A sign of just how shakey this "recovery" is ...

[dmcowen674]

What happens to new college graduates who can't find jobs.

Do they get counted as "unemployed"?

No

 

[WhipperSnapper]

I'll give it a shot, but it isn't anything that others haven't talked about before like you claim.

Historically, as markets for trade have opened up a boom followed for those involved.

Where is our boom?

Is it possible that conditions were very different historically, such as not having a huge standard of living and income difference between the people doing the trading as well as having the Comparative Advantage precondition of capital immobility? The trade situation is very different today in a world where work product can be transmitted almost instantaneously at low cost over the Internet.

Allocation of resources was brought closer to optimal. The same reason that farmer Ted growing corn and farmer Joe growing wheat allows for more productivity and more food for the both of them, is the reason why opening up trade with billions of others is good. Allocation of resources.

You're basically saying "comparative advantage". What if Joe can grow corn himself for less money than Ted can? What if Ted really can't offer Joe anything? Let's suppose that it were possible for Ted's cornfield (think factory) to be picked up and moved over to Joe's land. It turns out that Joe has an essentially infinite ability to both grow corn and wheat. (Kind of like having a labor pool with billions of impoverished people ready to work at the factory for fifty-cents an hour). Now what? Ted can't sell his corn because Joe can produce both corn and wheat less expensively than Ted can and can sell it for less. You might say that Joe has an "absolute advantage".

You have the raw materials that earth creates, you have the labor that turns raw materials into goods. Expanding markets allows access to more raw materials and more labor.

Why wouldn't that new labor end up consuming the raw materials itself? What if there is more new labor relative to the amount of new raw materials?

Raw materials are being "wasted" when they sit there doing nothing, same with labor. The notion that we are just dumping labor to other countries and receiving nothing in return isn't accurate.

We're not "dumping" our labor on other countries; they're dumping it on us. We're sending them our means of production. They are sending us manufactured goods and services but not purchasing an equal amount from us. Instead we are trading our real wealth--hard assets like domestic real estate and business ownership--for ephemeral consumer goods and services. We are impoverishing ourselves long-term. See Warren Buffet's excellent essay, Squanderville vs. Thriftville.

There are many things wrong with what the US is doing economically, and I think some of those things are being ignored while people blame free trade. The middle class has been weakening despite increases in productivity. There is a concentration of wealth going on. There has been considerable GDP growth and the US is by far the leader in the world in GDP over the last 20 years that free trade has been booming. Despite that, the money is flowing to less and less people. The problem isn't that the US isn't getting enough of a piece of the world's pie, it is that too few in the US are getting a piece of the US's pie.

I agree--but why is that happening? Could it be because Global Labor Arbitrage has decreased the cost of labor? Could this just be the natural workings of a global free market?

If the supply of labor relative to capital increases dramatically and almost infinitely overnight, what do you think that will do to the price point--wages? It makes sense that the owners of the capital--the wealthy--could keep a larger percentage of the value of a worker's contribution to wealth production as profit.

At root, I think that that explains why the rich have been able to get richer--the labor market is allowing them to do it. To understand Global Labor Arbitrage you really just need to understand simple concepts of supply-and-deman.

The same argument for free trade is the same argument for technology, and we are all here on computers right now aren't we? Technology makes jobs obsolete. Doesn't that mean job loss and lower standards of living? Not at all. In fact it is the exact opposite. Technology makes things more efficient and improves standards of living. New jobs replace older jobs, but efficiency is the key, as that is where you see the gains. Free trade allows greater efficiency, which is why things will get better overall.

I agree with you that technological advance and resultant real productivity advances are a good thing. However, this has little to do with the issue of free trade and protectionism.

Actually, we have to ask the question--why hasn't the bounty of wealth resulting from increased productivity, efficiency, and technological advance resulted in a higher standard of living and more wealth for the American middle class? Why hasn't this bounty been internalized?

The American people haven't seen it because while productivity has increased, their wages have remained stagnant or are decreasing as a result of having billions of poor people merged into their labor market.

Overall, I don't think your explanation is very convincing. I think that a great many Americans have accepted the notion, almost as an absolute or as a dogma, that the free market is always good and that free trade is always good. Our traditional fear of Communism has reduced people's willingness and ability to question those ideas.

I hope that you will read some of Paul Craig Roberts's op-eds where he discusses these types of issues. You can find a list here:

http://outsourcing.yuku.com/topic/365/t/Links-to-Selected-Op-Eds-by-Paul-Craig-Roberts.html

 

[daishi5]

You're basically saying "comparative advantage". What if Joe can grow corn himself for less money than Ted can? What if Ted really can't offer Joe anything? Let's suppose that it were possible for Ted's cornfield (think factory) to be picked up and moved over to Joe's land. It turns out that Joe has an essentially infinite ability to both grow corn and wheat. (Kind of like having a labor pool with billions of impoverished people ready to work at the factory for fifty-cents an hour). Now what? Ted can't sell his corn because Joe can produce both corn and wheat less expensively than Ted can and can sell it for less. You might say that Joe has an "absolute advantage".

Ted really can't offer Joe anything? That seems like a ridiculous situation. Ted couldn't do some of the work so that Joe can have some more time with his family? Or maybe Joe hates his family, then Ted could offer to be a vacation coordinator that gets Joe's family out of his hair. Your example only works if you limit them to growing corn and wheat, when you allow Ted to offer many other services, such as doing some of Joe's work to give Joe more leisure time, the idea that Ted has nothing to offer becomes almost ludicrous.

A second comment, in order to come to a simple conclusion that global labor competition will drive American workers out of their jobs, you have to assume that all laborers, American and foreign, are exactly the same. But they are not, a lot of the capital invested in American workers, their education, reliable power infrastructure, and other forms of capital, cannot be moved. When you consider all the forms that capital can take, a lot of it is immobile, and is a part of the American work force. Because American labor has so many "built in" advantages, you get more from a laborer in America then you do in less developed countries. You have to consider relative costs. I think that the biggest trade issue is the Chinese currency. I think it is skewing the relative costs of labor, and depressing American wages, not global trade, but the currency manipulations of the Chinese government.

Also, can you find me some original source on the idea that capital must be locked for comparative advantage to hold true? I don't think capital is as mobile as you think it is, but I have never heard that particular requirement for comparative advantage before.

 

[her209]

What happens to new college graduates who can't find jobs. Do they get counted as "unemployed"?

Yes.

 

[HendrixFan]

Where is our boom?

Is it possible that conditions were very different historically, such as not having a huge standard of living and income difference between the people doing the trading as well as having the Comparative Advantage precondition of capital immobility? The trade situation is very different today in a world where work product can be transmitted almost instantaneously at low cost over the Internet.

We are about 20 years into the whole global marketplace thing, if that long. There have been numerous efforts from many parties to slow or impair the global marketplace. That being said, I think our struggles have nothing to do with a global marketplace.

You're basically saying "comparative advantage". What if Joe can grow corn himself for less money than Ted can? What if Ted really can't offer Joe anything? Let's suppose that it were possible for Ted's cornfield (think factory) to be picked up and moved over to Joe's land. It turns out that Joe has an essentially infinite ability to both grow corn and wheat. (Kind of like having a labor pool with billions of impoverished people ready to work at the factory for fifty-cents an hour). Now what? Ted can't sell his corn because Joe can produce both corn and wheat less expensively than Ted can and can sell it for less. You might say that Joe has an "absolute advantage".



Why wouldn't that new labor end up consuming the raw materials itself? What if there is more new labor relative to the amount of new raw materials?

If Joe can produce more corn and wheat on his land than Joe and Ted can collectively, there is something wrong. If Joe can produce x amount of corn and y amount of wheat and have it be worth more than Ted's x amount of corn and Joe's y amount of wheat, then let Joe do that. That is efficiency in action. Trying to put a lid on it does nobody any favors. Joe can pump out his corn and wheat, and Ted can move onto something else to do. If Ted can't figure out how to produce anything of value with his land while Joe can do just about anything, what does that say about Ted?

I think an important part of this equation, backing away from analogies, is population. To you China's larger population is a threat to the US. I don't see that. Neither does China. The collective value of China's resources (materials and labor) also gets split up amongst its population. The GDP of the US is something like 4 or 5 times the GDP of China, and with 1/5 the population (or so). That means the average American should be enjoying 25X the standard of living. There is a finite amount of raw materials. Only so many people can live on a nice ocean or on a mountaintop. The less people you have the more each person can enjoy, especially as technology allows us to refine raw resources into goods with minimal labor. How many Americans are involved in producing something of value, especially in the global marketplace? Having 40% of the GDP be government spending (federal, state and local) surely puts a damper on that.

We're not "dumping" our labor on other countries; they're dumping it on us. We're sending them our means of production. They are sending us manufactured goods and services but not purchasing an equal amount from us. Instead we are trading our real wealth--hard assets like domestic real estate and business ownership--for ephemeral consumer goods and services. We are impoverishing ourselves long-term. See Warren Buffet's excellent essay, Squanderville vs. Thriftville.

That's what I mean by dumping, sending our labor (the work needed) to other countries. I didn't mean our manpower. Labor isn't the only thing that we have to offer in a global marketplace, and if it is we are screwed.

If the supply of labor relative to capital increases dramatically and almost infinitely overnight, what do you think that will do to the price point--wages? It makes sense that the owners of the capital--the wealthy--could keep a larger percentage of the value of a worker's contribution to wealth production as profit.

But the truth is those that are kept around are just as valuable (if not moreso) once the physical labor is offshored. If the benefits of cheaper labor aren't passed on in lower prices and instead kept as profits (or larger pay for execs), then the problem is that the companies are too large and powerful (barriers to entry at their size) because the a perfect market would have competitors come in and wipe them out. That same size and power is what keeps the remaining workers from getting fair compensation. If their jobs can't be eliminated, then they have value. If the companies are so top heavy with their pay, the workers aren't getting fair value for the labor they do provide. This erosion of the middle class is related to free trade, but only in the sense that it is an excuse for companies to screw its remaining workers.

At root, I think that that explains why the rich have been able to get richer--the labor market is allowing them to do it. To understand Global Labor Arbitrage you really just need to understand simple concepts of supply-and-deman.

The companies reap record profits and use those to lobby congress for even greater power and control. Labor supply and demand in the US isn't simple because the two sides do not share the same power, as they would in the standard supply and demand model. The companies have merged and merged and merged, now these super corporations have no real competitors to force wages to be fairly priced. This is why the middle class is disappearing and wealth is being concentrated.

I agree with you that technological advance and resultant real productivity advances are a good thing. However, this has little to do with the issue of free trade and protectionism.

The similarity is that both increase efficiency long term while short term eliminating "now useless" jobs. It is the increased efficiency of a global marketplace that will punish those who stay out, just as those who avoid technology won't be able to compete with those that use it.

Actually, we have to ask the question--why hasn't the bounty of wealth resulting from increased productivity, efficiency, and technological advance resulted in a higher standard of living and more wealth for the American middle class? Why hasn't this bounty been internalized?

US GDP has been doing well, dips here and there aside. Corporate profits are doing amazingly well. The problem isn't that the US as a whole is struggling to benefit, it is that a select few are and are preventing the rest from enjoying it.

Inflation adjusted per capita income has doubled since 1960. 11% of current US population is foreign born, and they do pull down the bell curve as most are on the lower end of the earning scale. Despite that we still make gains. The median household is 2.6 people, it was 4 people 25 years ago. This is an effective income gain of 50% in real dollar terms for middle class household, during a period of record immigration. There is almost one car for every licensed driver in the US, 30 years ago most families had one car. Between houses and apartments, the typical american dwelling has 5.3 rooms for its 2.6 people. The typical new home built is 2250 sq feet with 3 bedrooms and 2 and a half baths. 50 years ago it was 1100 sq feet, two bedrooms and one bath. Despite the fact that much of the US doesn't live in areas where air conditioning is a necessity, 80% have central AC (not including window units) versus 15% two generations ago. Since 1960 the average American has gained 5 more hours of free time a week. In 1960 22% of Americans lived in poverty, by 2001 it was down to 11.7%.

I think it is inaccurate to say that standards of living haven't gotten better for average Americans. I do think it is accurate to say the middle class hasn't kept pace with the gains of those at the top.

The American people haven't seen it because while productivity has increased, their wages have remained stagnant or are decreasing as a result of having billions of poor people merged into their labor market.

As explained above, this isn't true.

Overall, I don't think your explanation is very convincing. I think that a great many Americans have accepted the notion, almost as an absolute or as a dogma, that the free market is always good and that free trade is always good. Our traditional fear of Communism has reduced people's willingness and ability to question those ideas.

I don't believe we have a free market, as 40% of our GDP is government spending. I think the corporations we do have are too large to effectively exist in a free market with consumers. I do think that globalization will weaken the US and the corporation's stranglehold on our economy and decentralize it to some extent.

 

[DanDaManJC]

Inflation adjusted per capita income has doubled since 1960. 11% of current US population is foreign born, and they do pull down the bell curve as most are on the lower end of the earning scale. Despite that we still make gains. The median household is 2.6 people, it was 4 people 25 years ago. This is an effective income gain of 50% in real dollar terms for middle class household, during a period of record immigration. There is almost one car for every licensed driver in the US, 30 years ago most families had one car. Between houses and apartments, the typical american dwelling has 5.3 rooms for its 2.6 people. The typical new home built is 2250 sq feet with 3 bedrooms and 2 and a half baths. 50 years ago it was 1100 sq feet, two bedrooms and one bath. Despite the fact that much of the US doesn't live in areas where air conditioning is a necessity, 80% have central AC (not including window units) versus 15% two generations ago. Since 1960 the average American has gained 5 more hours of free time a week. In 1960 22% of Americans lived in poverty, by 2001 it was down to 11.7%.

I think it is inaccurate to say that standards of living haven't gotten better for average Americans. I do think it is accurate to say the middle class hasn't kept pace with the gains of those at the top.

To that end, how much of the income gain was made because we've moved from single income homes to double income homes? I don't have the number handy --- but I know it's a pretty significant number.

 

[WhipperSnapper]

Ted really can't offer Joe anything? That seems like a ridiculous situation. Ted couldn't do some of the work so that Joe can have some more time with his family? Or maybe Joe hates his family, then Ted could offer to be a vacation coordinator that gets Joe's family out of his hair. Your example only works if you limit them to growing corn and wheat, when you allow Ted to offer many other services, such as doing some of Joe's work to give Joe more leisure time, the idea that Ted has nothing to offer becomes almost ludicrous.

Name something that can be done in the United States and exported for sale to China or India that the Chinese and Indians cannot do less expensively for themselves.

Sure--we can produce goods and services the Chinese and Indians will buy--just as soon as we are willing to work for a competitive 50 cents-an-hour without labor and environmental regulations.

A second comment, in order to come to a simple conclusion that global labor competition will drive American workers out of their jobs, you have to assume that all laborers, American and foreign, are exactly the same. But they are not, a lot of the capital invested in American workers, their education, reliable power infrastructure, and other forms of capital, cannot be moved.

They have universities in India and China, too. Also, many people from India and China have trained in the U.S. See:

http://www.computerworld.com/s/arti...fshore_Dominance?from=story_kc&taxonomyId=010

According to the National Association of Software and Service Companies, an IT industry group in India, there are approximately 290,000 engineering degrees being awarded annually in India, with the majority of those workers entering IT fields.

Note that that article was published in 2004.

There isn't much here that is not present in those other nations or that could not be developed and implemented with the will to do so. Manufacturing know-how and capital can be exported overseas. America's "capital invested in American workers, their education, reliable power infrastructure, and other forms of capital" doesn't seem to have kept our manufacturing facilities here nor has it kept many of the knowledge-based jobs that have been shipped off to India.

Some people also have adopted a racist notion that only Americans and Westerners are capable of "innovation".

When you consider all the forms that capital can take, a lot of it is immobile, and is a part of the American work force.

The only thing that's really immobile is the land itself--that means agriculture, lumber, freshwater, and the mining of raw materials.

Because American labor has so many "built in" advantages, you get more from a laborer in America then you do in less developed countries.

That may be so for now, but it's hard to compete against fifty-cents an hour without labor and environmental regulations. Does American labor's advantages give it sufficient advantage to compete with that? Apparently manufacturers don't seem to think so nor do companies that have sent knowledge-based jobs to India.

You have to consider relative costs. I think that the biggest trade issue is the Chinese currency. I think it is skewing the relative costs of labor, and depressing American wages, not global trade, but the currency manipulations of the Chinese government.

It's certainly an issue, but the fifty-cents-an-hour without labor or environmental regulations would still be a large problem.

Also, can you find me some original source on the idea that capital must be locked for comparative advantage to hold true? I don't think capital is as mobile as you think it is, but I have never heard that particular requirement for comparative advantage before.

According to Paul Craig Roberts, David Ricardo, the guy who originated the idea of comparative advantage, said it himself. If there is comparative advantage, it sure doesn't seem to be asserting itself with regards to our trade deficit.

 

[HendrixFan]

To that end, how much of the income gain was made because we've moved from single income homes to double income homes? I don't have the number handy --- but I know it's a pretty significant number.

Not as much as you would think because nearly doubling the workforce by adding women lowered the wages. Of course it was a gradual change as women gradually entered the workforce over the course of many decades. That is why household income is used for most of these figures and not individual incomes. This is also while childcare costs are now a significant chunk of household income. The point of those numbers wasn't whether or not individual incomes were rising, it was the overall quality of life that the average American enjoys, the standard of living.

The number of workers per household increased while business output per worker increased. This meant there were/are more things for everyone to enjoy.

 

[MJinZ]

Name something that can be done in the United States and exported for sale to China or India that the Chinese and Indians cannot do less expensively for themselves.

Wow, you're an idiot. Do you know what America's biggest export is? I'll let you figure this one out yourself.

Sure--we can produce goods and services the Chinese and Indians will buy--just as soon as we are willing to work for a competitive 50 cents-an-hour without labor and environmental regulations.

Shit, I'm sure those Cadillacs are being made by 50 cents a hour Union labor.

They have universities in India and China, too. Also, many people from India and China have trained in the U.S. See:

http://www.computerworld.com/s/arti...fshore_Dominance?from=story_kc&taxonomyId=010



Note that that article was published in 2004.

There isn't much here that is not present in those other nations or that could not be developed and implemented with the will to do so. Manufacturing know-how and capital can be exported overseas. America's "capital invested in American workers, their education, reliable power infrastructure, and other forms of capital" doesn't seem to have kept our manufacturing facilities here nor has it kept many of the knowledge-based jobs that have been shipped off to India.

Or perhaps our society is rightly moving away from low-class low-education manual labor? Should we all be farming and hunting again too?

Some people also have adopted a racist notion that only Americans and Westerners are capable of "innovation".

Who?

Japan? What's Japan?

That may be so for now, but it's hard to compete against fifty-cents an hour without labor and environmental regulations. Does American labor's advantages give it sufficient advantage to compete with that? Apparently manufacturers don't seem to think so nor do companies that have sent knowledge-based jobs to India.

Those companies should fucking burn in hell for making me listen to this shit on tech Support. Michael Dell. Fuck you.

 

[WhipperSnapper]

Wow, you're an idiot. Do you know what America's biggest export is? I'll let you figure this one out yourself.

Why don't you tell us what it is.

Shit, I'm sure those Cadillacs are being made by 50 cents a hour Union labor.

Perhaps a couple wealthy Chinese people can afford the American-made Cadillacs. Isn't GM manufacturing vehicles in China for the Chinese market now, anyway?

Or perhaps our society is rightly moving away from low-class low-education manual labor? Should we all be farming and hunting again too?

Moving away from it to what? Jobs at Walmart, McDonalds, and Starbucks?

How is the U.S. supposed to pay for all of its imports? What can we do here that cannot be done for less elsewhere? I guess we're good at making rap music and movies.

Who? Japan? What's Japan?

I was referring to American pundits who claim that innovation is the solution to our nation's problems, as though only Americans can engage in innovation.

 

[MJinZ]

Why don't you tell us what it is.

Perhaps a couple wealthy Chinese people can afford the American-made Cadillacs. Isn't GM manufacturing vehicles in China for the Chinese market now, anyway?

Moving away from it to what? Jobs at Walmart, McDonalds, and Starbucks?

How is the U.S. supposed to pay for all of its imports? What can we do here that cannot be done for less elsewhere? I guess we're good at making rap music and movies.



I was referring to American pundits who claim that innovation is the solution to our nation's problems, as though only Americans can engage in innovation.

You answered your own questions.

Let's clarify:

We export debt.
We export Entertainment.
We export Foods.
And primarily highly advanced technology, like Weapons, Medicine, Aerospace, Engineering, Electronics etc.

None of these can be done by low-class manual laborers. Our biggest exports to the world are our highly skilled, highly intelligent, highly trained, and highly talented individuals' work product that are world-class of EVERYTHING you can imagine.

We import cheap shit to chew up and spit out.

 

[Special K]

Why don't you tell us what it is.

I'm guessing it's intellectual property and ideas. The only problem is that not everyone is capable of becoming a researcher, scientist, innovator, etc. What jobs are they supposed to take once their manufacturing jobs are sent overseas?

 

[HendrixFan]

I'm guessing it's intellectual property and ideas. The only problem is that not everyone is capable of becoming a researcher, scientist, innovator, etc. What jobs are they supposed to take once their manufacturing jobs are sent overseas?

Our biggest export is food, we provide the majority of the world's food supply.

 

[werepossum]

You answered your own questions.

Let's clarify:

We export debt.
We export Entertainment.
We export Foods.
And primarily highly advanced technology, like Weapons, Medicine, Aerospace, Engineering, Electronics etc.

None of these can be done by low-class manual laborers. Our biggest exports to the world are our highly skilled, highly intelligent, highly trained, and highly talented individuals' work product that are world-class of EVERYTHING you can imagine.

We import cheap shit to chew up and spit out.

Used to be we designed and manufactured motherboards. Then we designed them, but farmed the actual manufacturing out to Taiwan so that we could lay off the manufacturing workers and make more profit. Then the Taiwanese factories offered to do the design for free, because our engineers, who no longer worked with the manufacturing technology day to day, could no longer produce a good design - you cannot successfully divorce manufacturing technology and design theory. So we could lay off the design engineers too and make even more profit. All this profit allowed American companies to hire big advertising and marketing departments. Then the Taiwanese factories began producing their own designs for much less money. Suddenly the bloated American companies couldn't compete. Larger corporations closed or sold off their failing motherboard operations, smaller companies went bankrupt, and now American-made or even American-designed motherboards exist in only a very few niche markets.

This same pattern repeats thousands of times each year. There is nothing inherently less intelligent or less industrious or less inventive about the Chinese or the Indians; the only advantage we had was the manufacturing and design base we had developed, especially during World War 2, and we happily gave that away. Anything that today is invented by an American can be more cheaply manufactured in China or India or Mexico. And this will not soon change, as their governments are more interested in favorable trade balances than in achieving parity of living standards. When it does change it will likely be through the USA falling to their level rather than they becoming too prosperous to have a cost advantage. There is not enough energy, let alone enough raw materials, in the world to raise the whole world to the American standard of living; we can only let ourselves be dragged down to the average, if not below.

 

[HendrixFan]

There is not enough energy, let alone enough raw materials, in the world to raise the whole world to the American standard of living; we can only let ourselves be dragged down to the average, if not below.

Or we can work on population control. The only reason the whole world can't live at the American standard is that there are far too many people for the resources we have and the ability we have to process said resources. China is limiting their population and trying to shrink it because it is in their own long term best interest.

 

[BoberFett]

At least we don't have Bush and McCain telling us "The Economy is strong"

No, we have you telling us that gas is $5, milk is $7, and that you get carded when buying vinegar. Frankly, the Republicans look like MENSA members compared to your stupid ass.

 

[werepossum]

Or we can work on population control. The only reason the whole world can't live at the American standard is that there are far too many people for the resources we have and the ability we have to process said resources. China is limiting their population and trying to shrink it because it is in their own long term best interest.

For the USA, there's not much point in population control when illegal immigration will swamp any progress. I'm not sure we could do much anyway; nature abhors a vacuum, and I suspect any country with no or negative population growth will be swamped with immigrants one way or another unless it's a police state or a little piece of hell (but I repeat myself.)

For the world, we have no control over other countries. I can't think of any method by which we can control other countries' population that wouldn't appall me, and I'm a pretty heartless bastard. Even if we could, it would only take one population to blow the curve in an attempt to rule the world through population and expansion.

 

[WhipperSnapper]

I'm guessing it's intellectual property and ideas. The only problem is that not everyone is capable of becoming a researcher, scientist, innovator, etc. What jobs are they supposed to take once their manufacturing jobs are sent overseas?

It's not only that, but how many people could "innovation" actually support? Perhaps a nation of 3 or 4 million people could earn its living by innovation if it had a population of ubermen with an average IQ of 130. But 300+ million? Even if the working-aged populace of a nation of 300 million people were capable of that, I can't see innovation as being a sufficient enough export to employ even 25% of the working-aged populace.

 

[werepossum]

It's not only that, but how many people could "innovation" actually support? Perhaps a nation of 3 or 4 million people could earn its living by innovation if it had a population of ubermen with an average IQ of 130. But 300+ million? Even if the working-aged populace of a nation of 300 million people were capable of that, I can't see innovation as being a sufficient enough export to employ even 25% of the working-aged populace.

Having been in manufacturing engineering I can attest that half the battle is thinking of something. If a competitor invents a process or piece of equipment, we can usually come up with another way to do the same thing.

 

[WhipperSnapper]

You answered your own questions.

Let's clarify:

We export debt.

Wouldn't we be "importing" the debt--bringing it to our own country?

We export Entertainment.

We seem to do a decent job of this. Thank goodness we can do something.

We export Foods.

It's a good gig as long as we can keep it up. However, since we already have the world's 3rd largest population and since it's growing by about 30 million or more every ten years, eventually we're going to need all of that food for ourselves (while having less land and freshwater on which to grow it).

And primarily highly advanced technology, like Weapons, Medicine, Aerospace, Engineering, Electronics etc.

For now perhaps. I'm pretty sure other nations also produce this and I don't see any reason why the Chinese cannot and would not do it themselves eventually. They're already manufacturing high-tech electronic goods.

None of these can be done by low-class manual laborers. Our biggest exports to the world are our highly skilled, highly intelligent, highly trained, and highly talented individuals' work product that are world-class of EVERYTHING you can imagine.

OK--so where are the tens of millions of high-paying jobs in these fields for Americans? Why do we have a huge supply of PhD. scientists who cannot find work in their fields?

Do you really think the Chinese and Indians (279,000 engineering degrees per year in 2004) only have manual laborers? Would they even be content to only have manual laborers? I think that they have and will intelligent high-tech laborers willing to work for less than Americans. There's a reason they want to come here on H-1B and L-1 visas and that Americans don't want to go to China and India to work those types of jobs for Chinese and Indian market wages. That reason isn't because the market wages for highly-educated and skilled people in India and China are high.

 

[MJinZ]

Wouldn't we be "importing" the debt--bringing it to our own country?

No, you clearly do not understand financial vehicles. When you sell debt, you sell bonds, securities, etc. You get cash in return for giving someone an IOU.

It's a good gig as long as we can keep it up. However, since we already have the world's 3rd largest population and since it's growing by about 30 million or more every ten years, eventually we're going to need all of that food for ourselves (while having less land and freshwater on which to grow it).

Food is not a problem and should never be another problem. Government restricts food production, not the other way around. Americans are obese. /Argument.

For now perhaps. I'm pretty sure other nations also produce this and I don't see any reason why the Chinese cannot and would not do it themselves eventually. They're already manufacturing high-tech electronic goods.

When another country starts up an Intel, Apple, Dell, etc, we can continue this. They do the grunt work for now.

OK--so where are the tens of millions of high-paying jobs in these fields for Americans? Why do we have a huge supply of PhD. scientists who cannot find work in their fields?

Ridiculous, I know plenty of PhDs from when I worked in Genetics, and many of them were even out of country transports. If there were jobs for them, the only reason there aren't jobs for natives are poor quality/shitty school PhDs.

Do you really think the Chinese and Indians (279,000 engineering degrees per year in 2004) only have manual laborers? Would they even be content to only have manual laborers? I think that they have and will intelligent high-tech laborers willing to work for less than Americans. There's a reason they want to come here on H-1B and L-1 visas and that Americans don't want to go to China and India to work those types of jobs for Chinese and Indian market wages. That reason isn't because the market wages for highly-educated and skilled people in India and China are high.

India = our Tech Support
China = our plastic importers

When either starts making anything of significance, you can then start worrying.

You should be worrying about Korea (cars and electronics) instead.

 

[WhipperSnapper]

If Joe can produce more corn and wheat on his land than Joe and Ted can collectively, there is something wrong. If Joe can produce x amount of corn and y amount of wheat and have it be worth more than Ted's x amount of corn and Joe's y amount of wheat, then let Joe do that. That is efficiency in action. Trying to put a lid on it does nobody any favors. Joe can pump out his corn and wheat, and Ted can move onto something else to do. If Ted can't figure out how to produce anything of value with his land while Joe can do just about anything, what does that say about Ted?

But the problem is that there are only so many people who need to purchase corn and wheat and no value to having an excess of corn and wheat. Joe's gigantic farm has a population of 2.6 billion people who are willing to provide all of that corn and wheat for a price far below what Ted can provide.

What's happening today is really more akin to Ted's farmland being magically exported over to Joe's land, leaving Ted without a farm or Joe just outright purchasing Ted's land.

So where exactly is our comparative advantage? What are we producing to exchange with the Indians and Chinese in exchange for the "corn and wheat"? We're giving them IOUs and selling capital assets--our land and real estate. They aren't buying stuff we're making on our farm--we're selling them our farm in exchange for foodstuffs we used to grow on our own.

I think an important part of this equation, backing away from analogies, is population. To you China's larger population is a threat to the US. I don't see that. Neither does China.

The collective value of China's resources (materials and labor) also gets split up amongst its population. The GDP of the US is something like 4 or 5 times the GDP of China, and with 1/5 the population (or so). That means the average American should be enjoying 25X the standard of living.

It's not the population, it's the amount of wealth owned by that population. It's the fact that they are very poor relative to Americans.

What is the sense of merging our American middle class labor market with that of the Chinese (and Indians and Mexicans)? In a free market the result will be an averaging out of everyone's standard of living. Let's do the math:

(310 million middle class Americans + about 2.6 billion relatively impoverished people in India, Mexico, and China) divided by the wealth of about 310 million Americans = ?

Obvioulsy those 310 million Americans are going to have much less wealth than they had before.

Now you could argue that if Mexico, India, and China became more capitalist that the average amount of wealth of Mexicans, Indians, and the Chinese would increase to current middle class American levels. However, they really aren't very captialist (internally) and we're talking about raising 2.6 billion people out of poverty--this could take over 100 years! That's all fine and dandy, but how will that benefit Americans who will spend the bulk of their lives living over the next 50 years?

There is a finite amount of raw materials. Only so many people can live on a nice ocean or on a mountaintop. The less people you have the more each person can enjoy, especially as technology allows us to refine raw resources into goods with minimal labor.

It's amazing how many people don't understand that. I think that the United States (and people around the world) would benefit from having a smaller U.S. population (and a smaller world population) for that very reason. I wish every American could understand that and then apply it to the immigration debate.

How many Americans are involved in producing something of value, especially in the global marketplace? Having 40% of the GDP be government spending (federal, state and local) surely puts a damper on that.

That's what I mean by dumping, sending our labor (the work needed) to other countries. I didn't mean our manpower. Labor isn't the only thing that we have to offer in a global marketplace, and if it is we are screwed.

We really don't have much of anything to offer that cannot be done less expensively someplace else. We're not "screwed", we just need to engage in trade protectionism. We need a zero-dollar trade deficit type of policy to insure that e are exchanging an equal value of goods and services for an equal value of goods and services. I don't have a problem with real trade--let the Chinese send us televisions if they use the revenue from the televisions to purchase cars at the going American market rate. But we don't manufacture anything they want to buy, at least not in sufficient quantities to balance the trade. Instead we're writing them IOUs and selling business ownership and real estate.

But the truth is those that are kept around are just as valuable (if not moreso) once the physical labor is offshored. If the benefits of cheaper labor aren't passed on in lower prices and instead kept as profits (or larger pay for execs), then the problem is that the companies are too large and powerful (barriers to entry at their size) because the a perfect market would have competitors come in and wipe them out.

Part of the problem is that there is no such thing as a perfect market and there are in fact high barriers to entry for certain types of activities.

That same size and power is what keeps the remaining workers from getting fair compensation. If their jobs can't be eliminated, then they have value. If the companies are so top heavy with their pay, the workers aren't getting fair value for the labor they do provide. This erosion of the middle class is related to free trade, but only in the sense that it is an excuse for companies to screw its remaining workers.

It's just natural supply-and-demand. When the supply of labor increases dramatically and almost infinitessimally overnight relative to the demand for labor (businesses, capital, factories, etc.), basic principles of economic dictate that the supply curve shifts out and intersects the demand curve at a lower price point.

That's why the American standard of living would necessarily have to decrease--because you've just merged the American labor market with the Indian, Chinese, and Mexican labor markets while the demand curve (which is mostly American) has barely moved.

The companies reap record profits and use those to lobby congress for even greater power and control. Labor supply and demand in the US isn't simple because the two sides do not share the same power, as they would in the standard supply and demand model. The companies have merged and merged and merged, now these super corporations have no real competitors to force wages to be fairly priced. This is why the middle class is disappearing and wealth is being concentrated.

I don't think the problem is so much that businesses have merged as it is that the labor pool has exploded.

The similarity is that both increase efficiency long term while short term eliminating "now useless" jobs. It is the increased efficiency of a global marketplace that will punish those who stay out, just as those who avoid technology won't be able to compete with those that use it.

What exactly is the nature of the efficiency? Are you trying to argue that global trade benefits us in the form of technological advance that would otherwise not occur or that we would not be privvy to?

One of the large areas of confusion in this debate is that some people confuse real efficiency gains--gains resulting from technological advances--with low costs of manufacturing abroad. Foreign Outsourcing is not a technological advance in any way--it's just a huge increase in the supply of labor. There isn't any real efficiency gain.

In a closed free market--if we had a zero dollar trade deficit policy and no immigration or H-1B and L-1 visas--technological advance in the form of increased efficiency and resultant productivity gains should cycle back into the economy and raise Americans' standard of living; much of the gains should go to the workers. However, it has been reported in numerous places that Americans have not enjoyed any of the increased wealth resulting from the alleged productivity gains.

(I suspect that some of what is being called "productivity gains" is not the result of technological advance but rather of production abroad at lower prices being regarded as a productivity gain and/or terrified Americans working harder and longer for the same or less money.)

US GDP has been doing well, dips here and there aside. Corporate profits are doing amazingly well. The problem isn't that the US as a whole is struggling to benefit, it is that a select few are and are preventing the rest from enjoying it.

This is because foreign outsourcing, mass immigration, and work visas are allowing the wealthy to keep a larger percentage of a worker's contribution to the act of wealth production, consistent with the amoun tof wages and compensation dictated by the supply of labor worldwide relative to the demand.

Inflation adjusted per capita income has doubled since 1960. 11% of current US population is foreign born, and they do pull down the bell curve as most are on the lower end of the earning scale. Despite that we still make gains. The median household is 2.6 people, it was 4 people 25 years ago. This is an effective income gain of 50% in real dollar terms for middle class household, during a period of record immigration. There is almost one car for every licensed driver in the US, 30 years ago most families had one car. Between houses and apartments, the typical american dwelling has 5.3 rooms for its 2.6 people. The typical new home built is 2250 sq feet with 3 bedrooms and 2 and a half baths. 50 years ago it was 1100 sq feet, two bedrooms and one bath. Despite the fact that much of the US doesn't live in areas where air conditioning is a necessity, 80% have central AC (not including window units) versus 15% two generations ago. Since 1960 the average American has gained 5 more hours of free time a week. In 1960 22% of Americans lived in poverty, by 2001 it was down to 11.7%.

I think it is inaccurate to say that standards of living haven't gotten better for average Americans. I do think it is accurate to say the middle class hasn't kept pace with the gains of those at the top.

Let's see what happens over the next couple years now that the force of global labor arbitrage is really hitting home. Millions of Americans can no longer afford houses and millions are being foreclosed upon with a great many college graduates having to move in with their parents. It's also very difficult for unemployed and underemployed Americans to purchase vehicles. Tens of millions cannot afford health insurance.

Back in 1960, 1970, and even 1980 the U.S. didn't have as much of a problem with global labor arbitrage as it has today. Were most of those gains realized during those decades? It certainly wasn't the past decade.

Regarding GDP, we should question what exactly it means. How much of it is "Phantom GDP" resulting from offshoring? A few years ago a Business Week article pointed out that much of the alleged GDP gains included production abroad. See:

The Real Cost of Offshoring

Productivity, GDP, Jobs, and Outsourcing

The American people haven't seen it because while productivity has increased, their wages have remained stagnant or are decreasing as a result of having billions of poor people merged into their labor market.

As explained above, this isn't true.

That depends on what timeframe you are looking at. What about the timeframe of the past 10 years?

I don't believe we have a free market, as 40% of our GDP is government spending. I think the corporations we do have are too large to effectively exist in a free market with consumers. I do think that globalization will weaken the US and the corporation's stranglehold on our economy and decentralize it to some extent.

We don't have a free market. Note however that foreign outsourcing, mass immigration, and H-1B and L-1 visas are very consistent with having a free market.

Eamonn Fingleton once said something to the effect that, "Capitalism is good locally but not so good globally". Meaning--having an internal free market protected by trade protectionism is the way to go.

Somehow advocates of capitalism began to believe that merging a nation's economy with that of socialist economies was somehow an act of capitalism or that capitalism means having an infinite supply of labor or having businesses and governments manipulate the labor supply to increase it.

 

[WhipperSnapper]

No, you clearly do not understand financial vehicles. When you sell debt, you sell bonds, securities, etc. You get cash in return for giving someone an IOU.

Yeah, I get that. Now we have lots of IOUs. We can either declare bankruptcy or pay it back in the future somehow.

Food is not a problem and should never be another problem. Government restricts food production, not the other way around. Americans are obese.

For now. If the price of the gasoline used to produce and transport the food increases dramatically, then what? The price of food has definitely increased in the past five years. Fish and beef (land intensive) seem pretty expensive now.

When another country starts up an Intel, Apple, Dell, etc, we can continue this. They do the grunt work for now.

It's wonderful that we still have some jobs in those fields, but for how much longer? I don't think there's any metaphysical law that prevents the Indians and Chinese from doing that sort of innovation and design on their own.

Ridiculous, I know plenty of PhDs from when I worked in Genetics, and many of them were even out of country transports. If there were jobs for them, the only reason there aren't jobs for natives are poor quality/shitty school PhDs.

So you're saying that the same universities that are training the foreign graduate students adequately are training the American graduate students inadequately?

Are you acknowledging or denying that we have a huge oversupply of American PhD. scientists? As evidence, I point to the existence of low-paid postdoc positions.

Perhaps the PhDs you knew while you were employed were employed since you met them in the workplace, but is it possible that you missed the thousands who are unemployed, involuntarily-out-of-field, or underemployed as postdoc slaves?

I have known several American postdocs from my time in the sciences and they all seemed to be pretty bright, hardworking folks. I'm sure they'd take offense to the insinuation that they are unqualified for jobs in their field. Here's an NPR clip you might find interesting:

Young Scientists' Issues

When either starts making anything of significance, you can then start worrying.

Televisions and other high-tech electronic goods are not of significance?

The loss of our manufacturing jobs and many knowledge-based IT, computer, legal services, financial analysis, architecture, and other jobs wouldn't be such a big deal if better jobs magically materialized to replace them, but the only jobs that seem to be increasing are low-wage retail services jobs.

You should be worrying about Korea (cars and electronics) instead.

To the extent that we have a trade deficit with South Korea, it is a concern. South Korea is at least a middle class nation that might be able to afford to purchase something we produce. (But why should they and why would they when they can get it cheaper from China?)

 

[dmcowen674]

Quote:
Originally Posted by dmcowen674
At least we don't have Bush and McCain telling us "The Economy is strong"

No, we have you telling us that gas is $5, milk is $7, and that you get carded when buying vinegar. Frankly, the Republicans look like MENSA members compared to your stupid ass.

and since you're so jealous where does that put you in the food chain?

 

[Zebo]

You have seen nothing yet! AMERICA is making trillions of private and public debt to stave off a serious depression and we will get cut off from that credit one day and savings is running out. I suggest watching a few hours of LA riots over at Youtube to prepare and maybe take some urban combat classes while you still have a paycheck.

Nice Writeups WHIPPER

There is no way out of this box without wholesale debt restructuring all the way up to the treasury and about 50% of our country stops being deadbeats. And that includes bankers, government employees and welfare queens, SS recipients, and yes immigrant children who's parents make no where near the tax contribution to educate them. Get over it. A new day is upon us. It will not be the end of the world, just the end of the world as you know it.