTF do you think all the “hand over your patents before we let you do business in China” crap is coming from?). > > China has a natural comparatice advantege… I don’t think “comparative advantage” means what you think it means. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [October 6, 2010, 5:54pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/70 "2010-10-06T17:54:20Z")
> [@Fuji](#): > > > [@Le\_Jacquelope](#): > > > > Hopefully it won’t result in domestic hyperinflation, but if it does, whoops, there goes the rich. That would be a complete and total reset > > Apologies for the hijack, but this is not correct from my understanding of history. What has been the case historically (Weimar Republic Germany being a prime example) is that the burden of hyperinflation has fallen hardest on the middle class, not the poor, who have no assets to depreciate and whose debts essentially evaporate, nor the rich, who have real assets (e.g. land) which retains its relative value. You have a point with some rich people; if anyone cares about land rights during that crisis, they also have the advantage of living in a country where food production won’t go south like it did in Zimbabwe. Now if distribution gets disrupted because of skyrocketing gasoline prices then _all bets are completely off_. It’s that potential problem - skyrocketing gas prices hampering food distribution - that makes me very nervous about hyperinflation. Nothing is more annoying than being forced to trade real assets for a meal only to find it has also lost value. (Because people can’t eat a bar of gold or clothe themselves with a parcel of land.) Your points are certainly worth considering. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [October 6, 2010, 6:00pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/71 "2010-10-06T18:00:51Z")
> [@John\_Mace](#): > > No, they’re not stupid. But they’re not screwing us over, they’re screwing over workers in other low wage countries that let their currencies float. We’re not a low wage country. We benefit from their willingness to sell us their labor at a discount. You’ve never shown us these benefits… besides lower prices, which is only one. I’ve cited a study that shows they and other low-cost nations are in fact costing us jobs in return. We have no job opportunities for the lower educational classes now (and unemployment rates in that group tell the tale quite vividly); but wait, you will say they need more education! Yet now, people with college degrees are competing against other low wage nations for [research level jobs](http://www.globalpost.com/dispatch/technology/090513/biotech-firms-outsource-asia). (I’ve cited this before, :rolleyes: ) So what were those benefits again? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [October 6, 2010, 7:04pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/72 "2010-10-06T19:04:55Z")
> [@Le\_Jacquelope](#): > > > [@John\_Mace](#): > > > > No, they’re not stupid. But they’re not screwing us over, they’re screwing over workers in other low wage countries that let their currencies float. We’re not a low wage country. We benefit from their willingness to sell us their labor at a discount. > > You’ve never shown us these benefits… besides lower prices, which is only one. I’ve cited a study that shows they and other low-cost nations are in fact costing us jobs in return. As I said before, the benefits are lower prices. There are some benefits for companies to spread their manufacturing around, and to be closer to non-US markets, but I think lower prices are the 1st, 2nd and 3rd highest benefit. Yes, we lose some jobs. Low paying, shitty jobs. If you want to compete with a Chinese worker who gets paid $500/month (that’s about what a factory worker would make if their currency was allowed to float), be my guess. But that’s still less below the US minimum wage by more than 2x. > [@](#): > > We have no job opportunities for the lower educational classes now (and unemployment rates in that group tell the tale quite vividly); We don’t need plumbers, electricians, carpenters and painters anymore? I didn’t realize those jobs had all been outsources or automated. Ignorance fought! > [@](#): > > but wait, you will say they need more education! Yet now, people with college degrees are competing against other low wage nations for [research level jobs](http://www.globalpost.com/dispatch/technology/090513/biotech-firms-outsource-asia). (I’ve cited this before, :rolleyes: ) Really? There are people in India and Singapore with degrees in medicine? Well, we better put a stop to that right now! They shouldn’t be allowed to hold American degrees like BS, MS, MD, and PhD. Those are our degrees!! ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 6, 2010, 8:01pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/73 "2010-10-06T20:01:46Z")
> [@Le\_Jacquelope](#): > > They’re free to try. At the moment they’re dependent upon us as an export market. I already cited what happened in 2008 when our economy tanked: 20 million Chinese lost their jobs. A full knock-on wipeout of our currency would set them back a bit. I’m just saying its silly to demand that someone adopt your political or economic model. As long as they play fair, why do we care? Let teh Chinese worry about China and lets spend a little bit of time worrying about ourselves. > [@](#): > > One more way we let those Godless SOB’s take ownership of us… So perhaps you should lay some of the blame for that on us. > [@](#): > > See, that’s why I am opposed to “cap and trade” and more interested in “cap, period”. China would be right about accusing us of that. Cap and trade is bad enough as it is (although it can be improved (see Duke energy CEO proposal). > [@](#): > > We need to close the door to ourselves and behind us with regards to pollution. I’d much rather do that than argue about who’s being a hypocrite when we have an acidic ocean overrun by jellyfish. There are choices somewhere between “let China do whatever the fuck it wants” and “tell China to fuck off because we got ours already” > [@](#): > > How long will that take? You’ll have to ask teh Chinese people but China cannot turn back the clock. Once they let the djinni out of the bottle there’s really no way to stuff him back in. > [@](#): > > I said “Show a drastic decrease in their people’s habits”… that means that despite the fact that gendercide is illegal, it’s their people (not the government) who need to wise up.. I put “people” in there intentionally, as opposed to the government. Yeah, I know, and thats silly. China is going to a lot of effort to prevent the gender mismatch in births but the one child policy is making that tough, even without the one child policy, it would have been a challenge. Imposing trade sanctions for stuff the China is going to a LOT of effort to prevent is silly. > [@](#): > > If we had a nation of electric cars I’d make the Middle East go cold turkey. Yes, different rules for different countries. I know. But I’m going with what works. Even so I acknowledge that the Middle East could make an alliance with China which could make things get ugly… which is good, since we NEED to develop alternative fuels and that would force us to get back to innovating. Going cold turkey on ANYONE hurts us but i am willing to support retaliation against CHINA because they are engaging in unfair trade practices, Saudi Arabia isn’t. > [@](#): > > Speaking of which, you do know about that Saudi Arabian dude with a big stake in Fox who told Fox to squash stories about alternative fuels, right? /sigh cite please. > [@](#): > > I don’t necessarily believe in surrender like that. I believe we should bite the bullet. Or more specifically, I believe that we will have to bite the bullet no matter what we do at this point. No, we don’t we can raise taxes and cut spending after we get out of this recession. If its inevitable then it hardly a threat but noone thinks its inevitable anymore. America isn’t going to become a third world economy as long as it stands up to China. They may be the second largest economy in the world but they are a distant second and their growth does not mean our demise any more than Canada’s growth means our demise. We just need to prevent unfair trade practices and our manufacturing base will grow at the margins, enough to absorb a lot of the current unemployment. > [@](#): > > We’ve had Depressions before and we’ll have them again. We can use that situation to make serious fundamental changes to our economy. We most certainly succeeded in doing that the last time. Not when the voting population seems to be blaming the Democrats for the recession. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 6, 2010, 8:08pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/74 "2010-10-06T20:08:19Z")
> [@John\_Mace](#): > > No, they’re not stupid. But they’re not screwing us over, they’re screwing over workers in other low wage countries that let their currencies float. We’re not a low wage country. We benefit from their willingness to sell us their labor at a discount. I’m surprised at you John. China doesn’t simply compete with India, it competes at the margins with everyone. Do you think that employment in the US wouldn’t rise if China suddenly decided it wasn’t going to export anything? Do you think that there wouldn’t be some significant marginal effect on employment right here in the USA if China let their currency float? Its not just the currency float, they are trying to steal industrial secrets and intellectual property. You knew that didn’t you? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 6, 2010, 8:25pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/75 "2010-10-06T20:25:13Z")
> [@RickJay](#): > > > [@Damuri\_Ajashi](#): > > > > What do you think, the Chinese are retarded and short sighted? Their currency peg is buying them accelerated growth at the expense of our growth and recovery. They are accumulating comparative advantages in everything from low tech sewing factories to high tech electronics and green technology. Comparative advantage that would be spread more evenly anng developed nations if China didn’t specifically engage in activity to improve its comparative advantages (WTF do you think all the “hand over your patents before we let you do business in China” crap is coming from?). > > > > China has a natural comparatice advantege… > > I don’t think “comparative advantage” means what you think it means. OK then let me restate it using more precise language. China’s ABSOLUTE advantage in cheap labor (relative to its relative paucity if natural resources or capital) gives it a COMPARATIVE advantage in labor intensive industry (as opposed to selling natural resources or providing capital). They are using this comparative advantage to extort COMPETITIVE advantages by trying to steal intellectual property and they are magnifying this effect by engaging in unfair trade practices. Sure everyone has comparative advantages but our absolute and competitive advantantages are slipping away. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 6, 2010, 8:41pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/76 "2010-10-06T20:41:23Z")
[quote=“John\_Mace, post:72, topic:556111”] > [@Le\_Jacquelope](#): > > You’ve never shown us these benefits… besides lower prices, which is only one. I’ve cited a study that shows they and other low-cost nations are in fact costing us jobs in return. As I said before, the benefits are lower prices. There are some benefits for companies to spread their manufacturing around, and to be closer to non-US markets, but I think lower prices are the 1st, 2nd and 3rd highest benefit. Yes, we lose some jobs. Low paying, shitty jobs. If you want to compete with a Chinese worker who gets paid $500/month (that’s about what a factory worker would make if their currency was allowed to float), be my guess. But that’s still less below the US minimum wage by more than 2x. The average American industrial worker is 8 times more productive than the average Chinese industrial worker. The average American agricultural worker is over FIFTY times more productive than the average Chinese agricultural worker. [http://www.cbsnews.com/stories/2007/09/03/business/main3228735.shtml](http://www.cbsnews.com/stories/2007/09/03/business/main3228735.shtml) So if China’s currency were allowed to float the corresponding pay for an American worker could be $4000/month. Not great but you could find a lot of skilled American labor at those prices. But the currency peg puts Chinese labor at $200/month. Its a LOT harder to find a lot of skilled labor for $1600/month (or $20,000/year). China’s productivity is slowly but surely going to start approaching America’s at which point they might start to let their currency float a bit more as well but in the meantime they are unfairly amassing capital and technology at our expense. > [@](#): > > We don’t need plumbers, electricians, carpenters and painters anymore? I didn’t realize those jobs had all been outsources or automated. Ignorance fought! We don’t export a lot of electrician and plumbing services. What do economists say about persistent trade imbalances? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [October 6, 2010, 10:08pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/77 "2010-10-06T22:08:34Z")
I don’t know that it makes sense to compare the average American worker with the average Chinese worker. If the 8x number is correct, then why would it make sense to favor China for manufacturing jobs now? The high end of what I see for China’s currency is that it should be 40% higher than it is now. That’s not enough of a difference to suddenly make your Average American worker comparable to your average Chinese worker. And agriculture has nothing to do with what we’re talking about. The US is a net exporter of food. China’s agricultural system is decades (if not centuries) behind the US’s system. I don’t know what economists say about persistent trade imbalances. What do they say? Generally speaking, I expect rich countries to have trade imbalances with poor countries. Rich countries have more money to buy stuff from the poor countries with. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [October 6, 2010, 10:40pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/78 "2010-10-06T22:40:34Z")
> [@John\_Mace](#): > > > [@Le\_Jacquelope](#): > > > > You’ve never shown us these benefits… besides lower prices, which is only one. I’ve cited a study that shows they and other low-cost nations are in fact costing us jobs in return. > > As I said before, the benefits are lower prices. There are some benefits for companies to spread their manufacturing around, and to be closer to non-US markets, but I think lower prices are the 1st, 2nd and 3rd highest benefit. Not when you’re unemployed and can afford $0. > [@](#): > > Yes, we lose some jobs. Low paying, shitty jobs. Manufacturing was not a low paying or shitty job. The IT jobs that went overseas sure as HELL were not low paying or shitty: this includes programming, software testing, network administration and web design. I also pointed out to you that biotech research has been going overseas, too. I dare you to tell me that’s low paying or shitty. We’re also losing paralegals. Do I need to cite that for you, too? (Of course, this is getting tiresome to spend all day digging up citations only for people to say I am not showing any citations. :rolleyes: ) > [@](#): > > If you want to compete with a Chinese worker who gets paid $500/month (that’s about what a factory worker would make if their currency was allowed to float), be my guess. But that’s still less below the US minimum wage by more than 2x. Why do you believe that this kind of work is worth only $500/month? Because some corporation told you so? What if I went and found a country of slaves that will do the work for free? Does that mean that manufacturing work is worth $0? No, it means corporations found a way to cheat the market by digging around for someone who’ll do the work cheaper. It’s called the race to the bottom. Oh wait, [China has used prison labor](http://www.washingtonpost.com/wp-srv/inatl/longterm/china/stories/prison060397.htm) to serve the US market. > [@](#): > > We don’t need plumbers, electricians, carpenters and painters anymore? I didn’t realize those jobs had all been outsources or automated. Ignorance fought! I knew you’d say that. Let’s do a math problem, shall we? How many plumbers, electricians, carpenters and painters jobs do you think are out there? How many people are long term unemployed? Compare. Discuss. Or let me put it this way: if every single long term unemployed person EVER, got skilled up to _journeyman level_ proficiency as a plumber, electrician, carpenter or painter, how many do you think would find work? > [@](#): > > > [@](#): > > > > but wait, you will say they need more education! Yet now, people with college degrees are competing against other low wage nations for [research level jobs](http://www.globalpost.com/dispatch/technology/090513/biotech-firms-outsource-asia). (I’ve cited this before, :rolleyes: ) > > Really? There are people in India and Singapore with degrees in medicine? Well, we better put a stop to that right now! They shouldn’t be allowed to hold American degrees like BS, MS, MD, and PhD. Those are our degrees!! :rolleyes: :rolleyes: :rolleyes: You’re seriously not addressing the statement I made. We are losing college education oriented jobs in bleeding edge innovation fields to offshore competition. [Unemployment among college grads](http://money.cnn.com/2008/12/05/news/economy/degreed_workers/index.htm). I wonder, where does America stand in the rankings of nations with unemployed college grads? Lemme guess, you think the problem is because they all got degrees in basketweaving, right? Fine, you don’t believe those jobs are American jobs. Then what do you believe? That we should set the working class adrift while the third world economy is exploding with growth _at the expense of the American working class_? (And don’t tell me they’re not taking jobs from here - I already cited a study that showed offshoring to low wage nations does cost us jobs. Not that anyone READ it, of course.) Go ahead and set the working class adrift. Tell them that our Government should not protect them even though China and India’s governments are protecting their workers’ jobs. But then don’t be shocked that [62% of Americans](http://news.cnet.com/2100-1022_3-5204950.html) are on my side in opposing offshoring. No one else gives a shit about the working class - so they have to fight and vote for their own interests. Simple law of survival. > [@Damuri\_Ajashi](#): > > > [@Le\_Jacquelope](#): > > > > They’re free to try. At the moment they’re dependent upon us as an export market. I already cited what happened in 2008 when our economy tanked: 20 million Chinese lost their jobs. A full knock-on wipeout of our currency would set them back a bit. > > I’m just saying its silly to demand that someone adopt your political or economic model. As long as they play fair, why do we care? Let teh Chinese worry about China and lets spend a little bit of time worrying about ourselves. Oh but that’s protectionism when we do that. We’re not caring about the poor put-upon Chinese. (No, really, someone on here did actually say that to me.) I am not demanding that China adopt my political or economic model. I am saying we as Western nations have a right not to do business with those who undercut us with shithole societal models. It’s like banning steroid users from the NBA. > [@](#): > > So perhaps you should lay some of the blame for that on us. Or better yet, do something to remedy it. I only buy stuff made in the USA / Western democracy wherever possible. (Although that’s pretty much impossible for computer parts… :smack: ) I encourage everyone else to do the same. > [@](#): > > Cap and trade is bad enough as it is (although it can be improved (see Duke energy CEO proposal). What is this proposal? Link? I believe in stopping global warming and carbon emissions ASAP. It is screwing up our atmosphere and making our oceans acidic. We’re on the verge of mass extinctions in the oceans. Plus there’s the pollution that goes with it: acid rain, that huge brown mess in the Indian Ocean… _Linfeng, China_… There is no such thing as cheap fossil fuel energy: we pay for it in a whole lot of deadly obvious (but not official) ways. > [@](#): > > There are choices somewhere between “let China do whatever the fuck it wants” and “tell China to fuck off because we got ours already” My stance is “don’t bleed us dry, don’t take our jobs to grow your economy.” > [@](#): > > You’ll have to ask teh Chinese people but China cannot turn back the clock. Once they let the djinni out of the bottle there’s really no way to stuff him back in. I don’t see why, though, the West just _has_ to accept goods made by countries that allow collapsing mines and factories, until they get their act together. China is free to do as they want; I’m not forced to accept that we must buy from them because some globalist deity of some sort said we must. > [@](#): > > Yeah, I know, and thats silly. China is going to a lot of effort to prevent the gender mismatch in births but the one child policy is making that tough, even without the one child policy, it would have been a challenge. Imposing trade sanctions for stuff the China is going to a LOT of effort to prevent is silly. Okay, I don’t agree, but let’s go with trade sanctions over their Government-imposed one child policy, which any civil libertarian would say is a huge abomination. > [@](#): > > Going cold turkey on ANYONE hurts us but i am willing to support retaliation against CHINA because they are engaging in unfair trade practices, Saudi Arabia isn’t. _sigh_ Okay, then how about we phase out to alternative energy and in the meantime sanction Saudi Arabia for manipulating [major “news companies”](http://thinkprogress.org/2010/02/10/right-rebels-foxnews/) into foisting propaganda on us to defend their outdated oil industry profit model? (Matter of fact, I’m against any foreign nationals manipulating our news outlets.) > [@](#): > > /sigh cite please. [Ask and you shall receive](http://thinkprogress.org/2010/02/10/right-rebels-foxnews/). Do note that while that is a Thinkprogress link, there are several other links found therein which substantiate this story. [This one](http://rawstory.com/2009/2009/12/murdochs-news-corp-cements-ties-saudi-prince/) can be found in Google cache; it shows Joseph “World Net Daily” Farah raising alarms about the Saudis doing this. In short the Saudis have been caught by a bipartisan group of people and heavily criticized for this behavior. On a side note, you do realize that I spend a LOT of time providing citations for stuff that I claim and it is fairly frustrating that I get asked (mostly by others, not you) to provide the same thing over and over again or worse get accused of not having provided it at all (even after I’ve already done so once or twice)? > [@](#): > > No, we don’t we can raise taxes and cut spending after we get out of this recession. That would be nice. But Republicans, who are about to take Congress, have been [voting down social safety net programs like unemployment benefit extensions](http://voices.washingtonpost.com/plum-line/2010/07/republicans_delay_vote_on_unem.html), while there are [5 people fighting for every job](http://lifeinc.todayshow.com/_news/2010/09/08/5070380-for-every-job-opening-nearly-five-people-seeking-work). Things like this will only contribute to the recession through a ripple effect of fewer people having money to spend and businesses closing. Republicans aim to take us down the doomed path of austerity measures in the face of a major recession. Austerity programs are going on around the world with mostly negative effects. Austerity measures have screwed [Ireland](http://baselinescenario.com/2010/09/02/irish-worries-for-the-global-economy/) more than it has helped. Plus the voters are [now turning against](http://dealbook.blogs.nytimes.com/2010/06/29/in-ireland-the-high-cost-of-austerity/) the politicians who forced austerity upon them. [Europe in general](http://www.businessinsider.com/moodys-austerity-credit-ratings-downgrade-24-august-2010) Austerity also [killed a robust U.S. recovery from the Great Depression](http://www.nytimes.com/2010/06/18/opinion/18krugman.html) in 1937. Austerity in Greece triggered a [stock market panic](http://hotair.com/archives/2010/05/06/stock-market-in-panic-after-greece-austerity-bill-passes/). Austerity measures are [also failing](http://abcnews.go.com/International/wireStory?id=11382916) to even help Greece’s problems. Plus austerity in Greece is [running the risk of a civil war](http://www.telegraph.co.uk/finance/economics/7980291/EU-austerity-policies-risk-civil-war-in-Greece-warns-top-German-economist-Dr-Sinn.html). And things are projected to go badly for [England](http://www.presstv.ir/detail/140693.html) because of their austerity measures. > [@](#): > > If its inevitable then it hardly a threat but noone thinks its inevitable anymore. America isn’t going to become a third world economy as long as it stands up to China. They may be the second largest economy in the world but they are a distant second and their growth does not mean our demise any more than Canada’s growth means our demise. We just need to prevent unfair trade practices and our manufacturing base will grow at the margins, enough to absorb a lot of the current unemployment. I doubt that even if we merely stop China’s currency peg our manufacturing base will grow enough to absorb a “lot” of the current unemployment. You do know how many jobs we need now just to keep pace with population growth since Dec 2007, right? [Around 2.7 million](http://www.npr.org/templates/story/story.php?storyId=124376881). Instead we lost 8.4 million (same cite). I’m not sure how hotel clerks, wal mart, fast food, nursing, plumbers, electricians, painters, drywallers, teachers or nurses _combined_ could cover that. Much less restore these workers to the wage levels they earned before. The math says a lot of people are going to have to accept a lower standard of living after the recovery. How is this good for an economy, or for a country? > [@](#): > > > [@](#): > > > > We’ve had Depressions before and we’ll have them again. We can use that situation to make serious fundamental changes to our economy. We most certainly succeeded in doing that the last time. > > Not when the voting population seems to be blaming the Democrats for the recession. [/quote] True that. _Phew_ I’ve spent 90 minutes cobbling together all of this documentation. What are your bets that I’ll be accused of not doing my homework to back up my arguments _again_? ---
**Author:** ![Honesty](https://avatars.discourse-cdn.com/v4/letter/h/f04885/32.png) [@Honesty](https://boards.straightdope.com/u/Honesty)\ **Post date:** [October 6, 2010, 11:58pm UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/79 "2010-10-06T23:58:45Z")
> [@Shodan](#): > > > [@Le\_Jacquelope](#): > > > > If China gets ugly about it, default on all debt owed to them and cut them loose. > > What will you do when the Supreme Court tells you that this is in [direct violation of the Constitution](http://en.wikipedia.org/wiki/Fourteenth_Amendment_to_the_United_States_Constitution)? > > Regards, > Shodan I read the link and I’m not seeing how the U.S defaulting on debt is unconstitutional. > [@Le\_Jacquelope](#): > > 1. No currency pegging > 2. Their wages rise to levels comparable to the Western block nations > 3. They have full-on democracy (I’m not in favor of invading and “democratizing” them, but we do not have to trade with them either) (Obviously this primarily applies to China) > 4. Institute rigorous pollution control laws on par with the Western block > 5. Institute workplace safety laws on par with the Western block > 6. Show a drastic decrease in their people’s habits of singling out baby girls for death or abandonment, and I mean all the way down to Western block levels (which are, compared to them, pretty much nil) (this obviously applies chiefly to China and India) > 7. Respect Western intellectual property laws I agree only agree with #1. Most of your suggestions strike me as either unnecessary (# 2, 3, 5, 6) or better handled by the United Nations (#4). I do think currency pegging is an issue. It’s madness how little outrage there is; it’s like our world leaders are actors in an alternate version of Shyamalan’s \*The Village \* where no one will acknowledge or discuss Chinese currency manipulation and its deleterious effect on the U.S economy. - Honesty ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [October 7, 2010, 2:10am UTC](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111/80 "2010-10-07T02:10:51Z")
**LJ** : Here’s a little free advice. If you make a post with 25 links and not one single quote from those links, no one is going to go and real all those cites. Especially when we’ve seen in the past that your links are often: 1. Completely unrelated to your argument. 2. Some opinion piece that may or may not true. 3. Contain information that contradicts your statements. Slow down. Pick one argument and make it. Throwing out google searches of random articles that may or may not touch on the debate topic isn’t going to score you any debate points here. You need to link to primary sources, with factual data. You need to excerpt the appropriate section so people don’t have to wade through 100 pages of junk to find out what in that article you are talking about, and then people will respond to you. Free advice. Take it or leave it. [Previous page](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111.md?page=3) [Next page](https://boards.straightdope.com/t/its-time-to-establish-trading-blocks/556111.md?page=5)