Offshoring - the snake that is eating itself.

[Le_Jacquelope]

@RickJay

@Le_Jacquelope

You spent all that time declaring that I’m not rational only to end this with “They’ll be replaced with other jobs”. How is that rational?

I’m not sure you’re quite solid on what the word “Rational” means. If you mean based on reason, it is rational to assume that things that have always happened before, for centuries, in fact, will continue happening.

Since the tech crash of 2000 that has, in fact, not been happening. I would cite for you the issue of anemic job growth during the ensuing Bush years but you’d only discount that, falsely claim my citations contradict me (without explaining how they do so), accuse me of “throwing things out”, and then whatever else you like to say. Obviously you have zero idea of how relevant anemic job growth is to your argument that “they’ll be replaced with other jobs”: or you see history proving you wrong and attacking me is your way out.

In short, more recent history has not backed your argument for the last 10 years. This financial crisis has done little more than crack open an already hollowed-out economy.

Since history does not back your claims, your point is not rational. It shows a profound blindness to what has been going on in the last 10 years: namely, there has been nothing in the last 10 years that has been sufficient to replace the jobs we’ve lost, certainly nothing that has been able to keep job growth on par with population growth or keep wages on par with inflation. Of course I’ve also documented and cited that but you rejected it because… because what again? Ah yes, because no amount of facts in the universe will be accepted that contradict the idea that the rules of economics that has only worked for the last 200 years of the history of man will work forever and ever, amen. :rolleyes: And there we go again: explaining facts to you in the clearest possible English only to likely be accused of being “all over the place”. Or maybe you’ll ask me for more cites even after I’ve already cited all of my points above. News flash: that’s not straight doping; that’s smokescreening.

Allow me to break things down more simply: times are changing. The rules are changing. What happened for the last 200 years is not a historical roadmap to the future. Except for one thing: economic collapse. And that one is certainly coming, and the third world, which feels we owe them their prosperity, will have their day of reckoning.

You aren’t going to AGAIN introduce this old myth that unemployment is calculated by adding up the number of people on unemployment benefits, right? The myth that on this message board has been refuted - oh, I’m guessing, three hundred times? Get your facts straight.

That’s not what I said. Not even in the same universe. Do not twist my words. Ugh, what am I saying? All of your accusations that I don’t know what I’m talking about are based mostly on words I never even spoke.

Why do I even try… oh well here we go again. Those out of work and not getting unemployment benefits aren’t counted in the typical U3 measurement that the American press goes by. That is what I was referring to when I said 10%. When I mentioned people who ran out of unemployment benefits, that goes into U4. Which is the higher figure that I referred to.

Quite a lot of the lost jobs ARE coming back,

Uh, no they’re not. You’re just throwing stuff out there now.

Counter facts, not that anyone reads citations anymore:
Of the eight million jobs lost, three-quarters were in positions that are not likely coming back. Even those economists you hold in such high esteem agree with me and disagree with you on this.

I’m not even going to get into the error of saying “let the manufacturing jobs go”. You haven’t even dared to answer me on “then what about the research and development jobs that are leaving the country?” Or if you ever do answer it, o you’ll throw out the old saw of “throwing out arguments all over the place” even though my most obvious point is “everything that is not nailed down is going overseas or threatening to go overseas”. Ugh. Can’t wait to see how that’s twisted.

Oh and I noticed you had ZILCH to say when I documented and explained to you the migration of two major types of research jobs overseas: solar energy and biotech. I documented this for you. I recall you saying that “we’re not competing against China for manufacturing jobs” (which is a load of BS) and someone else said “if we kept those manufacturing jobs it’s a sign that we’re a poor nation”. So what’s your explanation for biotech and solar energy research jobs going overseas? We’re not competing against the third world for research jobs now? If we keep research jobs it’s a sign that we’re regressing? I haven’t heard you explain how good it is for America to lose both manufacturing AND innovation jobs. Why is that?

Then you say a lot of liberals dislike my arguments but you should never have been given such a free pass saying “Quite a lot of the lost jobs ARE coming back” when even your own economist gods say most of those lost jobs are not. That such a clearly wrong statement gets by without criticism shows me there is no “straight dope” here. Zero. Zilch. Your own great and mighty economists would do a headdesk in response to that comment. Yet not one Straight Doper flinched at that.

Anyways. Enjoy the endless string of jobless recoveries. I assure you that anemic job growth (that fails to keep up with population growth) during recovery years, and shorter recovery spans before another recession hits, is the future for the United States. You can feel free to laugh when ever that stops happening. More than likely you won’t be laughing because the jobless recoveries and anemic job growth won’t ever stop happening until the economy finally collapses and the Third World loses its economic meal ticket. Won’t that be a bitch for them… it sure will be a bitch for us.

Oh and good luck, Gonzomax, with pointing out the R & D thing. Yer gonna need it.

[Le_Jacquelope]

@RickJay

You seem to just be assuming that anything bought from overseas is a dead loss. I’m not sure what to say to something so… well, hopelessly false. Buying stuff from a Chinese person does not mean you lose one American job with no correlating benefit. How are you accounting for the jobs created by these efficiencies?

You mean the low paying retail and service jobs that trade with China creates?

How much does the average Wal Mart worker earn versus a worker at an American manufacturing company in the U.S.?

[RickJay]

(Screwed up quote about stagnant job growth in 2000s - I messed up the coding)

I’m aware job growth was stagnant during most of the Bush administration, *in part because unemployment was already so low at the beginning of his administration. * Nobody’s claimed otherwise. What you haven’t done is demonstrated that tariffs against China will make jobs reappear.

In short, more recent history has not backed your argument for the last 10 years.

My decision to use an immensely larger data sample is clearly… uhhh, that’s a BAD idea?

Allow me to break things down more simply: times are changing. The rules are changing. What happened for the last 200 years is not a historical roadmap to the future. Except for one thing: economic collapse.

Again, give me a date and an amount you want to bet.

Why do I even try… oh well here we go again. Those out of work and not getting unemployment benefits aren’t counted in the typical U3 measurement that the American press goes by.

Wow. Bolding mine.

So I accuse you of citing the 10% as not including people who aren’t taking unemployment benefits. You angrily state that’s not what you said and then… you say it again, claiming the 10% figure doesn’t include people who aren’t getting unemployment benefits. So you’re restating what you stated before - that the 10% figure doesn’t include folks not getting unemployment - while simultaneously, angrily, claiming you said nothing of the sort.

Again, what you’re saying is false. This is not how U3 is calculated. It has NEVER been calculated this way; never in the entire history of the ILO’s definition of unemployment, and the Department of Labor’s calculation thereof, have people not getting unemployment benefits been excluded from U3.

U4 includes people who have stopped looking for work entirely, which perhaps is the source of your confusion. The difference between U3 and U4 has nothing at all to do with unemployment benefits.

Anyway, I won’t paste your link because repasting links is messy, but you provide one cite that says that some lost jobs aren’t coming back. Yes, we know. This doesn’t really contradict my claim that some ARE coming back, though.

I’m not even going to get into the error of saying “let the manufacturing jobs go”. You haven’t even dared to answer me on “then what about the research and development jobs that are leaving the country?”

So create more.

Do you seriously think you can prevent research and development jobs from “leaving” the country? How on earth can you do that? Are you going to try to prevent the other 6.7 billion people in the world from researching things?

Oh and I noticed you had ZILCH to say when I documented and explained to you the migration of two major types of research jobs overseas: solar energy and biotech.

1. You didn’t really explain anything, you just railed about it.

2. I don’t see how this has anything to do with manufacturing in China and, again, I don’t understand how it is you’re planning to stop the rest of the world from researching things, or for that matter why it’s a bad idea to have 7 billion people doing research instead of 300 million.

If the United States wants to raise tariffs against junk made in China, that’s one thing. You can’t really raise tariffs against ideas, though.

I haven’t heard you explain how good it is for America to lose both manufacturing AND innovation jobs. Why is that?

Because it wouldn’t be true.

It’s clear that I’m wasting my time here, but I’ll try to explain this in as short and as succinct a manner as I can; jobs are not a limited number of things that we mine up out of the ground and have to keep for ourselves. They’re not limited resources, like coal or oil. Jobs are created through hard work and innovation and trade. If you have a trading partner who does Jobs A, B, C and D, that gives you an opportunity to do Jobs E, F, G and H. The richer the Third World gets, the richer WE have the potential to get.

Having enough jobs for everybody is simply not a function of stubbornly holding on to the ones you currently have. If that were true, unemployment would be ninety percent, because most jobs that we’ve had have been eliminated.

If you give Americans (or Canadians, or Australians, or whomever) a stable society, rule of law, freedom, property rights, and control of externalities, the jobs will be created because people will create them. In the long run they’re not going to sit around doing nothing and buying Chinese T-shirts; they’re going to do something to sell to someone else.

If you look at countries with really horrible unemployment rates they’re not formerly-first-world countries being exploited by poor countries (that’s a laugh.) They’re countries that lack one or more of the things I have listed that create prosperity.

… when even your own economist gods say most of those lost jobs are not.

Who are my economist gods? Names, please.

Economics isn’t religion. It’s science. We should be skeptical of all scientists, because that’s what science is.

[RickJay]

Deleted an accidental duplicate post

[CalMeacham]

Do you seriously think you can prevent research and development jobs from “leaving” the country? How on earth can you do that? Are you going to try to prevent the other 6.7 billion people in the world from researching things?

Fun as this is to watch from the side, I have to step in here about this.
You’ve twisted the situation around grotesquely. No matter how much people outside the US research things, that doesn’t do anything about jobs leaving the US. What makes R&D jobs leave the US is when multinational companies take their R&D out of the US, partly because they want to foster brand awareness in those countries, but undoubtedly more because the costs of R&D are cheaper abroad.
Nobody’s opening new corporate R&D labs in the US – they’re closing them down (or the companies themselves are dying). The big Bell Labs in Holmdel, AT&T Labs in Waltham, Several Johnson and Johnson Labs, the big Bausch and Lomb Glass Lab, and, of course, Polaroid and AO are completely gone.

[RickJay]

@CalMeacham

Fun as this is to watch from the side, I have to step in here about this.

You’ve twisted the situation around grotesquely. No matter how much people outside the US research things, that doesn’t do anything about jobs leaving the US. What makes R&D jobs leave the US is when multinational companies take their R&D out of the US, partly because they want to foster brand awareness in those countries, but undoubtedly more because the costs of R&D are cheaper abroad.

I don’t see a material difference, to be honest, but let’s assume there is; the question stands as to how Le Jacquelope plans to prevent this.

I really don’t buy the notion that there isn’t R&D going on in the USA just because some big names aren’t keeping R&D centres open; the USA remains the world’s leader in most measurements of R&D. But, there are certainly examples of R&D being offshored. My best friend works for Cisco, and Cisco has effectively given up on hiring engineers in California; they do almost all their hiring in India. So there’s one example.

My questions would be

1. How could you prevent this? and
2. Do you want to?

I don’t see a way to prevent it, and I’m not convinced that you want to. If John Chambers wants to move to Bangalore, he’s got his reasons, I guess. I’m not convinced that independently that’s a good thing for the USA, but I am equally unconvinced that all those Americans left behind are going to just sit on their asses, and that there won’t be a reorganization that will result in new jobs being created in California.

This goes back, though, to why we’re essentially talking about the same thing. If Cisco’s moving engineering jobs to India, it’s because they perceive that to be the economically logical thing to do. Now, who knows, maybe they’re wrong, and they will fail spectacularly and other companies won’t follow suit. But if they’re right, then there’s not really a material difference between Cisco moving jobs to Bangalore and an Indian startup creating the jobs themselves. If Cisco DIDN’T build a campus in Bangalore, the likely result is simply that “Bangalorsco” would be created to build low-cost switches and network equipment and would start eating away at Cisco’s market share.

While this might take a few years longer than the existing American company building a campus in India, the end result would not only be the same, but would arguably be worse for the USA, since now you’d have an entirely Indian company raking in the bux, as opposed to an American concern raking it in. When sales of switches were made in Canada or the EU or Dubai or wherever, all the profits would go to Bangalore, and none at all to San Jose.

Of course, the USA could raise trade barriers to prevent Bangalorsco from selling its switches in the USA, but that wouldn’t help them at all in any other market, would present the customer with fewer choices, cause trade fights, and so on.

You can’t stop Indians from doing R&D. The question is, do you want American corporations to get a piece of that action? From a pure national interest perspective, isn’t it better for American companies to invest in India and own that operation, rather than waiting for India to do it? Imagine if American investors had created Toyota, Honda and Datsun/Nissan back in the 50s.

[gonzomax]

You keep taking a snap shot of 3 arrows. Two are on the way up. One has peaked and is dropping . While America has been on top a long time, you would have to be in a coma not to see what will happen in the future. India and China are getting stronger and richer, thanks to the gifts corporations have given them, our hard earned technology and our jobs.
They are no longer American Corps. They are international and many are not headquartered in the US. They avoid American taxes for the Caimans or Dubai. They avoid regulation so they can pollute the land and air. They eschew American labor and go where workers have no protection and make almost nothing. Nothing like child labor for making products, is there?

[Damuri_Ajashi]

@John_Mace

@Damuri_Ajashi

Mostly because its true.

If it’s true, then let’s see an unbiased, academic source backing that statement up.

Why the hell would I need academic theoretical evidence that something happened when I have seen it happen. I have seen factories get closed down and seen the exact same factory opened by the exact same company in China and the decision would not have been made if Chinese costs were 40% higher. To say nothing of the new factories that WOULD have been built here but were instead built in China. Sure its not the only concern but the factory would not have moved anywhere if China was 40% mroe expensive.

If China never became the factory floor of the world, we would not have the trade deficit we have. The fact that Sri Lanka is also a cheap source of labor doesn’t mean that absent China, we would be importing JUST AS MUCH from places like Sri Lanka. If China’s currency floated, do you think that our imports would remain constant but that we would simply start importing from Viet Nam instead of China?

Yes, I do. Or, we’d just buy less stuff in total. People have a certain amount of discretionary money to spend. If prices rise, they are more likely to cut back on purchases rather than dig deeper into their pockets.

And you don’t think their discretionary income would be affected by more factories and jobs here in the United States?

Fact is, people like buying cheap stuff, and businesses are good at finding ways to provide cheap stuff to consumers. If it’s not made in China, it can be made somewhere else much cheaper than it can be made in the US. Make it in Indonesia, Malaysia, India or even Mexico before you’re going to make in the US.

Noone is saying that all of Chinese manufacturing would move back to teh USA but at the margins, when US currency becomes cheaper and Chinese currency becomes more expensive it is inevitable that some production would move back to teh US. For a guy that knows a lot of about economics, i don’t understand why you don’t understand that simple fact.

By your reasonaing, there would be no benefit to a cheaper dollar because all the new production wold move to places like Cambodia because they have an absolute advantage on labor costs no matter what. Then explain why we are exporting more and importing less in almost perfect correlation to the reltaive value of our currency.

[Damuri_Ajashi]

@xtisme

@Damuri Ajashi

You are assuming that new jobs replacing old jobs THAT HAVE BEEN OBSOLETED BY NEW INDUSTRIES is the same thing as “new jobs will replace old jobs that have been shipped overseas”

Well…yeah. Why wouldn’t this be the case. From a labor perspective, what’s the difference between workers being laid off due to automation and workers being laid off due to moving their jobs overseas? A worker who isn’t working because a robot turns the screw or welds the weld s/he used to turn or weld is just as out of work as a worker laid off because someone in China now turns that screw or welds that weld, no?

And that idle worker represents the same possible resource for some new or existing industry to utilize, regardless of the reason they were laid off. You’d need to explain why you perceive a difference.

In the first case, the money stays in the US.

Sure it can. Or not. It’s more dependent on the state of the economy (and the recession) than it is on whether the job was moved offshore, eliminated due to automation or was due to cut backs due to lower demand (the real reason most folks who are recently out of work today are unemployed…the offshoring bug-a-boo is a load of horseshit, numerically speaking, though it seems to be a huge rallying cry certain Dems and Pubs lately).

You’re missing the point. The SPEED at which unemployed people can recover jobs is overwhelmed at the rate at which people are structurally losing jobs. This is bound to happen nomatter what but the speed of job loss is accelerated by the unfair trade rpactices. I don’t know why everyone is defending China’s unfair trade practices. What is so fucking sacred about free trade that we have to surrender our economy to preserve it when others are cheating?

Ok. What if instead of moving textiles offshore the manufacturers had automated instead? Would those towns still have retained those jobs? How would it be different?

That money would have stayed here. The automation would have provided jsut as much of an increase in the stadard of living in the form of cheap goods and the cheap goods would have led to even more production than we had in the first place, perhaps even enough production that simply maintaining the machines and exporting the goods would have alleviated some of the job loss associated with automation. No quite as much alleviation when the factory is overseas.

Which was at least partially caused by the same sort of economic ignorance being touted in this thread…i.e., the fear of foreign competition and foreigners ‘stealing American jobs’, etc etc.

Are you putting me in the camp of economic illiterates? Do you think I am proposing isolationism? Why do you think we should continue to tolerate unfair trade practices in the form of a currency peg? Or do you think there is nothing wrong with teh currency peg?

Or a failure to recognize why it might be a bit different this time.

How is it different this time? What’s different? Why has offshoring only NOW (that we are in a major recession not caused by offshoring) caused this supposed problem? Could you explain why you think the situation has changed?

Explain to me where all these new jobs are going to come from. Its like you don’t believe that econmic superpowers can become economic backwaters. Heck China and Italy used to be economic superpowers, where are they now?

My problem is with the currency peg. I don’t care if you think it is scosting us 500,000 jobs or 1.5 million jobs. It is clear that the currency peg is shifting more jobs from the US to China thana floating currency would permit.

[John_Mace]

Damuri Ajashi: Here’s the thing. Let’s say we put a 40% tariff on Chinese goods. What is the net effect of that tariff? How many jobs will be created in the US and how much income will that generate relative to the price increase of all the other goods that either continue to be manufacture in China or some other, low-wage country? If you can’t answer that question, then you shouldn’t be advocating a policy that is contrary to generally accepted economic principles.

Even if it made economic sense to move a factory back to the US, business people aren’t stupid. They know that a 40% tariff today can turn in to a 10% tariff next year or a 0% tariff the year after that. Companies need stability in order to make plans. No CEO worth her salt is going to make important, long term decisions based on populist legislation that can, and probably will be changed in the next election cycle.

[CalMeacham]

I really don’t buy the notion that there isn’t R&D going on in the USA just because some big names aren’t keeping R&D centres open

I didn’t say there’s no R&D going on. There is R&D going on in Universities. And there are a few companies with R&D centers. But it’s not “some big names” who aren’t keeping them open – it’s most of them. Besides the ones I mentioned (which I have personal experience with), there’s Bethlehem Steel. IBM and Xerox and Kodak have cut way back.

[XT]

But why have they cut back? Because of the recession? The impact on their revenue or diminishing market share? Or because of outsourcing? Some combination of those factors? Other factors?

-XT

[Damuri_Ajashi]

@RickJay

I know those towns. They suck. You don’t have to tell me that economic change can hurt people.

But the Rust Belt cities were declining before the current wave of offshoring to China. Why do you think that is? Do you think the government should have stepped in to prop them up?

Didn’t you just say that jobs replace themsleves?

Where was the job replacement?

Exactly.

Look, I’m sorry that “eventually” is an unsatisfying answer to “How will we create jobs/wealth?”, but when you ask “how will the jobs be created,” “Eventually” is the correct answer, and anyone who tells you otherwise is selling you snake oil. The government can step in and help out in the troughs with a Keynesian approach, but if you want the economy to really grow, “eventually” is how it grows.

Yeah and if we can balance the RATE of job loss more closely with the RATE of job regeneration, we avoid a LOT of unecessary suffering. Or do you think that doesn’t matter?

And you think the chances of this sort of job replacement is as certain as the sun rising in the east? There is no guarantee of continued prosperity for any country. Look at the countries that were global economic powers 200 years ago versus today.

Who were the global economic powers 200 years ago? The UK, I guess. Tell me: who is richer, the average Briton in 1810, or the average Briton today?

Are you under the impression that all the improevements in our standard of living are the result of trade?

At the end of the cold war after decades of brutal communist rule, who do you think was better off, the average Russian in 1810 or the average Russian in 1980?

Lets pick a more dramatic example. Who do you think is better off, the average North Korean today or the average North Korean today? Some of the benefits we see in our standard of living is the result of technology and improved science and not necessarily trade.

[Damuri_Ajashi]

@even_sven

@Damuri_Ajashi

I think the laws of economics are more or less universal. What constitutes fair trade practices are based on economic theories not whaever happens to be good for teh USA.

This is a religious point of view.

To give a basic example, you can look at the Structural Adjustment Programs. In the 1980s and 90s, Western institutions tried to use aid to leverage countries into adopting “free trade” practices, under the promise that this would build economic growth. Many countries, including much of Africa, went along with it. Some countries, like much of Asia, told the West to screw off. History shows who made the right choice.

The idea that markets are a one-sized fit all good thing for all situations is a fundamentalist one.

I think what youa re saying is that “what is fair” economically tends to advatage those who already have money. I agree.

But that doesn’t mean that we have to stand by and just suck it up when China manipulates its currency. They agreed to certain behaviour when we opened our markets to them.

besides i am arguing with folks who believe in this sort of fundamenaltism even mor than I do.

[Voyager]

@RickJay

This goes back, though, to why we’re essentially talking about the same thing. If Cisco’s moving engineering jobs to India, it’s because they perceive that to be the economically logical thing to do. Now, who knows, maybe they’re wrong, and they will fail spectacularly and other companies won’t follow suit. But if they’re right, then there’s not really a material difference between Cisco moving jobs to Bangalore and an Indian startup creating the jobs themselves. If Cisco DIDN’T build a campus in Bangalore, the likely result is simply that “Bangalorsco” would be created to build low-cost switches and network equipment and would start eating away at Cisco’s market share.

While this might take a few years longer than the existing American company building a campus in India, the end result would not only be the same, but would arguably be worse for the USA, since now you’d have an entirely Indian company raking in the bux, as opposed to an American concern raking it in. When sales of switches were made in Canada or the EU or Dubai or wherever, all the profits would go to Bangalore, and none at all to San Jose.

No. Plenty of places tried to replicate Silicon Valley. In the 1970s and 80s there was Silicon Glen, Silicon Bayou, and Silicon Alley. They discovered it was not so easy. You need a critical mass of trained engineers to allow the kind of job hopping and cross fertilization that goes on here all the time. Now, there has been low level programming work going on there for a long time. But what US companies have done is build the infrastructure that India needs to grab the industry. The guy who starts the hot new company is not going to be the guy just out of IIT, but the guy who was an exec here who has access to a big pool of engineers trained by US companies. Then your scenario will happen - but it wouldn’t (or wouldn’t so quickly) if American companies hadn’t supplied the rope, as Lenin said.

[Damuri_Ajashi]

@RickJay

I don’t see a way to prevent it, and I’m not convinced that you want to. If John Chambers wants to move to Bangalore, he’s got his reasons, I guess. I’m not convinced that independently that’s a good thing for the USA, but I am equally unconvinced that all those Americans left behind are going to just sit on their asses, and that there won’t be a reorganization that will result in new jobs being created in California.

and that would be fine considering that india doesn’t engage in currency manipulation.

You can’t stop Indians from doing R&D. The question is, do you want American corporations to get a piece of that action? From a pure national interest perspective, isn’t it better for American companies to invest in India and own that operation, rather than waiting for India to do it? Imagine if American investors had created Toyota, Honda and Datsun/Nissan back in the 50s.

American corporations? Which ones are those? I don’t think corporations really have nationalities any more.

[Damuri_Ajashi]

@RickJay

If the United States wants to raise tariffs against junk made in China, that’s one thing. You can’t really raise tariffs against ideas, though.

I recently had a similar question posed by someone who asked me what i would do if India increased its competitive advantage by pegging its currency as well. how would I retaliate against them when tariffs are not really an option. I didn’t have a ready answer but i still don’t think that we should sit back and let India engage in currency manipulation.

jobs are not a limited number of things that we mine up out of the ground and have to keep for ourselves. They’re not limited resources, like coal or oil. Jobs are created through hard work and innovation and trade. If you have a trading partner who does Jobs A, B, C and D, that gives you an opportunity to do Jobs E, F, G and H. The richer the Third World gets, the richer WE have the potential to get.

Yes yes, we all understand taht jobs are not a zero sum game and that jobs are created as people create value but when one party stacks the deck so taht the jobs are created in their country at the expense of job creation in another country…

[Damuri_Ajashi]

Having enough jobs for everybody is simply not a function of stubbornly holding on to the ones you currently have. If that were true, unemployment would be ninety percent, because most jobs that we’ve had have been eliminated.

I totally agree but high unemployment makes growth really hard and when that high unemplyment is at least partly the result of currency manipulation that is helping to spur hyper growth in China into super hyper growth in China, I object.

If you give Americans (or Canadians, or Australians, or whomever) a stable society, rule of law, freedom, property rights, and control of externalities, the jobs will be created because people will create them. In the long run they’re not going to sit around doing nothing and buying Chinese T-shirts; they’re going to do something to sell to someone else.

Timing is kinda important too don’t you think?

Economics isn’t religion. It’s science. We should be skeptical of all scientists, because that’s what science is.

I now see where the problem is. You think economics is a science. Physics is a science. Chemistry is a science. Economics is not a science.

When economists say taht free trade is always good, it is not a scientific axiom. It is based on a LOT of assumptions, one of those assumptions (a floating currency) is being violated by China and that throws off the conclusion taht free trade is always good.

[Damuri_Ajashi]

@John_Mace

Damuri Ajashi: Here’s the thing. Let’s say we put a 40% tariff on Chinese goods. What is the net effect of that tariff? How many jobs will be created in the US and how much income will that generate relative to the price increase of all the other goods that either continue to be manufacture in China or some other, low-wage country? If you can’t answer that question, then you shouldn’t be advocating a policy that is contrary to generally accepted economic principles.

The net effect of that tariff is that China lets its currency float and we export jobs at a slower rate. A rate that is perhaps slow enough to permit our economy to generate jobs faster than we lose them.

You are sorely mistaken if you think that free trade NO MATTER WHAT TEH OTHER GUYS DOES is generally accepted econmic principle. Free trade principles are based on all sorts of assumptions and a floating currency is one of those assumptions.

Do you think we should sit back and wait for China to float their currency when they are good and ready without reacting to the peg at all?

Even if it made economic sense to move a factory back to the US, business people aren’t stupid. They know that a 40% tariff today can turn in to a 10% tariff next year or a 0% tariff the year after that. Companies need stability in order to make plans. No CEO worth her salt is going to make important, long term decisions based on populist legislation that can, and probably will be changed in the next election cycle.

If we adopt a POLICY of imposing tariffs to offset currency pegs, the corporation would know that the tariff might disappear but only because the currency peg is gone and the cost of doing business in China would be higher.

So what aboput all those factories that were built based ona currency peg that can go away?

[XT]

@Damuri Ajashi

In the first case, the money stays in the US.

The money pretty much stays in the US even when we outsource textiles to China, since they end up using it to buy US debt in an effort to keep their own currency low so that they can maintain a trade imbalance. Of course, much of that money would go to the government instead of US private industry, but I’d think that most in this thread would consider that a feature, not a bug.

You’re missing the point. The SPEED at which unemployed people can recover jobs is overwhelmed at the rate at which people are structurally losing jobs. This is bound to happen nomatter what but the speed of job loss is accelerated by the unfair trade rpactices. I don’t know why everyone is defending China’s unfair trade practices. What is so fucking sacred about free trade that we have to surrender our economy to preserve it when others are cheating?

I think it’s you who’s missing the point. Recent job loss isn’t due to outsourcing, it’s due to the fact that we’re in a major recession caused by a major bubble burst, which was preceded by two foreign wars, a major attack against the US that caused yet more economic disruption, and preceded yet another huge recession and bubble popping.

I’m not defending China’s economic practices at all. Personally, I think they are fucking themselves by trying to artificially keep their currency low. That has also caused a lot of secondary disruptions to our own economy and currency, but it’s been a bit of a two edged sword…part of the money that allowed us to spend so freely during the housing boom came from China pumping that money back into our economy, so it’s harmed us and helped us at the same time…and, frankly, the Chinese are going to hit the wall sooner than we will if they continue along the same path they are on, especially if we keep interest rates as low as they are. The wall is looming, and anyone who thinks that China is going to get a free ride in all of this basically doesn’t know even the basics of this subject (such as the OP).

That money would have stayed here. The automation would have provided jsut as much of an increase in the stadard of living in the form of cheap goods and the cheap goods would have led to even more production than we had in the first place, perhaps even enough production that simply maintaining the machines and exporting the goods would have alleviated some of the job loss associated with automation. No quite as much alleviation when the factory is overseas.

Even if you really believe that the money would have stayed here (some of it would have, some not), the products would have been more expensive, and it still wouldn’t have saved those jobs…which was the point.

Are you putting me in the camp of economic illiterates? Do you think I am proposing isolationism? Why do you think we should continue to tolerate unfair trade practices in the form of a currency peg? Or do you think there is nothing wrong with teh currency peg?

No, I wasn’t putting you on par with the OP or some of the others in this thread…that wasn’t what I was saying there at all. Not unless you believe the statement I said there, in which case you’d be putting yourself in their camp, not me.

I HOPE you aren’t proposing isolationism…that would put you in the OP’s camp, since that is exactly what he’s proposing.

As for the ‘current currency peg’, I think there is plenty wrong, but the wrongness comes from what the Chinese are trying to do, not from the way we are handling it. I don’t believe that tariffs are the right way to correct the problem…actually, I think that the problem will self correct eventually, and that we’ll be stronger for it in the long run. Personally, I think the Chinese are fucking themselves, and more importantly they are fucking their own people, the vast majority of which haven’t benefited on par with their economic expansion, and that this will come back and bite them squarely on the ass eventually…probably sooner than later, considering their increasingly strident tone wrt the US keeping interest rates so low. Time will tell I suppose.

Explain to me where all these new jobs are going to come from. Its like you don’t believe that econmic superpowers can become economic backwaters. Heck China and Italy used to be economic superpowers, where are they now?

There are several things here. First off, I never said that economic superpowers can’t become economic backwaters. History is full of examples of this exact progression and I’m by no means a believer that the US is somehow exempt.

Where do jobs come from? Well, Rick answered this pretty well up thread, but they come from having the proper environment for them…the confluence of laws, regulations (but not too much), prosperity and capital. Currently we are in a recession, so businesses aren’t expanding…quite the opposite. If/when we aren’t in a recession any more, the jobs ‘lost’ will be replaced by companies going from hunker down mode back to full operations. In an expanding economy you will also have new businesses starting up, which will also require new jobs.

The US will never again be a major labor intensive manufacturing center…it’s just not in the cards. Our people expect too much money to make it a viable option. However, our location, our markets, education, and position in the global economy are always going to mean that there will be jobs here. This might not always be the case ad infinitum, but it’s not something that’s going to change in the near future, because we have a good environment for business to prosper, and we will continue to have it until folks like the OP finally manage to kill the goose. It won’t be outsourcing that is our downfall, however.

-XT