Oh, and you know what? I’ve gone back through my previous posts, and I never actually mentioned the Chinese benefits until my first post discussing them. So, don’t lecture me on being precise.
OK, the USD:RMB exchange rate is, and will remain driven by Chinese domestic interests.
The USD:RMB exchange rate is not pegged, but currently fluctuates between tight limits. I’m guessing, but it may be that the program allows the RMB to appreciate say 3-5% per annum.
Now lots of non-Chinese interests want that to rise a lot faster. But the domestic agenda probably demands that the RMB will remain undervalued for a long time.
There’s plenty of hard cash, China’s accumulated foreign exchange reserve are over 2.4 trillion dollars. That’s 50% of China’s GDP, 12% of US GDP, and 30% of the world’s reserves today. I think China knows it’s interest are in (progressively) rectifing the imbalance. You want your customers to be able to buy your inventory. However floating the RMB against a basket of foreign currencies isn’t the solution because the RMB isn’t the problem they are trying to tackle.
China faces managing the fundamental change of a populace of 1.3bil people with a majority engaged in subsistence agriculture barely half a century ago to consumers with aspiration for cars, DVDs and mobiles etc. They need the cash and the strong economy so as to manage that transition. Rectifying the exchange rate to address the balance of reserves, placating US/western interests but leaving Chinese consumers with the same standard of living they currently have isn’t a consideration.
The challenges include past PRC central policies and practices have distorted production, primarily in labour but also land and the environment. Labour costs have been artificially low, with many workers not being paid their minimum entitlements. This is depressing domestic demand. The Chinese government wants consumption at home to rise. As Chinese workers earn more, that will reduce the competitiveness of China’s exports even as it boosts demand at home.
My view is that the strategy is aimed to take China from being a low-cost exporter into being the world’s biggest market. Your decadence in funding that program is appreciated.
If that steps on US toes, then so sorry, please accept this box of bandaids.
When the economic boot was on the other foot, the US was never reticent about sinking the slipper in.
Well, okay, that’s a great argument for why it’s in Chinese interests to keep the peg. Since I’m not Chinese, it’s an equally great argument for why the US should force the issue. I don’t think that letting their currency appreciate will harm the Chinese economy (although it may harm specific sectors of it), but I have to put US interests over that of the Chinese. So, you have basically made my argument for me.
Finally, I would like a citation that the current Chinese policy is to let their currency appreciate 3-5% annually. As far as I can tell, they let their currency appreciate slightly when people start kicking up a fuss and then yank it back down when the fuss has passed.
No, that’s an argument why China needs to maintain a growth strategy that would melt any western economy. Add in effects like the Lewis tipping point and a the One Child policy, and on environmental grounds we’d rather they didn’t power that growth via cheap fossil fuels.
You don’t have a mechanism. Not through the WTO. Not even threatening to default. And why would you do that anyway? Given the size hole the US dug for itself, the only growth strategy you’ve got is to hitch your cart to China. Why you’d want to decouple from that?
No. I’d characterise your argument as the hegemonist’s “China (and the rest of the developing economies) must maintain their current station so the US way of life can be maintained.”
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Finally, I would like a citation that the current Chinese policy is to let their currency appreciate 3-5% annually.
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That, as stated, was my guess. It’s based on discussions with FX traders I know. The People’s Bank of China doesn’t put their FX policy on the net. Will stand corrected but I’m not sure the US Fed does either.
Except for when there’s a bad harvest and they starve of course. Why the hell do you think these leave their farms to work horrendous hours in factories?
I’m honestly suprised at how many lengthy post you’ve managed to make on this subject without any real understanding of the issues.
China is not competing with the US for manufacturing jobs. China is competing with all of the other dirt poor countries that would love to get those outsourced jobs, like Indonesia. If you really think that the absence of Chinese currency pegging would result in the jobs coming back to the US then you’re an idiot, the jobs would just move to another country that’s even less developed than China.
Besides that you seem to have completely ignored the fact that the American standard of living is as high as it is because of the outsourcing of manufacturing. And even if you did somehow manage to bring all those jobs back to the US the people doing them would be just as poor as they are now because they still wouldn’t be able to afford anything made on American soil.
If you want prosperity for the American people bringing that sort of commodity manufacturing back to the US is insane. You cannot compete with the third world on unskilled labour prices and forcing the move with tariffs will make you poorer, not richer.
If you want continued prosperity for the American people you must look to the future, not the past. Instead of trying to create jobs for all the unemployed unskilled labourers you need to reduce their number through education (good education for everybody, not just the top 10%) and look to support high-tech and knowledge based industries that aren’t cometing directly with the third world.
I pay $5 an hour for Chinese resources. $7 for Thai. $7 for Malay. $20 for resource in Northern Ireland. $40 in Canada (don’t have to pay for health care! Which is a big part of the U.S. load) $80 for those in the U.S.
Yeah, change the balance for China and I’ll send less of my work to China. But you’ve got to knock down the cost of U.S. labor and increase the cost of labor in Northern Ireland and Canada before that job comes back to the US.
I wonder how it was that U.S. unemployment was under five percent just back in 2002, when all the same differences in labour costs still existed. Amazing, that.
Why, you’d almost think there was more to it than just the hourly price of labour.
Pretty much. This has turned into the pro-offshoring side proposing a whole list of fantasy cause-effect scenarios that haven’t materialized while ignoring the ones that have, if it doesn’t suit their cause. (Like saying that all trade barriers result in Smoot-Hawley disasters while ignoring the fact that trade barriers have contributed to China’s exploding economy.)
There will always be people unable to get a higher education. Pro-offshoring people are of the Social Darwinist mentality that says to leave them behind. Essentially let them die.
Even China is not that bad; at least their low skilled people have farm work. 800 million of them, no less.
I believe the film “Zardoz” explains perfectly where this will ultimately go. Today’s pro-offshoring sycophants are calculating that they’ll be on the luxurious side of that great divide.
See, that’s what I’m talking about. The free market fantasy is flawed because it has no humanity. There’s no pity, zero compassion and no concept of community spirit in that concept. You cannot rule human beings with inhuman systems of thought. It’s like using computers to judge who’s a perfect mate for you.
The free market concept is a sociopathic concept.
Yep, a lot more to it than that.
Congratulations, that is the stupidest argument in the whole thread! You know why people in the US don’t practise subsistence farming? Because it’s one of the shittiest, most gruelling and unstable way to make a living there is. Seriously. It’s one step above being a vagrant or casual labourer.
In a successful economy there can easily be more than enough low-skilled jobs. Not everything can be out-sourced, someone has to do the cleaning, table waiting, street cleaning etc. In fact, if you reduce the number of low-skilled workers the market will react by increasing low-skilled wages.
If we had a bad harvest we’d be starving, too.
Brightnshiny understands it perfectly. You’re the one with the unrealistic fantasies and disproven misconceptions about the market and its relationship to human beings.
Yes, China absolutely is competing with the US for manufacturing jobs. They’re taking the jobs that we used to have here, making products that used to be made here. Another one of your serious misconceptions about the market.
Which is why I am in favor of tariffs against low-wage nations. They work for China, they’ll work for us.
Incorrect. It would be higher if we did not outsource manufacturing to low wage nations. We would have a much stronger lower class, with more wealth in their hands to spend in the market. Your claim is not based on any facts.
Incorrect. You tried to make this point before, specifically about TVs, and I showed you a link to where TVs are undergoing price drops right now because few people can afford them and their production is being offshored to low wage nations.
If those jobs came back to the US they would simply put the TVs on layaway and get them later.
Another current example that shows your argument is wrong: China’s factory workers can afford their own goods. Why wouldn’t American factory workers be able to?
Also, yet another historical point of fact that totally ruins your argument: do you remember Henry Ford? He raised the wages of his workers to enable them to buy his stuff. It worked, too. History itself condemns your argument.
Plus, you continue to ignore the other point I made: when the US dollar inevitably collapses from all these trade deficits and debts, the working class will be unable to afford ANY imported goods. But you seemed to evade that when I pointed it out.
Unsubstantiated by logic and, most importantly, history.
Ah yes, a marketing slogan. Look to the future, not the past. In the past we decided that 1+1=2. You propose to us a future where 1+1=5. You propose a future of ignorance. You know what happens to those who ignore the lessons of history, right?
Who have always been and will always be there no matter what you do to try and starve them to death or uplift or make them go away…
This argument you propose has already proven not to work.
Education is now insanely expensive. How are the poor going to be able to afford it? You need a college education to get a job as a receptionist.
It doesn’t matter how educated you are. You’re still competing with equally educated workers overseas who are earning pennies on your dollar. This is why we are losing biotech research (innovation) jobs to low-wage nations like India and solar tech research jobs to low-wage nations like China. All high-tech and knowledge-based industries are competing directly with the third world.
If every American everywhere gets a PhD in some high-tech field, that’s a hundred million of us at least. There will never be enough jobs for them. Your theory is doomed. Plus, America is already moving from the “innovate here, produce over there” loser mentality to the “innovate over there” mentality. That’s the future your argument holds for this country.
Congratulations, you’ve just posted the most ridiculous point in the whole discusson!
No one wants to do that work because it’s unnecessarily dangerous. Construction jobs are no worse than farm jobs; but in farm jobs you have the problems of heat stroke, death by machinery, and basic things that workplace safety laws could and do prevent on a construction site. The difference between the farm industry and construction is that the farm industry is immune to both minimum wage and workplace safety laws and if that were to change we wouldn’t have so many people running away from it.
Congratulations you just posted the most deluded argument in this whole thread! Companies lay off low-skilled workers and drive their existing workers to work even harder. If there’s not enough of them they go hire immigrants. Which Republicans try very hard to keep around in order to depress wages. And I’m surprised that you haven’t argued that old saw here that if window washing wages go up so do prices and soon workers won’t be able to afford anything ever. (Or are you sensible enough to see that argument is wrong?)
Okay, assuming you can spin your way out of all those problems with your argument, how about we do a math problem… why don’t you calculate those hypothetically raised wages and tell us how that pays for rent and food and health insurance? Let’s leave out electricity, car payments, gasoline…
Reduce the cost of labor in the US to $5 an hour and we’ll be even poorer than the Chinese. The cost of labor is pushed up by the cost of living here.
High enough tariffs would force those jobs to come back, too.
Those employers who cannot be arsed to hire labor in a civilized country should not be selling their goods to a civilized country. If you want to prop up the economies of undemocratic low wage hell holes like China then I say go live there. America can take care of itself with its own workers; we always have.
Meanwhile you guys can choke to death on China’s unbreathable air and poisoned water.
Haha what? Crops fail all the time in the U.S. and nobody starves. We are rich enough to have ample stores, and are rich enough to buy food from other countries if we need to.
No, because we’re rich enough to import the food if we need it. Then the poor in the third world starve instead because the prices go up.
Good argument there, very persuasive.
Jobs would be created in the US sure, but THE PRICE OF EVERYTHING WOULD GO UP ACCORDINGLY! All of these modern consumer products are only affordable to average American because they are made with out-sourced labour. What you are proposing would simply create an internalised economy that would be completely uncompetetive with the rest of the world and eventually require state funding to prop up.
That wasn’t me, but your counter-arguement is idiotic. So TVs would become less affordable, but it’s okay because people could just go into debt to by them? That’s not an improvement.
Besides, the reason TVs aren’t selling isn’t because they are too expensive. It is more to do with that fact that the economy is recovering from a debt bubble and people are reigning in consumer spending while they pay off debt and some stability returns to the system. TVs are a complete luxury item, especially when everyone owns one already.
That’s not an example, that’s an unproven assertion. Cite?
Here you seem to have taken one isolated action and applied it to the global economy without any regard to context. When Ford was producing motor cars the US economy was more like India or China: lots of low-skilled labour, a much, much lower standard of living, low worker benefits, low wages and a non-existent consumer economy (by modern standards). The same outcomes would not necessarily be true in the current US economy. All it shows is that having a wealthier low-middle class creates a better consumer market and in turn drives economic growth. But that’s not what anybody is arguing.
Again, not me. Let me paint 2 scenarios:
- High tariffs placed on imports to protect American jobs. The working class can no longer afford foreign imports. Dollar collapses due to nobody having any use for Ddollars anymore.
- Dollar collapses. The working class can no longer afford foreign imports.
What you’re proposing would lead directly to what you are actually railing against!
Yeah, much better to block trade and move into a backwards, internalised, uncompetetive economy while the rest of the world advances around you. In twenty years the US would be like 80s era Soviet Russia :rolleyes:
What the hell is the point you’re trying to make here? On the one hand you are arguing for protectionist tariffs to bring home low-paying jobs while at the same time arguing that low paying jobs are shit and people don’t want to do them. And what is the point of bringing immigration into the debate? Obviously nothing will help if you just continually import enough immigrants to keep low-skilled wages depressed.
That is, until they decide their people need the food more and start embargoing it.
Like the Saudis did with oil in the 1970s.
Until they decide to embargo us.
Sigh Your argument is high on theory and deficient on the facts.
China’s working class can afford all the cell phones and cars made there. Especially now since they went on strike.
Speaking of idiotic, your argument shows what little you know of the word ‘layaway’. Look up the concept before you post another one of your ahem ‘points’. Layaway is not debt. It is not even in the same universe. Debt is post payment for services/goods delivered. Layaway is pre-payment in advance.
Here’s another history lesson for you. For the last 30 or so years consumer debt has EXPLODED as people’s incomes declined over that time period. To buy those cheap offshore-produced TVs and other consumer goods, people put it on credit cards and took out home equity loans. Then in 2008 all that credit collapsed and sales went right into the tank.
So, really, what are you talking about here? Your fantasy scenario that higher wages mean more expensive products (disproven by the example of China) or your confusion about history which has shown that people go into ruinous debt to afford cheap labor-made products in spite (or maybe even because) of offshoring?
In other words, they’re waiting to buy TVs when they can afford it without going into debt. :rolleyes: Way to go, disproving my point by coming back around and making it.
Chinese consumers are booming.
From this, do you think they’re having problems affording their own products? Car sales there are up 17 percent. Proof enough?
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Wrong again. I’ve been arguing for a wealthier low-middle class. I’ve mentioned the need to shift this economy to a trickle-up system several times here.
How do you figure? In either case we won’t be able to buy foreign imports. We’ll have to make the stuff here. That’s exactly what I want.
What makes you think that if we block trade with cheap labor nations and lower trade barriers with nations that have equitable wage, human rights, environmental and workplace safety laws, that we would become like 80s era Soviet Russia? Where did you get that argument from anyway, no wait lemme guess… the Dollar Tree?
Show me the historical basis that shows that blocking trade with cheap labor nations and lowering trade barriers with, say, Europe and Canada, would reduce us to the 80s era Soviet Union. I’d like to see how you figure this out.
What nonsense. You’re telling other people they lack facts and you quote urban myths to support your claims?
Henry Ford raised worker wages because they weren’t high enough to retain workers; his plants (like most factories at the time) suffered from almost comical levels of turnover; the average employee lasted just 3-4 months and most of the departures were people quitting. He jacked wages up because it was cheaper than constantly retraining and hiring temporary labor. Ford himself said:
The idea of making things affordable for the middle class was a fundamental tenet of capitalism before Henry Ford, but the idea that the factory makers should be able to afford what they make is… well, it’s idiotic. How can you apply that universally? Should every Boeing worker be able to afford his own 777?
Obviously this is not true, as most Americans do not have degrees, and yet most have jobs.
But the point being made - rather obviously, I think - was that the U.S. economy would be much helped by MORE investment in education and training. Make it more affordable.
Woah, woah, woah. Stop right there. Bring home low-paying jobs? What? I’m talking about bringing home manufacturing, biotech research, solar engineering, and tech jobs. What are you talking about?
Manufacturing has never been a low paying job in America. Neither has biotech research, software testing (I started out in that industry at $20/hr in the 1990s) or programming, all of which are just some of the good paying jobs that are going overseas. Paralegals are another one. Low-paying jobs? Really?
I hope you put some barbecue sauce on that “stupidest argument in the whole thread” comment of yours or else you’re pretty much choking on it right now.
That was regarding farm jobs whose lack of appeal is not their low wages as much as all the unnecessary hazards. You’re getting lost here, confusing high-paying jobs that are going overseas with one domestic job sector that is poorly regulated and fraught with low wages AND dangers to one’s life.
Because… because… well… it’s highly common in a large number of low-paying service jobs, from hotels to maids to farming? (Ask Meg Whitman if you don’t agree. 
)
If low paying domestic offshore-immune jobs are the China shop, immigrant labor is the bull. Not talking about its effects on those job-types is just downright senseless.
What urban myth?
http://www.ford.com/about-ford/heritage/milestones/5dollaraday/677-5-dollar-a-day
You’ll want to re-word your argument now.
Or maybe you’ll want to read the “My Life and Work”, particularly the “Wages” chapter. If I still had that book I’d quote the actual passage for you. You’d be advised not to bet against me on whether Ford intended to raise wages to help his workers buy his cars. Stopping labor turnovers was definitely a part of his plan, but not the only part. Ford was that one thing you consider a curse word: socially conscious.
But there are receptionist job ads looking for college degrees; more now, since there are 5 people fighting for every 1 job.
And how do we do that? Tuition is going up faster than inflation.