The US government and companies moving jobs overseas.

[pantom]

Hyperelastic, point by point:
1 - If you’re talking about the oil producers, yes, they do face a long term decline in their standard of living. They’re supply regions, with an economy dominated by the output of a single commodity with little value added. Not much going on outside of their resource sector, so yeah, the future for them ain’t great. It doesn’t just lead to future instability, it lends itself to present instability. That’s why the ME is the way it is, IMO.
2 - Patent laws usually would apply here.
3 - Ditto here. For intellectual property, the WTO is supposed to have enforcement mechanisms in place, allegedly. But this is a huge weak spot in the international trading system.
4 - Another huge weak spot. We’ve gotten to the point on these boards where people are justifying child & slave labor. There is a line that has to be drawn here, but where that line is drawn should be subject to international negotiation, because you can’t expect Third World countries to maintain First World standards in worker safety and the like. OTOH, demanding adherence to an international standard for child labor and for the outlawing of slavery should certainly be a minimum, I would think.

What is going on that has a lot of people exercised is “commoditization”: that is, processes, workplace skills, and products that were once exclusively First World are now being commoditized and repackaged as outputs from Third World areas. This is a natural process: economies are constantly shedding old outputs and gaining new ones. However, intellectual property rights do have to be respected, and some minimal standards for how products are output have to be maintained. And, of course, abuses like the currency manipulation I pointed out above should be outlawed, with the usual exceptions for emergency situations. None of this would or should get in the way of free trade.

[MyOld85MG]

Originally posted by pantom *
Hyperelastic,* point by point:
1 - If you’re talking about the oil producers, yes, they do face a long term decline in their standard of living. They’re supply regions, with an economy dominated by the output of a single commodity with little value added. Not much going on outside of their resource sector, so yeah, the future for them ain’t great. It doesn’t just lead to future instability, it lends itself to present instability. That’s why the ME is the way it is, IMO.**

I guess I’m not convinced. I’ve seen some pretty convincing arguments that oil production is going to peak in the next few years (2008 or a little later), and that seems to put oil producers in a particularly good position for a considerable time. Even if the First World comes up with viable energy alternatives, there are no good alternatives for the synthetic products we make from petroleum (plastics being a major one). So, oil producers will be able to make a great income for a while. Whether that’s good for their people is a different question, because I really don’t understand enough about their economies.

*Originally posted by pantom ***However, intellectual property rights do have to be respected **<snip>

Actually, pantom, I agree, but just to be devil’s advocate, I wonder why. Some of the arguments I’ve seen suggest that in a truly free market, anything goes. So if you come up with a new product and I can reverse engineer it and use it to compete with you, why shouldn’t I? (I’m not really asking you for a response, but I am asking anyone who thinks it is okay for a business to operate a factory knowing the working conditions are dangerous.)

[Voyager]

*Originally posted by Evil Captor *
**

Oh, and let me express my admiration for the dodge of seeking the destruction of the American middle class under the banner of free market conservatism. No one will EVER suspect. **

First of all, I’m not a conservative (Mr. Bush and friends cured me of that) and not a pure free marketer. Regulations are the friend of a true free market. I think it might be a good idea for companies moving jobs overseas gasp taxed to cover some of the social costs of the move. This will make the cost/benefit analysis more realistic.

If the middle class gets screwed, to some extent we did it to ourselves. I see lots of Beamers and Mercedes around here, bought by people who make less than me. I own a Saturn, 6 years old, which I paid cash for. Even worse, I see these same parents say their kids have to go to a 2 year college and then, maybe transfer to a 4 year state school, not because it suits academically but because they can save some money for their new cars. They tell their kids, by example, that it is more important to play sports than to study. They’re just all pissed that they can’t make $80 k a year anymore doing something a robot can do.

Americans have real advantages for all kinds of jobs, whether it be more familiar with the culture, closer to the customer, whatever. If workers can’t add value in their jobs, they shouldn’t expect them to pay as if they did. We’re heading for a global meritocracy. If an American who goofed off in school and went home at 5 no matter what loses a job to an Indian who works his or her ass off, I’m not going to cry too much. The tragedy is for those who do work hard, and get caught in the tide.

Oh - and I also blame the conservative tax cutters who think that we’re overspending if we spend half as much per student as some states. The idiots who won’t spend on education and then get surprised when their kids are not competitive any more deserve to be out of work.

[Evil_Captor]

*Originally posted by sailor *
**You got it all backwards. Protectionism is a Third World value which is guaranteed to bring Third World incomes to America. Protectionism does much more harm than good. **

I don’t necessarily advocate protectionism as a first and best solution to this problem but it IS better than all the NOTHING you seem to have as a solution. Frankly, you free traders seem entirely unable to acknowledge the problem, as if you think by ignoring it, it will go away.

Or you just don’t give a shit about America. Either theory fits the facts.

All this talk of not understanding economics, as if it’s some kind of monolithic thing that everyone must agree on… bullshit. Does everyone agree on trickle-down economics? Does everyone agree on John Kenneth Galbreath’s approach to economics? The International Monetary Fund’s approach?

It all seems distinctly politicized to me, and people who defend their viewpoints on the subject thusly strike me as disingenuously trying to establish their political opinions as science.

[Voyager]

*Originally posted by Hyperelastic *
**I have some questions I’d like answered by the many free-traders posting here:
**

I’m not a total free trader, but …

**

1. Completely free trade will quickly even out differences in standards of living from country to country, except those resulting from a locally high per capita amount of natural resources, like oil in the Middle East. Therefore, countries that are rich now are facing a long-term, steep decline in their standards of living. Do you suppose this might lead to political instability (the kind that results in angry mobs breaking windows)? Should this be considered in making trade policy?
   **

It is going to get you someday - even protectionist countries have riots, especially when even minor changes are proposed. Look at France. There needs to be education. The benefit of free trade is cheaper prices for products - that affects everyone.

**
2. Much of the technology that makes modern methods of production possible was financed by U.S. taxpayers. Are these taxpayers entitled to a return on their investment, or are they just pathetic suckers, like the guy who paid for an education in a field where nobody is hiring?
**

I rather expect that there is a good return on investment already. Many government funded research centers have mechanisms where US companies can get in early. But there is no guarantee of anything - those who exploit new technology best and fastest win. Anyhow, we are moving more to a model where the government supports long range research, and industry does the productization, which is not easy.

**
3. Is there any reason to think America has an advantage in this area any longer, and if not, how are we going to maintain our standard of living? Or is this not to be considered by policy makers?
**

The best and the brightest grad students from India and China still come here. Though Silicon Valley is expensive and has terrible traffic, it is still the one place to be, where you are close to your suppliers and customers, and where hiring is fast and relatively cheap. If you’ve got pretty standar, well defined software to write, it might be out-sourceable. If you’re developing new stuff, where you might want to meet with your customers once a week, and have the inventors and the programmers interact, then doing it in the US is still a big win. I don’t think everything will be a commodity, and anyhow once it is, it is time to get out of the business. I remember in the '80s when we were sure the Japanese were going to eat our lunch. We responded by improving quality, which we needed to do, but we thought we lost by losing the memory business, which was becoming a commodity. The Japanese got it, then lost it to the Koreans, and everyone is losing money now (or not making much.) I can assure you that Intel thinks that giving up on memories is the best thing they ever did.

**
4. Rights cost money. For example, giving people the right to a safe workplace means that coal mines have to spend money on safety equipment that does not contribute to profits. (If it did, there would be no need for occupational safety laws.) Doesn’t a democratic society have the authority to establish a reasonable set of rights, knowing full well that these rights are an economic drain? **

I totally agree with you here. In a true free market the real costs of decisions have to be considered. Too many so-called free marketers want to dump these costs on the government, and, when this costs a lot, cut government and dump costs on the victims. Using unsafe or slave labor factories overseas is just about as bad as skimping on safety equipment here. Pollution controls fall under the same category. I don’t to get sick to help the profits of some company.

[Rene]

That the Marketplace is the Great Arbiter is a Universal Truth. You don’t have to like it, but then, feelings don’t really have any place in business, do they?

Life is a steamroller, Babies. Climb aboard or be flattened.

I just adore all the simple-minded claptrap here about “American Made” products. Does no one here remember the 70’s, when General Motors gave the keys to Detroit to the Japanese auto makers? Don’t you remember those wretched, horrid, ugly cars GM tried to push on its consumer base?

As I recall, no one bought those pathetic excuses for cars, and Toyota became a household word. American auto makers became brutally acquainted with the stark reality that there are other countries in the world where cars could be built; and they have subsequently changed their attitude.

But that does not change the fact that corporations are ruthless.

What is so delectably delicious, though, is the other fact, that corporations are not ambiguous, mysterious entities to be talked about in hushed, ethereal tones. No. They are people, ordinary people, and that is to say, ruthless people.

You don’t like it? Don’t participate. Grow your own cotton and make your own cheap shirts.

Get a grip, would ya? Wal-Mart executives were beside themselves with joy on the day Sam Walton died. That afternoon all that malarkey about American made this and American made that went right out the corporate back door. Since then, Wal-Mart has flourished.

Why do you suppose that is? You ever shop at Wal-Mart? No? You’re lying. America shops at Wal-Mart because that’s where good products are available at low prices.

And please, desist with all that lachrymose belly-aching about the poor little kiddies in the sweat shops. People, i.e., ruthless people, don’t care about the plight of poor little brown boys and girls hoveled in adobe shacks in a date palm desert. They care about price tags, about how much bang they can get for their buck. In a word, they care about themselves.

There’s another Universal Truth for you to chew on.

Best regards,

Rene

[Hyperelastic]

*Originally posted by pantom *
**
1 - If you’re talking about the oil producers, yes, they do face a long term decline in their standard of living. They’re supply regions, with an economy dominated by the output of a single commodity with little value added. Not much going on outside of their resource sector, so yeah, the future for them ain’t great. It doesn’t just lead to future instability, it lends itself to present instability. That’s why the ME is the way it is, IMO.
**

Actually, I was referring to the U.S. In a perfectly free trade system, the only natural advantages are those which are geographically frozen in a certain country, like oil. This gives oil-rich countries like Saudi Arabia an unstoppable long-term advantage, until technology lessens our dependence on oil. What concerns me is that you have hundreds of millions of people who are for the most part accustomed to being able to feed their families on 40 hours a week. It used to be that one breadwinner could feed a family. Now it takes two. What’s going to happen when the whole family has to work constantly just to keep from starving, and then sometimes you starve anyway, like most of the world does? Unless there is a long adjustment period, people are not going to like it one bit, and they’re going to take it out on the nearest state capitol and corporate headquarters.

2 - Patent laws usually would apply here.

But what about the money that’s already been spent? Not many of the technological advances were protected by trade secret or patent law in the first place, and now many of them are in the public domain. Besides, intellectual property laws themselves are fundamentally a restraint on trade, but you never seem to hear free trade enthusiasts clamoring for their repeal. I suspect it has to do with whose interests are served by the intellectual property laws.

I agree that the economic case for free trade is almost irrefutable. But I have made some essentially noneconomic arguments against totally free trade, in particular number 4. The posts of sailor and msmith537, among others, seem to imply that people are fools to act for any but economic reasons, and that for a government to make policy on any basis other than economics is akin to theft or despotism. Do I have the right impression?

[John_Mace]

*Originally posted by Hyperelastic *

1. Completely free trade will quickly even out differences in standards of living from country to country, except those resulting from a locally high per capita amount of natural resources, like oil in the Middle East. Therefore, countries that are rich now are facing a long-term, steep decline in their standards of living. Do you suppose this might lead to political instability (the kind that results in angry mobs breaking windows)? Should this be considered in making trade policy?

I’m not sure I completely understand you here, but it seems like you are confusing a rise in ths SoL in one country with a decline in the SoL in another. If SoLs are “evened out” it doesn’t imply a decline. How quickly do you think it will “even things out”? Look at Hong Kong, Singapore, Taiwan. No significant resources there. Heck, even Japan is resource poor (one reason it went on a rampage in the 30s and 40s to build an empire).

2. Much of the technology that makes modern methods of production possible was financed by U.S. taxpayers. Are these taxpayers entitled to a return on their investment, or are they just pathetic suckers, like the guy who paid for an education in a field where nobody is hiring?

Again, I’m not sure what you’re talking about. What specific methods of production were financed by US taxpayers?

3. It’s been stated that America will generate wealth in the future using new technologies, the way we’ve done in the past. But the conditions that gave America an advantage in coming up with new technologies (high education and research expenditures) are no longer limited to America, and besides, any great new idea is immediately exportable now anyway. Is there any reason to think America has an advantage in this area any longer, and if not, how are we going to maintain our standard of living? Or is this not to be considered by policy makers?

Once again I’m not sure I can agree with your premises. A hundred years ago, the best schools were in Europe, not the US. We still have the best University system around. How many Americans go abroad for an education vs the people who come here? The hot new area of research is biotech. Can you demonstrate how many new biotech “ideas have been immediately exported”?

4. Rights cost money. For example, giving people the right to a safe workplace means that coal mines have to spend money on safety equipment that does not contribute to profits. (If it did, there would be no need for occupational safety laws.) Doesn’t a democratic society have the authority to establish a reasonable set of rights, knowing full well that these rights are an economic drain? And doesn’t that society also have the authority to refuse to do business with companies that move production to foreign countries specifically to evade the costs associated with workers’ rights, even if it means sacrificing economic gain? It’s pretty easy to see whose interests are served by free trade, when you consider that most workplace rights peculiar to America are to the benefit of workers and to the detriment of owners. I posed this question in a more concrete form in the Wal-Mart thread, but mysteriously, it was ignored.

Well, this democratic society has a constitution that limits the power of goverment, so we certainly don’t have the “right” to do whatever we wish. But we certainly could vote to tax companies, as you say, but the point is that doing so is economically disadvantageous to the country as a whole.

Look at the steel tarrifs that Bush recently got rid of. By imposing the tarrifs he could claim to have saved something like 5,000 jobs in the steel industry. But economists have estimates that the higher cost of steel ended up destroying 45,000 jobs in other industries. (Don’t have the cite for this handy. I posted it in another thread like this one about 2 months ago.) The problem with economic tinkering is the law of unintended consequences. You never hear, for instance, about the jobs lost because of protectionist measures.

Also, spare me the sneering and arrogance. There are posters in this thread who are so eager to boast their supposed intellectual superiority, it makes one think they harbor some secret doubts about their position.

Let me know if any of this came off as arogant. None of it was meant to.

[msmith537]

*Originally posted by Hyperelastic *

1. Completely free trade will quickly even out differences in standards of living from country to country, except those resulting from a locally high per capita amount of natural resources, like oil in the Middle East. Therefore, countries that are rich now are facing a long-term, steep decline in their standards of living. Do you suppose this might lead to political instability (the kind that results in angry mobs breaking windows)? Should this be considered in making trade policy?

Not necessarily. There is more to an economy than just natural resources. There is the ability to convert those resources to other goods. There are also service industries that do not rely on physical resources like oil or steel.

*Originally posted by Hyperelastic *
2. Much of the technology that makes modern methods of production possible was financed by U.S. taxpayers. Are these taxpayers entitled to a return on their investment, or are they just pathetic suckers, like the guy who paid for an education in a field where nobody is hiring?

I don’t see why that has to be the case. Free trade does not mean we throw all our intellectual property laws out the window. Technological innovation can also be profitable as long as it is protected.

*Originally posted by Hyperelastic *
3. It’s been stated that America will generate wealth in the future using new technologies, the way we’ve done in the past. But the conditions that gave America an advantage in coming up with new technologies (high education and research expenditures) are no longer limited to America, and besides, any great new idea is immediately exportable now anyway. Is there any reason to think America has an advantage in this area any longer, and if not, how are we going to maintain our standard of living? Or is this not to be considered by policy makers?

There is no reason not to believe that America will continue to be a source of innovation. We have a highly educated work force as well as a culture that encourages entrepreneurship and innovation.

New technologies create new industries. How many people wanted to be web designers in 1994? Other industries like pharmaceuticals depend on new innovations for growth.

*Originally posted by Hyperelastic *
4. Rights cost money. For example, giving people the right to a safe workplace means that coal mines have to spend money on safety equipment that does not contribute to profits. (If it did, there would be no need for occupational safety laws.) Doesn’t a democratic society have the authority to establish a reasonable set of rights, knowing full well that these rights are an economic drain? And doesn’t that society also have the authority to refuse to do business with companies that move production to foreign countries specifically to evade the costs associated with workers’ rights, even if it means sacrificing economic gain? It’s pretty easy to see whose interests are served by free trade, when you consider that most workplace rights peculiar to America are to the benefit of workers and to the detriment of owners. I posed this question in a more concrete form in the Wal-Mart thread, but mysteriously, it was ignored.

You are right that rights do cost money. Does an up and coming society also not have the right to take additional risk in favor of economic gain. I don’t think it’s fair to expect a third world country to be able to incur the same costs as a modern industrialized nation. We have become used to our employers providing medical and dental care, matching 401ks and every other conceivable benefit. People in many of these countries are just happy to have jobs.
While open markets aren’t perfect, I’m not sure what you are suggesting as an alternative. If America can’t maintain an economic advantage in terms of resources (natural, intellectual, or other) without errecting trade barriers (which most economists seem to agree benefit no one except maybe a few company owners) I don’t see what justifies having a significantly higher standard of living. We don’t have some God given right to 1500 sq ft homes, 50" plasma HDTVs and SUVs while the rest of the world lives in abject poverty unless we are doing a lot of things significantly better than those other countries.

I also don’t envision a world where we Americans produce everything and the rest of the world are simply eager consumers.