Trade Issues
I believe the United States and other countries are facing trade issues that affect the people at home (respectively) and affect people abroad. There are trends of American consumer dollars going to cheaper and cheaper consumer goods manufactured in places with cheap labor and less taxation and less environmental regulation. How can we correct this trend? Do you all see this as a problem as I do?
I am concerned that jobs will be lost and have been lost due to the drift of american consumer dollars towards cheaper consumer products.
Tariffs and Quoatas are used to "try" to protect domestic jobs from this trend but will this work? Will the world face trade wars. A Tariff for a Tariff.. What do we do to stop this deflationary trend?
The heart of the matter is this... Americans like to be able to walk into a discount retailer and purchase a $69 vacuume cleaner made in China over one that cost $250 made by Hoover in the States. This is a microcosm of how this leads to Hoover being the beholder of declining sales and profits. Not because the employees are less productive, not because Hoover wanted to have fewer sales, not because Hoover did not advertise enough but because the Bissel was $69.
Expand this example to everything we buy. Americans have a thirst for cheap imports. The consequence is that this leads to trade deficits and lost jobs to countries where people will work for $2 a day.
This issue is troubling to me. I do not know what the answer is other than to suggest that we watch what we buy collectively and do our best to respect keeping a living wage as we know it.
This is not an easy task as everytime we see two items side by side seemingly of equal quality and they very well could be 100% equal in quality which product will we buy? Will our choice indirectly affect the status of "jobs" being in the US or in China?
What do you feel is the answer? Trade Tariffs? Quotas? change consumer attitudes? If so how? Most people would rather pay less.
It is this paradox that will do us in.
Fellowship
I am concerned that jobs will be lost and have been lost due to the drift of american consumer dollars towards cheaper consumer products.
Tariffs and Quoatas are used to "try" to protect domestic jobs from this trend but will this work? Will the world face trade wars. A Tariff for a Tariff.. What do we do to stop this deflationary trend?
The heart of the matter is this... Americans like to be able to walk into a discount retailer and purchase a $69 vacuume cleaner made in China over one that cost $250 made by Hoover in the States. This is a microcosm of how this leads to Hoover being the beholder of declining sales and profits. Not because the employees are less productive, not because Hoover wanted to have fewer sales, not because Hoover did not advertise enough but because the Bissel was $69.
Expand this example to everything we buy. Americans have a thirst for cheap imports. The consequence is that this leads to trade deficits and lost jobs to countries where people will work for $2 a day.
This issue is troubling to me. I do not know what the answer is other than to suggest that we watch what we buy collectively and do our best to respect keeping a living wage as we know it.
This is not an easy task as everytime we see two items side by side seemingly of equal quality and they very well could be 100% equal in quality which product will we buy? Will our choice indirectly affect the status of "jobs" being in the US or in China?
What do you feel is the answer? Trade Tariffs? Quotas? change consumer attitudes? If so how? Most people would rather pay less.
It is this paradox that will do us in.
Fellowship
Comments
According to this model, economies eventually price themselves out of various markets, due in part to rising material, wage, & transport costs etc. This in turn makes them more uncompetative on a global market, giving rise to more unemployment and more local factory closures.
The fundamental belief of such Keynesian economics, is that eventually the countries that suffer such economic downtrend turn the cycle around, benefitting once again in the market place due to their now inherently cheaper labour & infrastructure costs, which gives rise to more local employment & investment opportunites etc..
If this model is correct, then America as well as other traditional "western" countries such as Canada, Australia, Europe etc, will all be facing an increasing problem with local employment declining in the face of new market economies such as those of China, & South East Asia.
( it is probabaly cold comfort to know that these new economies will eventually go through the same cycle..think of Japan 1970's compared to where it is now )
It is really tough medicine, but in theory, the ship shall eventually right itself.
But I am not an economist...
Originally posted by Aquafire
But I am not an economist...
How does this get worked out?
Fellows
What do you do when your country does nothing to stop the outflow of jobs? And does nothing in terms of training and education to prepare for the next economy?
It's depressing.
Originally posted by FellowshipChurch iBook
Here is the concentrated version of my question: In a world where some will work for $2 a day and where others in America / Western Europe etc. would never consider such a thing how can we keep the balance of goods and services from re-locating to areas where people will work for $2 a day? How do we stop this drift? I think we are in a sticky situation as on the one hand we consumers do not want to pay more than we have to but on the other hand we want to have jobs that sustain us as well.
How does this get worked out?
Fellows
Tariffs are good in the short term, but bad medicine in the long term..mainly beacuse everyone ends up raising the tarrif bar..which only adds to inflationary costs.
Perhaps one way around it would be to offer tax rebates to consumers for every item of purchase that is "made in America" or in my case.."made in Oz"
Added to this, Western Governments should encourage & reward people for putting money into local nationally owned banks etc..that way money gets fed into the system.
Yes it is true that some are paid the equivilant of $2.00 a day, but what they often fail to mention is that a loaf of bread is government subsidised and might only cost 2 cents.
Marginal unemployment happens. It's a fact of life. We simply have to deal with it. I think what a lot of people are forgetting when they refer to $2 a day wages is the cost of living in said country. The Nike plants in Southeast Asia pay their employees very little money when compared to our cost of living. However, the employees there feel PRIVELEGED to be able to work for such high relatively high wages compared to other jobs that are available in their home countries. If we were to force companies like Nike to pay their foreign employees an American living wage, you would see every doctor, lawyer, and all other professionals line up to work in the Nike plant. We would be doing the country a major disservice.
There is absolutely no reason why we should be protecting our steel industry with 30% tariffs on imported steel. Of course, it is no surprise that Bush signed that executive order. Guess how many steel plants are located in swing states. If you guessed most of them, you guessed right. Foreign steel is cheaper, better, and less labor intensive to make. Sure, we had an opportunity to upgrade our plants, but further automation and process refinement attempts were blocked by the very strong union. Oops. We missed the boat. Time to kiss our steel worker jobs goodbye. Instead of alienating the rest of our trade partners by increasing steel tariffs, how about we instead spend a little money wisely by retraining these marginally unemployed former steel workers in another field. Gee, now THAT would be money well spent.
Originally posted by BR
.........There is absolutely no reason why we should be protecting our steel industry with 30% tariffs on imported steel. Of course, it is no surprise that Bush signed that executive order. Guess how many steel plants are located in swing states. If you guessed most of them, you guessed right. Foreign steel is cheaper, better, and less labor intensive to make. Sure, we had an opportunity to upgrade our plants, but further automation and process refinement attempts were blocked by the very strong union. Oops. We missed the boat. Time to kiss our steel worker jobs goodbye. Instead of alienating the rest of our trade partners by increasing steel tariffs, how about we instead spend a little money wisely by retraining these marginally unemployed former steel workers in another field. Gee, now THAT would be money well spent.
Spot on BR !
This is the same case in most western countries.
( including OZ ).
For decades, many of the owners & shareholders of such steel mills, sat on their proverbial butts racking in the profits, paying dividends & looking for " tax havens " while investing little or no money back into needed infrastructure.
( My understanding is that most US & Australian steel imanufacturers are still using equipment built during WW2 or just after it.)
All the while, other countries were investing heavily in new technology and manufacturing methods.
Now these same companies ( having rested on their laurels for so long ) complain that others OV~seas companies have an unfair trading advantages...
Originally posted by FellowshipChurch iBook
I believe the United States and other countries are facing trade issues that affect the people at home (respectively) and affect people abroad. There are trends of American consumer dollars going to cheaper and cheaper consumer goods manufactured in places with cheap labor and less taxation and less environmental regulation. How can we correct this trend?
First off: I am not even sure how fair it would be to completely correct this trend. We should not forget (as hard as it is) that every dollar/Euro flowing to a developing country puts people out of misery, maybe even prevents starvation, children dying of ilnesses conquered here long ago. In a way, our money going to those parts of the world simply corrects some of the more glaring imbalances in income distribution.
The flip side, of course, is that it is bad news for us, the workers or employees in western countries. If our jobs are exported, we are poor (by western standards). It would be a bit too altruistic to hail this.
Classical (neoliberal) theory predicts that as third world countries develop, incomes rise there and people get wealthy, thereby buying more stuff which in turn means more money to companies here and over there - ideally, the west maintains its standard of living while people "over there" approach it.
I have, however, given up hope on this. It seems to humble me that all the Nobel price winners on world economics have failed to take into account the effects of companies continually streamlining their production. Tasks that required 4 workers in 1950 are now done by one worker and two machines. This alone was no problem, because the redundant workers could be qualified and therefore relieved from their bonebreaking jobs to do lighter and more healthy work.
If we combine the effects of streamlining and globalizations, the picture looks dire to me. Jobs are eaten away by the millions or exported to cheap-labor countries. Unemployment is rising, but high-tech companies are outsourcing even research and development to India (computers, software), China (manufacturing), and south-east tiger economies (biotech, chips).
There does not seem to be a fallback line for the rich western economies to stay in the game.
No matter where you look at, social security and public welfare is slashed. Rationalizing, journalists and politicians talk about preventing abuse (which surely exists), but it is no longer just trimming excess fat, some real achievements of the last 50 years are destined to go next. Usually, it is considered a good thing if the state withdraws from the economy, but with the increased globalization, companies withdraw too - to the far east and regardless of how low state spending is.