I believe the point of that diatribe was that for many companies it’s more profitable long term (over the next 5-15 years) for them to move to china, but they may not have the capital or cashflow necessary to afford it near term (in less than 3 years). He is saying that the tax cuts allow them to do it now rather than wait five years with a slow move, or cut into profits and do it near term, or do it without borrowing.
No lower taxes mean that INCORPORATING in the U.S. is cheaper. Operating expenses for OPERATING in america have NOTHING to do with taxes. OPERATING expenses have to do with the cost of land/space (for factories, warehouses, stores, etc.), the cost of wages (for workers duh), and the cost of marketing/moving product. All of which are MUCH higher in the US than in Asia (though marketing/moving may be made more expensive with a move, but barely) and will NEVER be affected by a tax cut.
This doesn’t make any sense. If something is more profitable than what you are currently doing, then you can finance based on that profit it no matter how expensive it might be. The idea that there are companies that want to move overseas, but just lack the money to do it, and we can keep them here by making them poorer, is just ridiculous.
So… when my workers wages are taxed, that doesn’t affect the salaries I have to offer to induce them to work? If the government taxes pencils, that doesn’t generally increase the cost of pencils? If the government taxes my company’s earnings, that doesn’t reduce my net profits? You’re not making much sense here.
Didn’t you mean to say: " why shouldn’t the Chinese have jobs instead?"
The jobs are not in two places, when an american factory closes down in Indiana, and relocates to China, the chinese is employed “instead” of the american citizens from Indiana.
When an indian programmer or engineer or telemarketer or insurance processor or customer service or readiologist or accountant, etc. does the work that a Californian used to do, then they are not both employed, the Indian has the job, “instead” of the Californian.
“Free trade”(sic), global trade, means that the “cheapest” labor in the world will be employed by a company, it does NOT mean that they “both” will be employed. You are missing the entire point and meaning of outsourcing and relocation of offices and factories to asia if you think that they both will be employed.
The truly dispiriting news is that unemployment dropped… but the drop was apparently primarily related to people simply giving up looking for work (which in many states disqualifying you from getting benefits)
Given the fact that I am coming off of active duty very soon and have to find a job, I’ll give you a report. Until then, quit talking out of your ass.
You know, I really wish that Bush had been the beneficiary of the tech explosion of the last decade. That way he could claim credit for something he had nothing to do with, just like your heroes Clinton and Gore. For all this BS i see thrown around about economic policies, I’d like to see proof, that’s PROOF, Reeder, not opinion, that Clinton actually had any effect personally on the economy.
Sure: instead.
But it’s not so simple. If the Chinese are cheaper workers for the same output, then the world as a whole benefits via lower prices. Even the people in Indiana. It isn’t all a zero sum game. But to the extent that it is… what do you have against the Chinese people that you would begrudge them a job if they can do it cheaper than an American worker?
Move to California. We’re gonna have the Terminator for governor, and he’s gonna kick-ass us some more jobs. Bunches of 'em. Pretty soon now. Bunches of 'em. I swear!
Peace,
mangeorge
I dont have anything against the chinese, they can develop their economy any way they want, they should have done it years ago. They can develop all they want without interferring with our country, our values, and our obligations.
What I dont like is that there is not free trade on an equal basis between our countries .
They dont buy much of anything from the us. They dont employ as many americans as we employ chinese.
I dont mind trading with other countries if they have the same policies and values as we do.
If china did not use child labor, if china did not use prison labor, if china did not pollute the earth and had an epa, if china allowed its workers to organize and not be slave labor, if china had health and safety standards like we have osha, if china gave its workers health benefits like we do, if china had a social security program, etc, then it is a zero sum gain, and then trade makes sense, and then whoever can produce the same goods cheaper should have a benefit in world trade.
There is no way an american company can produce goods at the same price when we dont dump waste into our rivers, when we dont employ prisoners and children, when we allow our workers to join unions, when companies in the US must pay social security taxes and when an american factory is not allowed to pollute our environment or operate its factory under unsafe and unhealthy conditions.
If you truely believe in free trade, then you must be for allowing companies in the US to not pay social security taxes for its workers, and allow them to dump whatever waste it wants to into our rivers and air, to allow american companies to hire children of any age, and let them operate machinery that is dangerous, etc.
The problem is, that everyone left in america under the current policies of unfair unequal unfree trade, will end up paying huge increases in factories to make up for all those unemployed americans who no longer pay any taxes. Government spending is not decreasing, it is increasing. Therefore, the total amount of real taxes in our country is going up, and fewer and fewer workers are going to have to pay for more and more taxes. Our taxes will also be going up even more because we will now have to pay for the housing, food, clothing, and all other of lifes expenses for everyone who has permenantly lost their job to cheap chinese labor.
The chinese workers who took american jobs away are not helping our environment and are not paying taxes into our social secuirty system nor are they paying income taxes into our general tax funds over here. I dont see where chinese laborers are helping us fiscally in balancing our budgets either on the state or federal levels.
This is going to be a huge burden on the rest of us who are still employed unless you can get our government to drastically cut spending at least equal to the lost wages and taxes of those who lose their jobs to foreigners.
The tariff system that our country had for almost 200 years worked pretty well, and our country did ok economically with well paid workers with lots of industrial output compared to any other nation in the world. Under the tarrif system the tax burden was much more spread out, and those who bought more goods, paid more taxes, the poorer people( who made less money) paid less taxes/tariffs.
So you want free trade… IF they agree to employ as many Americans as the number of Chinese who are employed by U.S. companies, and IF they start buying American goods in substantial quantities?
Sorry, but that’s not free trade.
Besides, what makes you think that the Chinese don’t consume American goods in substantial quantities?
The figures in parentheses are the seasonally adjusted figures. Either way, the deficit with China was the largest. Susanann is engaging in a bit of hyperbole, but her basic thesis is correct.
You want a job? Here is 40 million of them opening up:
India looks at U.S. jobs
Chicago Tribune ^ | April 20, 2003
"Americans who have gotten comfortable with the idea that jobs will be plentiful in the next 20 years as Baby Boomers retire may not have counted on India.
According to The Times of India, the All India Management Association has estimated that making India a global outsourcing center for knowledge-based services can create 40 million new jobs there by 2020."
Actually, the figures in parentheses are April, 2003 figures, not seasonally adjusted figures. A summary of the hard data used in this news release is found here (warning: Microsoft Excel format).
For a bit more context, total imports from China were estimated at $11,875 million, while exports to China were estimated at only $2,013 million. Though they are our largest net trade deficit, among single countries they are pretty far from being the largest importer of American goods and services (they appear to rank 8th among single countries, as opposed to regions or trade unions).
Conservative activist Schlafly blasts globalism’s effect on jobs
The Houston Chronicle ^ | August 7, 2003 | JOHN WILLIAMS
Phyllis Schlafly warned a group of about 300 fellow conservatives Thursday that creeping globalism threatens jobs and the high standard of living in the United States.
Among Schlafly’s concerns are two types of visas Congress enacted that help multinational corporations bring professional workers into this country who will accept lower-paying jobs than Americans.
She also criticized federal laws that help corporations transfer jobs to other countries, where workers are often paid one-tenth the salaries of Americans.
She said that might result in corporate profits that make the stock market rebound, while Americans lose jobs to people from India, China and elsewhere.
Unless Congress makes provisions to change the trend, she said, the United States will start to resemble Third World countries with a few super wealthy citizens and large masses of underclass with no chance for advancement."
Here is a small part of a New York Times article today that kind of sums things up and answers your question. We are starting to get comparisons to the 1930’s, expect to see more and more comparisons to the 1930’s, esp when personal bankruptcies, and state budget deficits start to increase in the next couple of years:
New York Times ^ | 08-09-03
U.S. hasn’t suffered job losses like this in more than half a century
BOB HERBERT New York Times
This alleged economic upturn is not just a jobless recovery, it’s a job loss recovery. The hemorrhaging of jobs in the aftermath of the recent “mild” recession is like nothing the U.S. has seen in more than half a century. Millions continue to look desperately for work, and millions more have given up in despair.
…How bad is it? The Economic Policy Institute in Washington reported last week that “since the business cycle expansion began in November 2001, payrolls have contracted by 1 million (1.2 million in the private sector), making this the weakest recovery in terms of employment since (the Bureau of Labor Statistics) began tracking monthly data in 1939.”
When you combine the unemployed and the underemployed, you are talking about a percentage of the work force that is in double digits.
Right now there is no plan, no strategy for turning this employment crisis around. There is not even a sense of urgency. At the end of July the Bush administration sent its secretaries of commerce, labor and treasury on a bus tour of Wisconsin and Minnesota to tell workers that better days are coming. But they offered no real remedies, and the president himself went on a monthlong vacation.
On the business side of this divide, increased profits are realized by showing the door to as many workers as possible, and squeezing the remainder to the bursting point. Productivity (based primarily on improvements in technology) is way up. Hiring, of course, is down.
And then there’s the ominous trend of sending higher-skilled jobs overseas to low-wage places like India and China, an upscale reprise of the sweatshop phenomenon that erased so many U.S. manufacturing jobs over the past quarter century.
Sam is correct on both counts. You should already see a positive change in your stock portfolio (if anybody bothers to look at their 401K reports).
Based on past trends, jobs usually follow 3-6 months after sustained growth. It’s sound business practice to wait for sustained growth before hiring more people. If I owned a business, that is exactly what I would do.
The second part of Sam’s statement is also true. If terrorists manage to create another panic in a major market the cycle will repeat itself.
On a personal note, I’m wondering where all the self employed are? I can’t hardly throw money at people. I have had to wait for 3 months to get a roofer and I’ve been waiting longer than that for machine work and engine parts.
If past indicators hold true, people will put their money back in their houses during recession as a form of investment. Remodeling is usually the bellwether of recovery. If historic trends hold true, the jobs should follow toward the end of this year.
Prologue. If the intent of the question was a swipe on Dubbya then any answer supporting him would be ignored. However, from the Econ classes I had to take in college there are only a couple of things that will create economic growth, lowered taxes and low interest rates.
If you look at the world unemployment rate we are sitting well below the average in Europe as well as Japan. If you add in the low tax rates we enjoy, the United States is poised for steady growth. Again, barring any more terrorist attacks.
I’m not endorsing Bush but the mechanisms for recovery are not a closely guarded secret. They are common sense public policy and have been demonstrated repeatedly. Any President from any party would do the same thing and get the same result.