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The Economist: Trading Places

Lafayette

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What the aversion to global trade says about Europe and America

FORGET left and right. These days, it is often said, the real dividing line in politics is between open-door liberals and pull-up-the-drawbridge nationalists. Like most grand claims, this one can be overdone. But the pummelling that international trade is taking on both sides of the Atlantic suggests there is something to it.

Why has trade become the piñata of politics? Partly because it fits the anti-elite mood. Trade deals are cooked up behind closed doors by obscure bureaucrats. Negotiating positions are hidden from voters. The economic changes wrought by technology and competition should perhaps shoulder more of the blame for job insecurity. But it is easier to rail against the hand of a politician who signs a trade deal than the invisible hand of globalisation.

So far, so transatlantic. But there are telling differences between Europe and America. In the EU, opposition to TTIP is at its sharpest in Germany and Austria, two export powerhouses with low unemployment. The thousands of protesters who rallied in Hanover last weekend, as Barack Obama rolled into town to instil energy into the flagging talks, or the Dutch campaigners gathering signatures to put TTIP to a referendum, fulminate not against lost jobs but greedy multinationals and the lower food and environmental standards they believe the deal will bring.

But in America the anti-trade message resonates most in post-industrial regions that lost out from NAFTA, a trade deal struck in the 1990s with Canada and Mexico, as well as the accession of China to the World Trade Organisation in 2001. This led to huge job losses as American firms struggled to compete with cheap imports. In his Hanover speech Mr Obama acknowledged that governments must do more for globalisation’s losers.

Why the difference? Pascal Lamy, who served as the EU’s trade commissioner before running the WTO from 2005 to 2013, distinguishes between the “old” and “new” worlds of trade deals. The old world, dominated by national producers, was about opening markets and cutting tariffs. The new one aims to reduce differences between sets of national or regional rules that hinder trade in a world of transnational production and long supply chains. In the old world, trade negotiators battled producers who sought protection from international competition. In the new, officials must contend with consumers who fear that the domestic standards they cherish will be watered down.

....

TPIP (TransPacific Partnership Agreement) is having some difficulties, which is a Great Shame. If it will work in the Far East, where China will sign the agreement, it will help diminish the flood of Chinese cheap knock-offs. The Chinese were not asked to participate in the formation of the TPIP, but have indicated that they will sign it. Why?

Because China has discovered the virtues of International Patents protecting Chinese hi-tech products. (Wow! Now that they've virtually stolen a good number of them for their own production of knock-offs sold to the world!) China has become a very-large depositor of international patents.

Unfortunately the polemic (yes, that's what it has become) reminds one of the 1920s when governments tried to protect their balance of payments by refusing imports. Which helped precipitate the Great Depression.

And in Europe, they see TTIP (the Atlantic version of TPIP) as a subterfuge for getting "American chlorine-tainted poultry" into European supermarkets.

So, the real-story (underlying the perhaps exaggerated headlines) is a bit confused/confusing (meaning intended). But, why should chicken-meat be the Whipping Boy ... ?
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Tim the plumber

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The ecconomists will always see free trade as a good thing. It makes the GDP numbers go up. Good right?

There is, however, the view from the bottom that when Polish workers come to the UK to work in a factory making vinal flooring or Mexican workers work in a US factory making wash hand basins that it is bad for the countries recieving them as the social problems are not wanted and the jobs should go to locals and they are definately driving down wages but also that it is bad for the nations which are losing their best workers to lands already developed.

Today workers have to chase the capital. How about making the capital chase the workers by having such factories move to the locations where they are now?
 

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The ecconomists will always see free trade as a good thing. It makes the GDP numbers go up. Good right?

There is, however, the view from the bottom that when Polish workers come to the UK to work in a factory making vinal flooring or Mexican workers work in a US factory making wash hand basins that it is bad for the countries recieving them as the social problems are not wanted and the jobs should go to locals and they are definately driving down wages but also that it is bad for the nations which are losing their best workers to lands already developed.

Today workers have to chase the capital. How about making the capital chase the workers by having such factories move to the locations where they are now?

I guess, we could try command economy for a change. Why we should want to prove, what the Soviet and other socialist countries did in the 20 Century competition of the systems, is more than I know. But, if we want to be losers? Power to the people, I guess.
 

Tim the plumber

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I guess, we could try command economy for a change. Why we should want to prove, what the Soviet and other socialist countries did in the 20 Century competition of the systems, is more than I know. But, if we want to be losers? Power to the people, I guess.

I am not suggesting such a drastic move at all.

I am suggesting that whilst in the US Detroit losing more than half of it's population since the 1960's is OK because you are all of one society and culture (ish), here in Europe the idea od half of Portugal moving to Germany or most of Spain's youth moving to Demark is not good and the existing problem of loads of eastern Europeans being forced to live in the vastly overcrowded London is trouble waiting to happen.

Total command ecconomy is bad.

Total free ecconomy is.....
 

joG

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What the aversion to global trade says about Europe and America



TPIP (TransPacific Partnership Agreement) is having some difficulties, which is a Great Shame. If it will work in the Far East, where China will sign the agreement, it will help diminish the flood of Chinese cheap knock-offs. The Chinese were not asked to participate in the formation of the TPIP, but have indicated that they will sign it. Why?

Because China has discovered the virtues of International Patents protecting Chinese hi-tech products. (Wow! Now that they've virtually stolen a good number of them for their own production of knock-offs sold to the world!) China has become a very-large depositor of international patents.

Unfortunately the polemic (yes, that's what it has become) reminds one of the 1920s when governments tried to protect their balance of payments by refusing imports. Which helped precipitate the Great Depression.

And in Europe, they see TTIP (the Atlantic version of TPIP) as a subterfuge for getting "American chlorine-tainted poultry" into European supermarkets.

So, the real-story (underlying the perhaps exaggerated headlines) is a bit confused/confusing (meaning intended). But, why should chicken-meat be the Whipping Boy ... ?
_______________________________

It isn't the first time chickens have separated the US and Europeans http://articles.baltimoresun.com/1992-11-06/news/1992311204_1_chicken-war-trade-war-tariffs
 

joG

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I am not suggesting such a drastic move at all.

I am suggesting that whilst in the US Detroit losing more than half of it's population since the 1960's is OK because you are all of one society and culture (ish), here in Europe the idea od half of Portugal moving to Germany or most of Spain's youth moving to Demark is not good and the existing problem of loads of eastern Europeans being forced to live in the vastly overcrowded London is trouble waiting to happen.

Total command ecconomy is bad.

Total free ecconomy is.....

What you say is totally correct. But it is not international free trade per se that is the problem in Europe. It is the level of inflexibility within the EU. That is one reason, why the Euro was such a horrible thing for the EU potentates to force through.
 

Lafayette

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There is, however, the view from the bottom that when Polish workers come to the UK to work in a factory making vinal flooring or Mexican workers work in a US factory making wash hand basins that it is bad for the countries recieving them as the social problems are not wanted and the jobs should go to locals and they are definately driving down wages but also that it is bad for the nations which are losing their best workers to lands already developed.

The precedence was set in those times we now call "the ole days", when foreign labor was badly needed to augment already full or near full local employment. Now, after a major recession, we don't "need them anymore". Except of course in Britain where the hospitals cannot find enough nurses, so (regardless of their Polish accent in English) the "foreigners" are welcome?

Or, in France, with high unemployment rates but no French engineers to fill them. Then, lo-and-behold, the Czech and Slovak computer engineers are avidly being recruited.

Is that your view of the world?

Look, for the most part, the migrant Syrians and Africans that flooded into Europe are not going to find jobs that will go first to long-lines of unemployed local individuals. The Syrians are now safe from a sudden death, but that's about it.

Workers are not "chasing capital", except for the many wild-eyed super-duper programmers who move to Silicon Valley seeking financing for the "next-greatest-Internet-thingy" are doing so. These migrants are ravenous for ... uh, "food".

They are just looking for a job - our world having been overrun by a lingering serious recession in the West and rabid Muslim assassins in the East - in developed countries desperately searching the exit to higher employment levels.

So, rather than anxiety, we should have pity ...
 

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The precedence was set in those times we now call "the ole days", when foreign labor was badly needed to augment already full or near full local employment. Now, after a major recession, we don't "need them anymore". Except of course in Britain where the hospitals cannot find enough nurses, so (regardless of their Polish accent in English) the "foreigners" are welcome?

Or, in France, with high unemployment rates but no French engineers to fill them. Then, lo-and-behold, the Czech and Slovak computer engineers are avidly being recruited.

Is that your view of the world?

Look, for the most part, the migrant Syrians and Africans that flooded into Europe are not going to find jobs that will go first to long-lines of unemployed local individuals. The Syrians are now safe from a sudden death, but that's about it.

Workers are not "chasing capital", except for the many wild-eyed super-duper programmers who move to Silicon Valley seeking financing for the "next-greatest-Internet-thingy" are doing so. These migrants are ravenous for ... uh, "food".

They are just looking for a job - our world having been overrun by a lingering serious recession in the West and rabid Muslim assassins in the East - in developed countries desperately searching the exit to higher employment levels.

So, rather than anxiety, we should have pity ...

Again you miss my point.

I am not against giving refuge to desperate people, although as you say bringing them into situations where they are very likely not to prosper is probably not the best idea.

The point I am making is that Polish plumbers do drive down the wages of British plumbers and reduce the incentive to train locals. The Polish state pays for the training of these plumbers and recieves little benefit from them.

The Czech programmers you talk of could do the work at home. The companies that recruit them to work in the London office could just move that office to Brno or somewhere. But why do that when all the problems of the moving are off the company balance sheet and onto the workers to sort out?
 

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Again you miss my point. The point I am making is that Polish plumbers do drive down the wages of British plumbers and reduce the incentive to train locals.

And you miss mine.

Foreign labor is what built America. We all know that, especially me, since my parents came from Europe.

Neither of them "bid down" the value of American labor because there was a dire need for a foreign "complement to" and not "replacement of" American laborers.

Of course, come the first recession, and national labor goes into serious unemployment, then foreign-nationals are indeed employed to replace nationals. Typically without work-permits. Btw, this is illegal in any country, the US or in the EU.

If America is not prosecuting those who hire illegal labor, it will obviously continue. In France, if you do it once, you get away with a warning. If you do it twice the fine is enormous.

If the US has not been able to get a handle on Mexican labor illegally crossing the border, that is the fault of who? If the Dept. of Labor cannot send its agents into a factory to seek those who have American work-permit, that is the fault of who?

If the Dept. of Labor cannot send agents into vegetable fields in California to seek the illegal workers, that is the fault of who? And so what? Your cucumbers are going to cost 10 cents more a pound.

When I came to work in France, I had a work-permit awaiting me obtained by the company employing me; which is standard procedure around the world. Anyone wanting work in the EU from another European country can easily get a work-permit by simply showing an EU-passport. It's a simple process.

However, anybody who does not observe the rules by obtaining a legal permit to enter the country to work with a work-permit awaiting them, should be asked/forced to leave. The rules should be clear: If you want permission to enter a country, said permission should have requested by an American company (following clearly defined procedures) that will result in permission to enter the United States where a work-permit is awaiting them.

Those employers in the US should have shown to have exhausted all means to employ a local and, if having failed, they can then turn to a transnational solution. The burden-of-proof is clearly upon the employers.

How is that process unfair or arbitrary? Entering a country without prior permission is an illegal act.

Period ...
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Tim the plumber

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And you miss mine.

Foreign labor is what built America. We all know that, especially me, since my parents came from Europe.

Neither of them "bid down" the value of American labor because there was a dire need for a foreign "complement to" and not "replacement of" American laborers.

Of course, come the first recession, and national labor goes into serious unemployment, then foreign-nationals are indeed employed to replace nationals. Typically without work-permits. Btw, this is illegal in any country, the US or in the EU.

If America is not prosecuting those who hire illegal labor, it will obviously continue. In France, if you do it once, you get away with a warning. If you do it twice the fine is enormous.

If the US has not been able to get a handle on Mexican labor illegally crossing the border, that is the fault of who? If the Dept. of Labor cannot send its agents into a factory to seek those who have American work-permit, that is the fault of who?

If the Dept. of Labor cannot send agents into vegetable fields in California to seek the illegal workers, that is the fault of who? And so what? Your cucumbers are going to cost 10 cents more a pound.

When I came to work in France, I had a work-permit awaiting me obtained by the company employing me; which is standard procedure around the world. Anyone wanting work in the EU from another European country can easily get a work-permit by simply showing an EU-passport. It's a simple process.

However, anybody who does not observe the rules by obtaining a legal permit to enter the country to work with a work-permit awaiting them, should be asked/forced to leave. The rules should be clear: If you want permission to enter a country, said permission should have requested by an American company (following clearly defined procedures) that will result in permission to enter the United States where a work-permit is awaiting them.

Those employers in the US should have shown to have exhausted all means to employ a local and, if having failed, they can then turn to a transnational solution. The burden-of-proof is clearly upon the employers.

How is that process unfair or arbitrary? Entering a country without prior permission is an illegal act.

Period ...
________________________

Perhaps we are saying the same thing.

I would like to see some restrictions on the movement of labour as I see the social costs of the present very free situation between places of very different wealth levels and different cultures being too high to be justified by the slightly higher GDP levels.
 

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I would like to see some restrictions on the movement of labour as I see the social costs of the present very free situation between places of very different wealth levels and different cultures being too high to be justified by the slightly higher GDP levels.

First of all, let's get what is meant by "migrant" and "immigrant" straight*.

I gather you mean Import of Labor, and my previous comment underlined the necessity of a process.

What was written in that comment is nothing more than the General Practice of labor migration around the world, which can be of of two kinds:
*At present, because of the Syria Situation, Europe has been obliged to accept migrants onto its soil. Quite a number will inevitably find work in the EU, but certainly not all of them. Neither will they be "sent back" to Syria, though many are being sent-back to Turkey. Which is a highly specific situation.
*The free-migration across the US border is in a state of "Perpetual Havoc" - some make it and some don't, and of those who don't try again. Were the US to typify those who don't (ADN, photo, facial recognition programs) as permanent outlaws to migration in America, the tide would likely diminish though not stop. (Also, as I mentioned, spot-checks at various jobs will be necessary internally - all of which is politically unpalatable due to the large minority of immigrants in America who seem to think entry of migrants should be opened without restriction).
*What is necessary is a program that allows US embassies in key Central an South American and countries to post "Need for labor" calls that define the type of labor. People then make application, and those migrants accepted (likely those who speak at least rudimentary English) are given entry-permits to be followed by a work-permit (with an ultimate renewal date beyond which they must leave if not renewed).

Note that if Canadians wish to "migrate", they do so legally and there are no hassles. (There is even a taxation agreement between the two countries regarding Canadian migrants into the US.)

My Point: Migration is no "free-ride" into anywhere in the US, and we need to have a Great Debate about the matter. Because the controversy is confused between those Cubans who deserved entry in order to escape from Cuba and those coming up through Mexico who were simply escaping poverty; and those migrants prompted because national politics in their country are corrupt. Honduras comes to mind.

Of course, said debate is not going to happen because the subject (as shown above) is complex and cannot be reduced to "soundbites" easily understand in a 20-second TV commercial ...

*The subject of human migrancy is well-known. (See here from the United Nations.) Those who don't observe them are a "illegal migrants". Not illegal immigrants, because immigrants are naturalized citizens of the US.
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I'm Supposn

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Lafayette, regarding your link:
Trading places | The Economist
“FORGET left and right. These days, it is often said, the real dividing line in politics is between open-door liberals and pull-up-the-drawbridge nationalists. Like most grand claims, this one can be overdone. But the pummelling that international trade is taking on both sides of the Atlantic suggests there is something to it”.
/////////////////////////

I’m not opposed to USA’s participation within global trade but I’m opposed to tolerating USA chronic annual trade deficits of goods. Trade deficits are ALWAYS to some extent a drag upon their GDP. The drag upon their nation’s domestic production is reflected by the drags upon their numbers of jobs and their median wages. I’m a proponent of USA adopting a specific version a unilateral substantially market driven proposed Import Certificate policy.

Refer to
http://www.debatepolitics.com/economics/249572-usa-s-chronic-trade-deficits-5.html
or
http://www.debatepolitics.com/economics/253134-import-certificates-3.html
or google Wikipedia’s article entitled “Import Certificates”
and/or
The paragraphs entitled “Trade Balances' effects upon their nation’s GDP” within the article entitled “Balance of trade”.

Respectfully, Supposn
 

Lafayette

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Yes, and so?

We disagree on Import Certificates, because you cannot accept their usage as defined by the WTO.

End of story.

M... r... a...
_________
 
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Lafayette

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You are right to underscore the fact that uniqueness of Europe is in its cultural differences country-to-country.

There will always be migrants looking for work elsewhere, and in Europe it has typically been those of the southern countries that migrate north. For work, not because they particularly like living in a colder climate.

The migrants to the US are willing to stay and live permanent, because going home is worse.

Which is not the case at all in Europe ...
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Yes, and so?

We disagree on Import Certificates, because you cannot accept their usage as defined by the WTO.

End of story.

M... r... a...

" their usage as defined by the WTO"?
 

I'm Supposn

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Yes, and so?

We disagree on Import Certificates, because you cannot accept their usage as defined by the WTO.

End of story.

M... r... a...
_________

Lafayette and JoG, excerpted from post of 11:18 AM, May 29, 2016 within “USA’s chronic trade deficits” thread:
http://www.debatepolitics.com/economics/249572-usa-s-chronic-trade-deficits.html

"JoG, prior USA trade agreements would not interfere with USA adopting the Import Certificate proposal. …
Specifically within the General Agreement on Tariffs and trade, (i.e. GATT), all participating nations are without prejudice may provide 6 months notice of their intention to withdraw from continued participation within such an agreement. I believe that’s the case for all the trade agreements we participate within. …”

Respectfully, Supposn
 

Lafayette

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We are coming out of a Great Recession, and since we (think we) don't know how it happened, we look for "guilty parties". Preferably those abroad. Like pointing the finger at Global Trade.

We'd do a lot better looking in our own back yard. Consider the composure of the Unemployment statistic. Ditto, the 15% of Americans living below the Poverty Threshold. The facts are essentially the same.

I'd venture, nowadays but not in 2012, for the most part the poor are also people with the lowest level of education. Ipso facto, which leads me to this article from WikiP: Poverty and education. Excerpt:
Poverty affects individual access to quality education. The U.S. education system is funded by local communities; therefore the quality of materials and teachers reflects the affluence of community. Low income communities are not able to afford the quality education that high income communities do. Another important aspect of education in low income communities is the apathy of both students and teachers. To some, the children of the poor or ignorant are mere copies of their parents fated to live at the same level of income and education as their parents. The effect of such a perception can manifest itself in teachers who will not put forth the effort to teach and students who are opposed to learning; in both cases poor students are thought to be incapable. Females in poverty are also likely to become pregnant at a young age, and with fewer resources to care for a child, young women often drop out of school. Due to these and other reasons the quality of education between the classes is not equal.

Further more: Social determinants of health in poverty. Excerpt:
According to Moss, socioeconomic factors that affect impoverished populations such as education, income inequality, and occupation, represent the strongest and most consistent predictors of health and mortality.

The inequalities in the apparent circumstances of individual's lives, like access to health care, schools, their conditions of work and leisure, households, communities, towns, or cities, affect people's ability to lead a flourishing life and maintain health, according to the WHO. The inequitable distribution of health-harmful living conditions, experiences, and structures, is not by any means natural, "but is the result of a toxic combination of poor social policies and programmes, unfair economic arrangements, and bad politics." Therefore, the conditions of an individual's daily life are responsible for the social determinants of health and a major part of health inequities between and within countries.

Along with these social conditions, "Gender, education, occupation, income, ethnicity, and place of residence are all closely linked to people's access to, experiences of, and benefits from health care." Social determinants of disease can be attributed to broad social forces such as racism, gender inequality, poverty, violence, and war.

This is important because health quality, health distribution, and social protection of health in a population affect the development status of a nation. Since health has been considered a fundamental human right, one author suggests the social determinants of health determine the distribution of human dignity.

I find it unconscionable that, when local taxation is insufficient to support even schooling, it's the kids that suffer most. It is at such a moment that recourse to Federal funding should be available (perhaps via state educational agencies).

All of our children deserve a chance, otherwise we incarcerate them under the Poverty Threshold in which they live daily with no obvious exit - except perhaps crime ...

What's to pull them out if not Federal assistance ... ?
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I'm Supposn

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We are coming out of a Great Recession, and since we (think we) don't know how it happened, we look for "guilty parties". Preferably those abroad. Like pointing the finger at Global Trade. ...

Lafayette, almost all knowledgeable persons offering creditable opinions have stated the global recession began and was due to do huge financial enterprises almost entirely within USA recklessly playing with esoteric financial products of great financial leverage. Lack of federal regulation enabled them to peddle their esoteric financial products and they did so globally.
It’s generally believed that we have done extremely little to prevent such recurrences in the future.

I don't recall reading or hearing of any creditable commentator contending a great USA economic calamity being almost entirely due to our global trade practices but our chronic annual trade deficits of goods certainly drag upon our production of goods and consequentially upon our numbers of jobs and our median wage.
USA’s enactment of Import Certificate policy would not be materially detrimental to our nation’s government budgets, our governments’ debts or our tax rates. It would not divert effort or resources from any other proposals for the improvement of our nation.

Respectfully, Supposn
 

I'm Supposn

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... I'd venture, nowadays but not in 2012, for the most part the poor are also people with the lowest level of education. Ipso facto, which leads me to this article from WikiP: Poverty and education. Excerpt:

Further more: Social determinants of health in poverty. Excerpt:

I find it unconscionable that, when local taxation is insufficient to support even schooling, it's the kids that suffer most. It is at such a moment that recourse to Federal funding should be available (perhaps via state educational agencies).

All of our children deserve a chance, otherwise we incarcerate them under the Poverty Threshold in which they live daily with no obvious exit - except perhaps crime ...

What's to pull them out if not Federal assistance ... ?

States rights and responsibilities:

Lafayette, regarding education and training:
Excerpted from the “States rights and responsibilities” thread,
http://www.debatepolitics.com/gener...ghts-and-responsibilities.html#post1065913093 .

“in many cases I agree with political conservatives’ contentions that many governing problems could be best dealt with by the individual U.S. states and their more local government jurisdictions.
However although they’re opposed to what they contend to be federal usurping of state’s jurisdictions, too many of them would have their states refrain from taxing and spending to effectively deal with their own problems. …
… There are many problems that for various reasons cannot be exclusively dealt with by our state and local governments, there are many problems that should not be directly dealt with by governments, and there are some problems that can only be dealt with on a federal level.

Respectfully, Supposn
 

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There are many problems that for various reasons cannot be exclusively dealt with by our state and local governments, there are many problems that should not be directly dealt with by governments, and there are some problems that can only be dealt with on a federal level.

Perhaps, but healthcare is not one of them.

And the EU, which has National HealthCare Systems catering to more than 500 million people is a case in point. Moreover, studies corroborate the fact the EU healthcare systems are amongst the best going ...

To wit:
*World Health Organization Ranking of Health-Care Systems
*Commonwealth Fund’s Study Results of HealthCare Performance
*Health Care Systems: Three International Comparisons

I already live in France, which has one of the best HC-systems noted. And I would not care in the least to return stateside, where the costs of such insurance is prohibitive, even if of excellent quality. Why is it so much less expensive in Europe? Because all acts and medications are priced by the state, which negotiates bulk their cost-prices. (So, yes, this is the principal reason why healthcare "services" are so much less expensive here.)

Comparative cost structure (see "Ambulatory", meaning staff costs), US and EU:
Health  Care Spending by Category.jpg

HeathCare is not something a nation wants to get wrong. Because when that happens, a great many people must suffer ...
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Lafayette

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I don't recall reading or hearing of any creditable commentator contending a great USA economic calamity being almost entirely due to our global trade practices but our chronic annual trade deficits of goods certainly drag upon our production of goods and consequentially upon our numbers of jobs and our median wage.

And I maintain you are barking up the wrong tree.

From Project Syndicat, America’s Trade Deficit Begins at Home -excerpt:

In 2015, the United States had trade deficits with 101 countries – a multilateral trade deficit in the jargon of economics. But this cannot be pinned on one or two “bad actors,” as politicians invariably put it. Yes, China – everyone’s favorite scapegoat – accounts for the biggest portion of this imbalance. But the combined deficits of the other 100 countries are even larger.

What the candidates won’t tell the American people is that the trade deficit and the pressures it places on hard-pressed middle-class workers stem from problems made at home. In fact, the real reason the US has such a massive multilateral trade deficit is that Americans don’t save.

Total US saving – the sum total of the saving of families, businesses, and the government sector – amounted to just 2.6% of national income in the fourth quarter of 2015. That is a 0.6-percentage-point drop from a year earlier and less than half the 6.3% average that prevailed during the final three decades of the twentieth century.

Any basic economics course stresses the ironclad accounting identity that saving must equal investment at each and every point in time. Without saving, investing in the future is all but impossible.

So why is this relevant for the trade debate? In order to keep growing, the US must import surplus saving from abroad. As the world’s greatest economic power and issuer of what is essentially the global reserve currency, America has had no trouble – at least not yet – attracting the foreign capital it needs to compensate for a shortfall of domestic saving.

But there is a critical twist: To import foreign saving, the US must run a massive international balance-of-payments deficit. The mirror image of America’s saving shortfall is its current-account deficit, which has averaged 2.6% of GDP since 1980.

It is this chronic current-account gap that drives the multilateral trade deficit with 101 countries. To borrow from abroad, America must give its trading partners something in return for their capital: US demand for products made overseas.

I frankly do not know what the solution can be for the US, but I suspect that Import Certificates are not the answer. As I have said to you many a time. They are a palliative solution to Trade Deficits and were never ever intended as a definitive resolution to chronic deficits of any nation. They were allowed to give nations a respite within which to "fix the problem".

Were the US to adopt them uniformly across all its trade, it would provoke all its trading partners (including the EU) to institute an unfair-trading practice under GATT rules at the WTO. Which is why the US has not even attempted to do so ...
 

James972

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Perhaps, but healthcare is not one of them.

And the EU, which has National HealthCare Systems catering to more than 500 million people is a case in point. Moreover, studies corroborate the fact the EU healthcare systems are amongst the best going ...

To wit:
*World Health Organization Ranking of Health-Care Systems
*Commonwealth Fund’s Study Results of HealthCare Performance
*Health Care Systems: Three International Comparisons

I already live in France, which has one of the best HC-systems noted. And I would not care in the least to return stateside, where the costs of such insurance is prohibitive, even if of excellent quality. Why is it so much less expensive in Europe? Because all acts and medications are priced by the state, which negotiates bulk their cost-prices. (So, yes, this is the principal reason why healthcare "services" are so much less expensive here.)

Comparative cost structure (see "Ambulatory", meaning staff costs), US and EU:
View attachment 67202035

HeathCare is not something a nation wants to get wrong. Because when that happens, a great many people must suffer ...
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American health care is a huge spaghetti mess of govt programs and regulations. If we switched to capitalism prices would be reduced to 20% of what they are now and 10-20 years would be added to our life spans
 

Lafayette

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American health care is a huge spaghetti mess of govt programs and regulations. If we switched to capitalism prices would be reduced to 20% of what they are now and 10-20 years would be added to our life spans

The present system is perfectly capitalistic. The prices of drugs and HC-services are determined and applied by coercion between market participants (Insurance Companies and HeathCare professionals.) Why?

Because there is an insufficient supply of the healthcare professionals, so they set their own prices. And, there is no National Health Service (NHS) that sets prices.

In the EU, NHS system of National, prices are established by negotiating with medical-practitioners and also pharmaceutical companies for bulk deliveries to NHS-run hospitals. Which is why, for instance, pharmaceutical prices in the US are hallucinatory.

Which is also why some Yanks go to Canada to buy their prescription drugs. Private hospitals typically just past the cost through to the patient. (Which is paid by a private healthcare insurance - if the patient is lucky enough to have one.)

Which is the reason why, comparatively, Health Care costs in the US are a extraordinarily higher in cost than elsewhere on this planet:

Average HC costs versus Life Span.jpg

Note in the above infographic that the total cost per capita in Canada, which has a NHS, is half that of the US ...
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Lafayette

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Perhaps we are saying the same thing.

I would like to see some restrictions on the movement of labour as I see the social costs of the present very free situation between places of very different wealth levels and different cultures being too high to be justified by the slightly higher GDP levels.

There should not be any "problem" with Central or South American labor movements "north". It's a bad situation made worse by not managing it properly. But how do we "manage it"?

I outlined in this forum how it should be done, by means of in-country recruitment of the needed workforce - not the wild, illegal migration across borders as is happening today. Europe is flooded with refugees from Syria and other parts of the Middle-east. They all come looking for jobs that don't exist - unemployment is high in the EU, and EU nationals come first.

I'll bet any Central American with computer-skills who shows up in Silicon Valley will find someone who will "legalize" their stay in America.

And even the plan I outlined would be difficult to implement, because the manpower entering is really quite basic, unskilled workers. And somebody has to pick the fruit you eat all summer.

Come fall and winter, the migrants do not want to return - so they remain illegal and take jobs wherever they can. And nobody stops them unless they get into trouble. Which is why they show up to support those politicians willing to "legalize" their stay, which is a palliative solution only worsening the situation.

These migrants do not have the skills for the well-paying jobs. Their kids, however, schooled in the US, will have the necessary skills. So, why aren't they skills-schooled in Central America? (Don't ask, it's a political mess down there!)

And if our kids don't want to do their jobs, who will ... ?
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