The Future of Trade? (1 Viewer)

[Joby]

http://www.ers.usda.gov/publications/summaries/chinagrn.htm

The report talks about the fact that China's population is growing at a dizzying pace. And while these countries populations continue to boom, they become more and more dependent on foodstuffs imported from other countries, chiefly the US.

Analysts keep crying over the trade deficit, but I believe that this number is incorrect. You see, the trade deficit is based on the amount of money of each commodity traded. However, a bushel of grain may sell for the same price as several high tech calculators made in China, but the Grain of course weighs much more. And of course, grain is needed, high-tech things may not be so in an economic downturn.

The point is that eventually, China may become the industrial factory of the world. India may become the software heart of the world. But as all these nations develop down there current path, populations will increase and more and more people will move off the farm.

That's were the breadbasket of the world comes in. When we are independent of oil, agriculture, production of chemicals(ethanol?), and services will become the mainstays of our economy. This would indeed hurt the dollar, but that may be aided at a later time when we are energy independent.

Besides, we'll all still make money off the EU

Another link:
http://www.cia.gov/cia/publications/factbook/rankorder/2078rank.html
http://en.wikipedia.org/wiki/Trade_deficit

Showing that while we're $800 billion down, that's about 4% of the $21.4 Trillion Imported/Exported.

 

[SFLRN]

I'd agree, sure maybe China some day has a higher GDP than us. The thing is we'll still have the higher per capita GDP. And you're exactly right, the U.S. economy will simply start to specialize, in developing high level technology and this will create solid skilled labor. Meanwhile the rest of the world will also specialize and things will become cheaper and cheaper and people will be able to make them better than before because of specialization. That way people can have more without all the costs. Too many people view economics as a zero-sum game. And not to mention plenty of extremely poor people will move out of starvation.

 

[Joby]

yeah. Basically this is a better way of saying what I meant:

US
Grain, foodstuffs​

China​

India​

Smokestack Industries​

Software, but still mainly servics​

Both feed up to us, and we literally feed down to them. Unless China and India start throwing all the newborns in the Yangtzee and Indus, there's no way they'll be able to keep up with that population growth, even with genetically developed crops.

Plus, if we're energy independent, we won't be sinking our money into some far away country but into an industry that will produce more jobs.

And as you said, more and more people will not be starving, creating a population boom, expanding the need for smokestack industries, software, and massive numbers of crops.

More $$$

 

[Joby]

I just saw another BBC production showing China and Indias Race to the Top.

What A Load of Bullshit! They think that because they are competing for smokestack industries, they are going to the top. Ha! These people are still looking at economics from the 1930s view.

Plus, they keep talking about how China is practically export-only.

Except for that $750 Billion from the US alone, that is mostly foodstuffs.

What the Chinese buy from us and Canada may notr be as expensive as oil, but it'll be worth more to them shortly. It'll develop into the globalization of economies. When they're all off the farm making calculators, and there's 2.3 Billion of them, who will they purchase their food from?

 

[SFLRN]

Yeah they'll need our high power technology to stay competitive. Supposedly when populations become more modern birth rates decline since women tend to gain more rights and have less restrictive roles and thus seek to have less children since they have to work. Which is also good since more of each households income would go to each individual child and what not.

 

[editec]

While we're spinning fantasies about how everyone is going to become a high tech worker, what do we do about the fact that we have left about half our working population in this nation either underemployed or rapidly becoming unemployable?

This FREE TRADE policy we're currently working under runs counter to the policies that made this nation the most wealthy and productive in the world.

I'm happy for China and India of course, but I find it hard to understand why our government is so sanguine whe the our middle class is struggling precisely because of these policies.

I remember when people worked in factories making stuff and could actually make a living that supported a family.

The jobs we've been creating pay about 60% as much in the service sector as they did in the industrial center.

Mistake in my opinion, and big one if you're even remotely nationalistic.

 

[SFLRN]

While we're spinning fantasies about how everyone is going to become a high tech worker, what do we do about the fact that we have left about half our working population in this nation either underemployed or rapidly becoming unemployable?

This FREE TRADE policy we're currently working under runs counter to the policies that made this nation the most wealthy and productive in the world.

I'm happy for China and India of course, but I find it hard to understand why our government is so sanguine whe the our middle class is struggling precisely because of these policies.

I remember when people worked in factories making stuff and could actually make a living that supported a family.

The jobs we've been creating pay about 60% as much in the service sector as they did in the industrial center.

Mistake in my opinion, and big one if you're even remotely nationalistic.

Not a mistake. We have saved and will save tremendous amounts of money by shifting manufacturing to the overseas areas. That way, we firstly get cheaper labor, allowing businesses to provide products for cheaper (to stay competitive). Now things aren't as expensive in the U.S. and people can purchase more. At the same time we move many of these countries out of extreme poverty, thus a moral benefit. Along with this, these countries open up new markets for U.S. firms to sell their technology products to, or other things of the like. Now add to that that the firms are making better profits from this outsourcing and they're now able to expand their middle management positions in the U.S. (since it will still have the larger amount of highly skilled workers) and we see the creation of more high power stable jobs.
This also coincides with the ideals of specialization. As these lower level economies specialize in making these things we can specialize in technology and services and everyone is able to do things more effectively and at a cheaper price. So all around we see price savings.

Also to put it shortly, the free trade practice of lowering tarrifs encourages businesses to invest in more high-tech communication and other business techonology. Wal-Mart specifically showed an exponential increase in technology as tarrifs declined. This supplements my point on high power jobs.

Now we move into the ideas of national security and globalization. As countries develop more and more economically they will also be forced to become more and more democratic. High-power business men will demand that the government lower trade restrictions and provide for solid tort law. Without these the businessmen could not function since property protection and reliable contracts are key to any economy. Businesses will demand a reliable court system to protect their rights as innovators (property protection) and thus will help push foward a reliable court system. At the same time the general people will see rising incomes and at the same time a diversification of their culture via the influx of Western Culture. Take a Wal-Mart or a McDonalds in China for example. The media at the same time starts to diversify and shows out the corruption in current governments. Basically, the trend is that as people are able to feed themselves they become much more active in the political sector and demand civil rights. This will help debunk the communist threat China once was and provide an economic partner that will need us as much as we need their cheap labor. With the spread of Western culture, a generally free and accepting culture, we see a greater acceptance of individual freedoms. So in this way social dynamics lead to a more stable world and a freer world.
Now what about all those people who don't have the skills for those high power jobs? Well theres always our excellent education system. Or even better they can always seek work in trade skills which will, for a long time, be homegrown aspects as its hard to outsource a Chinese worker to lay bricks.
So on the whole we see democratization, thus global stability, because hungry men are angry men. And we see a specialization with lower prices and more high power jobs. And of course, freer people and a freer world.

 

[editec]

Not a mistake. We have saved and will save tremendous amounts of money by shifting manufacturing to the overseas areas.
That way, we firstly get cheaper labor, allowing businesses to provide products for cheaper (to stay competitive).

We? Who is we? The owners of manufacturing who moved off shore are saving money on labor.

Now things aren't as expensive in the U.S. and people can purchase more.

Some things are cheaper, I'll agree. Like those $100 sneakers made offshore. Of course Converse (which were made in the USA until last year) were selling for about $30. You see? I'm not coninnced that the american consumer is really enjoying the tremendous savings that you seem to think they are. Clothing is somewhat cheaper than it was thirty years ago and consumer electronics.

But at what cost to the middle class, I wonder? I doubt the savings pays for the cost its having on society.

At the same time we move many of these countries out of extreme poverty, thus a moral benefit.

Not if its putting an increasing share of our population into extrme poverty.

Along with this, these countries open up new markets for U.S. firms to sell their technology products to, or other things of the like.

Now there's the REAL reason we have FREE TRADE, methinks. Of course those same tech companies are also moving offshore so that isn't going to last, either. The techie firms (read arms and jets) have enormous influence on Congress. After all they paid for it.

Now add to that that the firms are making better profits from this outsourcing and they're now able to expand their middle management positions in the U.S. (since it will still have the larger amount of highly skilled workers) and we see the creation of more high power stable jobs.

Huh? If you fire your workerforce in America what middle management will you hire here? If anything you're fire middle managment.

This also coincides with the ideals of specialization. As these lower level economies specialize in making these things we can specialize in technology and services and everyone is able to do things more effectively and at a cheaper price.

Even the godhead of FREE trade, Adam Smith, suggested that the ONLY reason to have foreign trade is for those things we cannot produce effectively in your nation. He cautioned against destroying productive capacity in your nation just to get stuff cheaper from overseas, ya know.

So all around we see price savings.

No, that's the point, I don't actually think we do see price savings, except in some cases as previously mentioned.

Also to put it shortly, the free trade practice of lowering tarrifs encourages businesses to invest in more high-tech communication and other business techonology. Wal-Mart specifically showed an exponential increase in technology as tarrifs declined. This supplements my point on high power jobs.

It does, except I'm not coninced that the numbers actually support what you believe.

Now we move into the ideas of national security and globalization. As countries develop more and more economically they will also be forced to become more and more democratic.

Like China? there's a real bastion of freedom, eh?

High-power business men will demand that the government lower trade restrictions and provide for solid tort law. Without these the businessmen could not function since property protection and reliable contracts are key to any economy. Businesses will demand a reliable court system to protect their rights as innovators (property protection) and thus will help push foward a reliable court system. At the same time the general people will see rising incomes and at the same time a diversification of their culture via the influx of Western Culture.

Capitalism has absolutely no problem working with totalitarian governments.

Take a Wal-Mart or a McDonalds in China for example. The media at the same time starts to diversify and shows out the corruption in current governments. Basically, the trend is that as people are able to feed themselves they become much more active in the political sector and demand civil rights. This will help debunk the communist threat China once was and provide an economic partner that will need us as much as we need their cheap labor. With the spread of Western culture, a generally free and accepting culture, we see a greater acceptance of individual freedoms. So in this way social dynamics lead to a more stable world and a freer world.

I'll accept the possibility that a more affluent nation is more stable one, but not that it necessarily leads to a less totalitarian one.

Now what about all those people who don't have the skills for those high power jobs? Well theres always our excellent education system. Or even better they can always seek work in trade skills which will, for a long time, be homegrown aspects as its hard to outsource a Chinese worker to lay bricks.

Tell it to the high tech workers in America who have already lost their jobs to offshoring. I'm not buying it. Tell it to the radiologists whose work is being done by Indian radiologists at 1/10th the cost.

It's a myth that a better educated workforce is the solution because all that does is ramp up the competition for jobs without actually helping the workers. America already has the highst educated workforce in the world and we work longer hours and are watching our salaries diminish in purchasing power at the same time.

 

[SFLRN]

First lets talk about the price saving arguement. Lower wages for workers means business can be more competitive. I'll give you a statistic. 2,000 dollars. Thats the average savings a family makes from the competition created by Wal-Mart. (global insight). How does Wal-Mart receive much of its cheap goods? By getting things from manufacturers, its own included, producing things in these foreign countries. So after all that, the other companies jump on board. So now all the companies can lower their prices in an attempt to beat out each other and make the most money. Along with that they start upping their technology because that also leads to greater profit. This all translates to the 2,000 dollar price savings for consumers. Out sourcing helps this competition (and thats just from Wal-Mart).
Converse is appealing to a different market than those 100 dollar running shoes. Shoes in that same market as converse, casual, can now sell less and so can those 100 dollar shoes.

First off, you fail to understand what extreme poverty is compared to relative poverty. Relative poverty is based on a societys wealth. For example in Ethopia having 10,000 dollars and you'd be making 100 times more than a great deal of the population. That population with a 100 dollar earning rate is extreme poverty. They can barely survive and die of starvation. The poor in our country do not suffer that kind of poverty. Thats relative poverty, which is based off of a countries own wealth. What evidence is there , from you, that out sourcing creates more unemployment and or rising rates of poverty?

Okay you completely missed my point on these markets opening. With that those U.S. firms can make more profit and expand themselves to hire more higher level positions, usually filled by U.S. employees.
Now unto your attack on middle management. When firms expand they generally don't hire upper or middle level management in those countries, it does depend though. But generally they look to find people in our country with the right job skills. Thats how you increase the high power workforce.
lets remember, Adam Smith did not live in the current global situation we do with this kind of technology. But none the less he still supports my stance of specialization and free trade over your stance of restrictive trade. In no way shape or form is Smith with your protectionist stance. . We don't make the cheap toys as efficiently as China because it costs us signifcantly more, they make the products just as well and at a cheaper price, thats efficiency.
And above all else, he suggested the invisible hand where people are lead by the motivation of profit. Companies see the profit benefit of outsourcing the higher efficiency and go with that instead of the inefficient , more expensive, U.S. workers. Thats the kind of free trade Smith talked about.
The numbers do support my stance and I can go look them up if its really necessary to prove that with lowering tarrifs
technology investments increase exponentially in these firms. I'll answer the why right now. These firms need more management and data entry systems so they know what manufacturers are producing and how fast. They have computers that do this efficiently since they now have more people overseas due to the lack of tarrifs. So the companies basically put in technology so they are organized enough, else their whole outsourcing goes to pieces.
Okay maybe you missed the massive expansions in freedom for innovators in China. The economy used to be in pieces. But now thanks to the skyrocketing GDP. There has been a more free press. Sure it is severly hindered by the state. But on the whole the grip the state had on the people is starting to fade and it will continue to do so.

Capitalism can't work with totalitarian governments by definition. Totalinarian governments focus on the state having supreme power over personal rights. And capitalism demands personal rights on property (business assests and ideas) and freedom on what to buy and what to produce.

A more affluent nation is a more stable one and prevents totalitarian governments. Look at Hitler, he needed an unstable government to take over. Lenin needed an economically unstable government. It takes bad conditions for people to resort to dictators over more free leaders. And there wouldn't be government watchdogs, like the ACLU if it weren't from funding from some of the politically active elite rich. The more affluent the more people can afford to participate in politics since getting food isn't a big issue.

Firstly, thats one example with the radiologists. Most techonology will increase for the U.S. and it will continue that way. You bring up an example of microeconomic unemployment, unemployment in one industry. That is generally short term and they switch to other fields or other industries which have a higher demand for their skills. A better educated workforce is exactly the solution. More competition is what drives us to better lives than before its what drives the whole market based economy. I really don't care if you buy it the fact is the overwhelming majority of economists do buy the argument for free trade (Jeffery Sachs, Martin Wolf, Adam Smith, Milton Freidman, the list only continues)

We work longer hours and it pays off with one of the most dynamic economies in the world and one of the higher per capitas in the entire world. Not to mention the biggest economy in the world. Salaries are deflating in purchasing power due to the decline of the dollar. Thats a whole other topic related to monetary policy and the national debt.
Also one reason salaries have been stagnating is employers are paying more and more for health care and cannot afford to raise employee pay rate.