This just doesn’t jive with past unemployment for performance. For an entire decade of offshoring, i.e. 1998-2008 the U.S. had about the minimum possible unemployment for an economy. It’s only recently that we’ve had a problem with unemployment, and that is because of the economic crisis, and is unrelated to offshoring.
In reality, China’s currency peg isn’t that big of a deal. No one knows for certain how undervalued the currency is, but from what I’ve read, 10-15% is about the number. That’s significant, but it isn’t a game changer in terms of manufacturing in the U.S. If China unpegged it’s currency, the jobs likely wouldn’t come back to America. They would go to India, Vietnam, Indonesia, Laos, and other poor countries.
Even if they did come back to the U.S., the net effect would that everything would become more expensive. More expensive items means that people will have to settle for fewer possessions or lower quality ones. In aggregate, that means we have less wealth and a lower standard of living.
Well, if you think it would boost our economy and help everyone, why wouldn’t that result in an increase in our standard of living? That’s all I’m interested in. If it increase our “utility” but decreases our standard of living, then no thanks.
No. If Chinese labor rates increased to where they were not competitive with poorer countries, the jobs would go to the poorer countries, not to the US. There are billions of people living in low wage countries. Billions. I don’t know why anyone would want to compete with them. It makes no sense.
I just have a few moments, but I’ll point out that it doesn’t actually break WTO rules for the US to unilaterally impose countervailing tariffs. There’s an investigative procedure that the US would have to initiate and it has to follow certain guidelines. If the results of the US investigation were to show that the Chinese peg meets the criteria for countervailing tariffs, then the US is allowed to impose them without going to the WTO’s Dispute Resolution mechanism first.
My preference is to get a final ruling from the WTO’s Dispute Resolution mechanism, in order to minimize economic uncertainty, but it is within the US’s power to impose the tariffs without going to the WTO first (providing the proper procedures are followed).
Of course, the unilateral imposition of countervailing tariffs is itself subject to WTO dispute resolution.
Different kinds of manufacturing. As I must - tiresomely, at this point - once again note, the U.S. is still a world leader in manufacturing. Some TYPES of manufacturing are going offshore. Others are not.
Yes, we’re in a recession, which was caused by a monetary crisis, not offshoring. The recession will end, as they all do.
Where do you think the jobs came from before? Innovation and hard work. Jobs have always come from those things, and will continue to do so.
I realize there are no easy answers to the high unemployment rate. I realize it’s frustrating as hell to be unemployed. I know that it’s awfully tempting to just blame the heathen Chinee. But the fact is that there’s no magical fix like “Ah, raise tariffs against China, that’ll fix 'em!” The path to economic growth is the same as it has always been; peace, political stability, the rule of law, free trade, freedom, good monetary policy, and a government willing to get involved where externalities are concerned and keep its hands off when they’re not. Those things work slowly, but they do work. We had a failure with monetary policy and, to some extent, the law. It’s being fixed. It’ll take awhile, but these things always do.
Blaming foreigners ain’t the answer.
I could go into a detailed explanation, again, of the concepts of comparative advantage, of where jobs come from, of the differences between monetary and fiscal and trade policy, but I’m not getting paid to teach an Econ 101 course.
Hm, if the call centers are gone, I suppose they can all get McJobs … and I dont know about your area, but manufacturing has mostly bailed out of Connecticut and nothing is replacing it. Heck, even McJobs are getting scarce as the stores are closing down because nobody is going out to eat.
I am reasonably patient, but unless something drastic happens to drop the taxes on businesses in my state, there certainly will not be any light medium or heavy industry moving in any time soon. I seriously doubt that there will be many call centers moving in either.
I certainly can’t work a McJob, gimps tend to be hard to place in jobs, I guess they think I am contagious or some such nonsense. I cant work at manufacturing, anyway - the wheels get in the way. I can’t work stocking shelves at a store, again, the wheels get in the way and i have issues getting to the top shelf. I seriously doubt that retraining would be of any help either, I have already gone that route once, and that job laid me off [and 52 of my co-workers in 1 day, 15% of the company population in one shot] and nothing is in the offing for most of us. I know at least 23 of my laid off compatriots that are still looking and it has been more than a year.
I’m really sorry you’re having trouble finding a job. Obviously, I cannot speak to your personal problems, of which I have no information and which, equally obviously, have very little to do with my making general observations about national economic policy. I sincerely wish you the best and hope you find something really good soon.
If I took what you said at face value, I would expect rising wage levels and lower u6 numbers during that time period but this simply has not been the case. Wages have remained stagnant and the U6 numbers have been higher than historical average.
Try more like 40% undervalued. A lot of the jobs that supply stuff to US consumers would return to the US.
And why wouldn’t the effect be more like what I said?
Globalization HAS indeed improved our aggregate economy but consider this…in the last 30 years 80% of the income increase in America has gone to the top 1% of Americans. 90% of American shared 15% of that growth. This isn’t all because of globalization, a lot of it is laissez faire policies and winner take all marketplaces but globalization contributes to this statistic as well, and the effect is much more harmful for 90% of Americans than it is helpful for that 1% of Americans.
If you define standard of living as whatever produces the greatest gross accumulations of wealth without regard to distribution even if people then you’d probably hate my ideas. If you define standard of living as how the typical person lives along with how well the poorest lives along with providing opportunities for success for the ablest amongst us, then you will probably like my way of thinking.
I can tell you for a fact that China is not likely to lose jobs to places like Bolivia anytime soon. The workforce quality just isn’t competitive with Chinese workers at any price. Low productivity labor is almost worthless without a critical mass of somewhat higher productivity labor. It doesn’t matter how many folks can load boxes on the truck if noone in the country has the skill to make anything worth putting in boxes.
All of our job woes are not China’;s fault but at the margins, there is some significant number of jobs that are missing in the USA because of the currency peg.
No, he’s not discounting that. We know there are certain jobs that are gone, and not coming back. Chasing those jobs is a fool’s errand. Chase the newer, better jobs that an economy like ours can create. In fact, how about creating some of those jobs yourself? I don’t mean that in a scolding kind of way, but I think too many people look at “jobs” as things that other people create and that we go out and get. But someone has to create those new jobs. Why not make that person you?
Do you have a cite for that? All I’ve found for U6 in chart form is here (PDF page 12). That chart shows U6 being 12% in 94, steeply declining, and not making it back to it’s 94 level until the current economic crisis.
I don’t think wages have been stagnant either. Maybe for low income factory line workers, but for most of Americans income has been rising.
I don’t believe it’s 40% undervalued. That’s higher than any estimate I’ve seen.
Because you’re wrong? That’s really all that it comes down to.
It isn’t harmful for 90% of Americans. It’s harmful for maybe the 10% of Americans who don’t really have a marketable skill. Those that do have seen there quality of life increase due to globalization.
How in heaven’s name do you get that idea? Jesus, I must have said twenty times in twenty different ways in these damned threads that the solution to this sort of thing is allowing the market to replace jobs, not chase the ones you’ve already lost.
Replace with what? It is clear with the unemployment that we have a lot of chasing to do? Where do we start? What direction do we go since we will write off high paying technical and manufacturing jobs.
Gore is pushing jobs in green energy. That is a way for a big future. the country that leads in that field will have a huge leg up. But if we do invent the next technology, the owners will offshore it again. They will look to cut labor costs .
If I know, I’m loading all my money into that industry and not letting anyone else in on it.
They’ll be replaced with other jobs. They always have been in the past. What jobs those will end up being we don’t entirely know; I could throw out some guesses, but who in 1805 would have seen the rise of railroads? Who in 1870 could have imagined how many people would be employed in making cars? Who in 1900 would have guessed that in 2010 the USA’s biggest export would be gigantic passenger airplanes? In the future there will be jobs in industries and of sorts we can’t predict now.
Think for a moment- what does “fair” mean? God didn’t include many rules for international economics in the ten commandments. It’s generally agreed that countries have an intrinsic right to manage their own internal affairs, as long as they don’t violate human rights or start wars. So “Fair” is not something with a universal definition.
What seems “fair” is going to depend on your perspective. From the US point of view, free trade seems fair- and not coincidentally that happens to favor large well-developed economies like ours.
But, I promise you, from the point of view of a small country like Nepal, free trade seems like a guarantee of getting completely screwed. If they were defining “fair” they would no doubt include contracts that make it easier for a small country less developed country to compete globally. I have no idea what North Korea would consider “fair,” but it probably wouldn’t be what is going on now. Back in Soviet times, they ran a whole different trading system that they, no doubt, considered “fair.”
The point is, everyone is going to define “fair” as what best benefits them. This is, in fact, exactly what we have done.
The only reason our version of “fair” has any global traction at all is because we are so big people have to play along by our rules. And they do indeed bitch about it. There is no shortage of official and unofficial bitching about how the US is able to impose it’s financial policies on the world. I’d venture most of the world doesn’t think our version of things is “fair” at all, but in true “unfair” fashion they have no ability to resist it.
Well, there is a new kid on the block. They have their own version of “fair,” and apparently they are big enough to enforce it.
You can be bummed that you aren’t the only game in town anymore, and you might have to share your toys. But it’s fatuous to claim any sort of moral high ground.
I don’t think we chase jobs taht we are going to lose in any event, but I think we protect those job (even the crappy ones) that we would be able to keep if China wasn’t engaging in unfair trade practices.
I’ve run several businesses in my life and the lowest barriers to entry seem to be in retail. There is almost no point in opening retail these days. people aren’t spending money. Forget getting a loan, I don’t need to borrow money to open up a store, it doesn’t really cost THAT much. What I need to open up another store is more customers. people aren’t spending money. Forget about taxes, I need profits before I have to worry about taxes. Give me a customer base before I can even start to worry about whether the return is good enough to make the capital investment or borrow the money and take the risks. people just aren’t spending money.
I’m not sure if that 2nd paragraph was in response to my post about creating your own jobs, but if it was, I’ll just say that retail isn’t the only way to create jobs. That’s not even what I had in mind, although it’s certainly an option. I don’t really even know how to respond to such sweeping statements as “people aren’t spending money”. People may be spending X% less money than they were 2 years ago, but let’s focus on what “X” is, and not assume X = 100. I’d be surprised if it was even 10.
I guess i would point out that your original statement was 1998-2008. I look at this chart:
I’m not blaming everything on trade. But I do think that China’s unfair trade practices are having a deleterious effect on domestic employment. I don’t know why you keep objecting to retaliating against China? part of your argument seems to be that we would invite retaliation if we did anything. Well, in this case, WE are the ones doing the retaliating.
not in real terms:
Not for the typical household. Now of course MEAN household incomes have done very well but almost all of that gain has been captured by the top 1% of American households.
Foreign politicians, especially those from the US, have been hammering these points home. President Obama made the RMB a key issue during his visit to China this week. Senator Chris Dodd chimed in with his two cents, that “You can’t give your competitor, your adversary in this case, a 40 percent advantage in global economies.” As analysts pointed out, the US, unfortunately, doesn’t have any leverage on this issue, as it is basically dependent on China to fund its budget deficits through Treasury Purchases. Thus, Chinese Prime Minister Hu JinTao couldn’t even be bothered as to so much mention the RMB when summarized the meeting with Obama for reporters.
Now that I take another look at it 40% is at the high end of the consensus which seems to be 20% to 40%.
“There is no serious debate about whether China’s currency is undervalued against the U.S.
dollar. There is a general consensus among economists that the Chinese yuan is undervalued by
as much as 40% against U.S. dollar.”
Warning PDF CHINA’S UNDERVALUED CURRENCY:
KNOW THE FACTS
So your evidence is that you disagree with me? Great argument. I accept that any sort of impediment to free trade is likely to result in lower aggregate wealth, I don’t accept that it will result in lower societal utility where the distribution of wealth becomes a factor. I don’t think we need to support an economic policy that makes a few Americans insanely rich on the order of billions of dolalrs while stripping folks who make $30,000/year of their income, especially when we are so reluctant to tax the guy that is making billions of dollars.
It is harmful if those 90% of Americans would otherwise have higher incomes, lower unemployment rates and greater job security.
Maybe I should make clear that I was talking about REAL incomes so whatever increases in quality of life you are talking about, it doesn’t include buying power. I guess you could argue that people would have suffered a significant DECREASE in buying power BUT FOR the cheap imports.
Some of those jobs should not have been lost, WOULD not have been lost BUT FOR unfair Chinese trade practices.
The market is NOT replacing those jobs very well and it certainly isn’t replacing those jobs TO THE PEOPLE WHO LOST JOBS very well at all. Do we simply write off a generation of our workers because China wanted to grow faster than normal market forces would have allowed them?
There are folks I jknow in Indiana who have been “retrained” 4 or 5 times in the last 20 years. Anything you can “retrain” someone for in a reasonable amount of time here, you can train someone in China for at a much lower price. Add to this the distortion of the currency peg and you have people coming out of “retraining programs” with skills that are obsolete within the year.
So what NEW JOBS are you talking about? What is the marketplace replacing these old jobs with?
Yes, but the speed of change is different nowaday. So much so taht we can no longer ignore the rate of change in our economy compared to the human being’s ability to assimilate that change, especially when that change is being accelerated through unfair trade practice.