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"Elite" creators of enterprises are helpless in the absence of a reliable, well-trained, and well-educated work force. It takes decades to build a trained work force, and only a decade or less to destroy it.
Any economist who studies successful economies understands the importance of quality, universal education, such as in West Germany today.
American "elitists" today often are hell-bent on destroying public education and making university educations unaffordable in order to increase their share of the nation's disposable income. They often don't found or manage anything more than their investment portfolios.
Elitists repeatedly deny the importance, or even the existence, of externalities and public goods, such as universal education. Human capital is as important a resource as mineral reserves.
Many of the old-line capitalists, such as the Rockefellers, well understood and supported education.
And, in the past, corporate CEOs more frequently valued their work forces and communities and weren't engaged in policies emphasizing the magnification of their own wealth.
Will as it stands out the rich of the past we’re much better than today’s rich. And since you’ve mentioned elitists, let’s not forget liberal elitists. They are one of many political evils in our country. They are so privileged and I bet you they don’t even think twice about anybody who is less privileged. What’s worse is that they send their kids to private schools, fearing that they could associate with some less privileged riff raff. And once their millions are made they don’t mind keeping it to thereselves and if somebody less privileged runs up to one of them, the first thing they’ll say is “get the hell out of here and get a job”. I despise liberal elitists and they are no better than those rich Trump supporters.
At least somebody gets what I am saying. I’m sure all the Rust Belt cities including Cleveland, had a chance to revitalize say about 30 or 40 years ago, but instead they decided to repeat the same mistakes as they did before, and because of that the Rust Belt is still in shambles. And who knows the federal government could be largely to blame for all of this. They had bad policies which caused so much manufacturing to go out of the country. Just look at China. Their manufacturing base is so strong, that our manufacturing base has shrunk drastically.
I know the federal government is responsible for the decline of American manufacturing. China has a pervasive industrial policy, centered on value added taxes (as well as predatory behavior including espionage). The U.S. has no industrial policy worth much of anything. American cities have had to increase income taxes because federal policies destroyed their economic bases. Did you live through the post-Vietnam stagflation?
Do you know that at the beginning of Ronald Reagan's Presidency the U.S. was the world's greatest creditor nation, but as Reagan made deficit spending acceptable to Republicans in order to stifle social spending, the U.S. now is the world 's greatest debtor nation in modern history. We've literally been consuming a couple centuries of wealth to maintain our level of consumption and federal global policing efforts.
Both the Republicans and Democrats find value-added taxes objectionable for ridiculous reasons. E.g., the Republicans are fond of citing the low corporate income tax rates in nations such as Ireland. The Republicans never explain that the largest source of Irish federal revenues is the value-added tax, or that Ireland spends a paltry share of its GDP on its military.
The Republicans tax policy leaders are well aware of the disadvantages inherent in not having a value-added tax. They proposed a border adjustment tax as an alternative, but they abandoned it. It's very possible for reasons such as foreign ownership of U.S. corporations and the adoption of the territorial tax system (which is necessary IMO), that the new tax bill actually will drain capital from the U.S.
The Democrats oppose a value-added tax because it's regressive, which is true taken in isolation. Yet most nations with VATs have much less regressive economies than the U.S. E.g., university educations and national healthcare are subsidized and much more efficient than in the U.S.
Check out the cost of business index here for both the U.S. and Canada. The U.S. cost of business index is over 17 percent higher than in the U.S.
Will as it stands out the rich of the past we’re much better than today’s rich. And since you’ve mentioned elitists, let’s not forget liberal elitists. They are one of many political evils in our country. They are so privileged and I bet you they don’t even think twice about anybody who is less privileged. What’s worse is that they send their kids to private schools, fearing that they could associate with some less privileged riff raff. And once their millions are made they don’t mind keeping it to thereselves and if somebody less privileged runs up to one of them, the first thing they’ll say is “get the hell out of here and get a job”. I despise liberal elitists and they are no better than those rich Trump supporters.
There's some truth to your comments about liberal elitists. At least liberal elitists don't preclude "science-based" policy or deny the existence of a major calamity in human-caused climate change.
Liberal elitists almost by definition are obsessed with those less fortunate than themselves, even if they aren't Americans. There may be some libertarian elitists who are not social conservatives and aren't much sympathetic to less fortunate individuals in our society.
Do you honestly believe, if given the choice, the Democrats in Congress wouldn't have funded the war on opioids rather than provide massive tax breaks for real estate moguls such as Trump, 13 Republican Senators and House Speaker Paul Ryan???
<<Trump and Corker are not the only lawmakers who could get a new tax break on the type of income targeted by the new provision. IBT previously reported that 13 Republican lawmakers directly overseeing the tax bill — including U.S. House Speaker Paul Ryan — make up to $16 million a year from the kind of real-estate related pass-through entities that could benefit from the tax bill.>>
<<Trump and Corker are not the only lawmakers who could get a new tax break on the type of income targeted by the new provision. IBT previously reported that 13 Republican lawmakers directly overseeing the tax bill — including U.S. House Speaker Paul Ryan — make up to $16 million a year from the kind of real-estate related pass-through entities that could benefit from the tax bill.>>
If there were no checks and balances, Trump would be the next Ferdinand Marcos or Robert Mugabe or worse. He would rip the nation of its wealth, invest it in personal dealings, stow it away in Swiss banks or wherever, and laugh all the way because his voters legitimized it. He would then demand a Nobel Prize for his genius thinking and order a solid gold statue of himself the height of the Key Tower to be built somewhere. Pence, Ryan, Corker, etc. would do nothing because they stand to solidify their positions and enrich themselves in the same process.
But seriously, our national government has not had any thoughts of reviving manufacturing for a long, long time. There are still individuals in Congress who actually have a problem with servants making nearly as much as their bosses. As long as American workers continue to ask for comfortable wages (notice I did not use the word "high"), American companies will continue to invest in other parts of the world with far cheaper labor and American cities will continue to suffer from decline. Corporations don't really care about any city or any one individual unless their profits are affected. They care about the dollars in their coffers first and foremost.
Last edited by Urban Peasant; 12-21-2017 at 08:15 PM..
If there were no checks and balances, Trump would be the next Ferdinand Marcos or Robert Mugabe or worse. He would rip the nation of its wealth, invest it in personal dealings, stow it away in Swiss banks or wherever, and laugh all the way because his voters legitimized it. He would then demand a Nobel Prize for his genius thinking and order a solid gold statue of himself the height of the Key Tower to be built somewhere. Pence, Ryan, Corker, etc. would do nothing because they stand to solidify their positions and enrich themselves in the same process.
But seriously, our national government has not had any thoughts of reviving manufacturing for a long, long time. There are still individuals in Congress who actually have a problem with servants making nearly as much as their bosses. As long as American workers continue to ask for comfortable wages (notice I did not use the word "high"), American companies will continue to invest in other parts of the world with far cheaper labor and American cities will continue to suffer from decline. Corporations don't really care about any city or any one individual unless their profits are affected. They care about the dollars in their coffers first and foremost.
Perfectly said. The Rust Belt had a chance to recover say back in the 70s and 80s, but instead they decided to repeat the same mistakes as they did before. After 9/11, things only got worse. The Rust Belt kept declining and even worse than it did in the 60s, and more manufacturing left the country more than ever before and by 2004 manufacturing in the U.S. accounted for only 9 percent.
Perfectly said. The Rust Belt had a chance to recover say back in the 70s and 80s, but instead they decided to repeat the same mistakes as they did before. After 9/11, things only got worse. The Rust Belt kept declining and even worse than it did in the 60s, and more manufacturing left the country more than ever before and by 2004 manufacturing in the U.S. accounted for only 9 percent.
While the 2006 article that you linked is accurate IMO, once again, as is typical with American media and American political leadership, conspicuous in its omission is ANY discussion or understanding of the impact of the global VAT regime on the decline of American manufacturing. It's no coincidence that the widespread adoption globally of the VAT beginning in 1960 corresponded with the decline in American manufacturing IMO.
There is some chance that this might change if Lawrence Lindsey is appointed vice chairman of the Fed.
Lindsey is one of the few persons in America's leadership that understands and speaks publicly about how the global VAT regime disadvantages U.S. manufacturers.
<< The largest component of the Chinese tax system is the Value Added Tax, which generates roughly one third of all Chinese tax revenue. But Value Added taxes are rebated on exports, so this tax does not apply. Conversely, an item built in America and then sold to China involves labor costs that pay both income and payroll taxes and capital costs that involve the whole panoply of U.S. taxation. When they arrive in China the import cost is subject to Chinese Value Added Tax. And this is not just the Chinese. Throughout Europe Value Added Taxation has increasingly replaced direct taxation on personal and corporate incomes over the last couple decades and under World Trade Organization rules it is perfectly legal for them to rebate the tax on exports and impose it on imports. We complain a lot about the advantages the Chinese give themselves through
manipulation of their exchange rate. At the same time we induce this massive self inflicted wound on ourselves in the form of our income based tax system. And whenever someone advocates raising rates within our current tax regime they are implicitly calling for these distortions to be larger and therefore for Chinese goods to become even more competitive here and our goods to become even less competitive overseas.>>
You never say what mistakes were made in the Rust Belt and how they were repeated. What are you talking about? In the face of the implementation of the global VAT regime around the world, and the failure of the U.S. to understand and react to the threat, I doubt that the Rust Belt had any chance of recovery. Consider the massive development of the Canadian auto manufacturing industry at the expense of the U.S., largely due to the presence of the VAT, drug price controls, and national healthcare in Canada, resulting in a much more favorable manufacturing environment in Canada than in the U.S.
<<Though dominated by foreign firms (largely American), Canada boasts a strong domestic parts manufacturing sector that emerged in the last part of the 20th century. Concentrated in Southern Ontario, Canada’s auto sector evolved as a consequence of industrial policies such as protectionism and free trade. >>
Relatively high wages and benefits compared with China, Mexico, etc., certainly are an issue.
However, automation, transportation costs, the complication of supply lines, and more expensive energy, offsets a great deal of the labor advantage.
What can NOT be offset is the impact of 20-30 percent value-added taxes that are assessed on U.S. exports much like tariffs, and rebated to exporters of goods from foreign countries, including China, Japan, Korea, Canada, Mexico, Europe, etc.
Very few Americans understand the negative impact of the VAT regime. Trump somewhat alluded to it, but it make it sounds as if the likes of Mexico are cheating by having a VAT regime. In fact, it is the ignorance and duplicity of American political leaders such as Trump and almost all other American political leaders, and the ignorance of the media, that has so imperiled the American manufacturing economy and therefore our national security.
The Rust Belt didn't inflict the archaic U.S. tax system on itself, although its politicians and media leaders were culpable, and remain even more culpable, in their failure to grasp the implications of not instituting a VAT even as Canada, Mexico, and other nations began to explicitly use VAT regimes to wrest manufacturing operations and jobs away from the U.S.
Again, the U.S. is the only significant global economy without a VAT. The VAT regime is institutionalized in the General Agreement on Tariffs and Trade (GATT).
Unfortunately, leading American economists such as Martin Feldstein and Paul Krugman have understated the impact of the VAT, arguing that exchange rates adjust to reflect the absence of a VAT in the U.S.
<<A value added tax is sometimes advocated as a way of improving a country's international competitiveness because GATT rules permit the tax to be levied on imports and rebated on exports. This leads to political support for the VAT among exporters and producers of import-competing products. For a general VAT on all consumption, this argument is incorrect except in the very short run because exchange rates or domestic prices adjust to offset the effect of the tax on the relative prices of domestic and foreign goods. When prices or exchange rates have adjusted, a general value added tax will have no effect on imports and exports.>>
This is wrong because exchange rates reflect much more than trade balances. The U.S. has run massive trade and current account deficits since 1989, when the above the article was written, and yet the dollar exchange rate has remained elevated due to such considerations of foreign currency manipulation, the security and transparency of U.S. security markets, especially the massive U.S. Treasury bond market, and the robustness of the U.S. judicial system.
Many, such as famed investment icon Jim Rogers, believes that eventually the dollar will cave under the weight of the hollowing out process that so clearly has impacted American manufacturing. In fact, the U.S. dollar as a momentum and "safe harbor" may have a little in common with crypto currencies such as Bitcoin.
Admittedly, the dollar has weakened since the publication of the above article, but the massive current account and trade deficits persist, suggesting still great overvaluation of the dollar based on fundamentals.
Foreigners buying U.S. assets, whether corporations, securities or American debt, support the U.S. dollar and keep the current account deficit from hemorrhaging. Of course, at some point foreign demand for U.S. assets will become sated, or there actually will be a decided effort to dump U.S. assets, especially debt. Then the past 40 years of living off the nation's collected wealth, of spending vast wealth policing the world, and of neglecting the competitive position of our nation's economy will come home to roost with disastrous consequences for the American people.
Exacerbating this inflection point will be that consumption, often of imported goods, represents 70 percent of U.S. GDP. The rising cost of imported goods will stifle American consumption and further negatively impact the economy.
The recent strength of the dollar vs. the euro (see 3-year chart below) reflects the much higher interest rates prevailing in the U.S. as the Fed has begun tightening monetary conditions even as the European Central Bank continues its policy of quantitative easing, resulting in relatively low, even NEGATIVE real interest rates.
House Ways and Means Committee chairman pushed for a border adjustment tax to offset the impact of the global VAT regime, since the VAT is anathema in the Republican Party.
<<The plan is similar in some respects to the value-added tax systems in countries like Mexico and the United Kingdom. But the minutiae would be unique to the U.S., which has some analysts concerned that other countries would take retaliatory trade measures against the U.S. for what they argue is an isolationist policy.>>
The reaction to the BAT was immensely negative and it was dropped from the recently approved Republican tax bill.
<<Bill Simon, former Wal-Mart CEO, shares his support for a border adjustment tax and explains how it will help American manufacturers create middle-class jobs.>>
So we go on, merrily abandoning our manufacturing heritage, impoverishing our middle class, and spending what's left of centuries of accumulated wealth....
Very few Americans understand the negative impact of the VAT regime. Trump somewhat alluded to it, but it make it sounds as if the likes of Mexico are cheating by having a VAT regime.
Improving and expanding on the above confusing sentence:
During the Presidential campaign and even subsequently, Trump often alluded to the reality that Mexico's VAT system penalized American manufacturers. However, he made it sound as if Mexico was cheating by having a VAT, even though every one of our major trading partners employs a VAT to raise substantial revenues. When the recently passed tax bill was being drafted, Trump made no demand to eliminate this competitive disadvantage by implementing a VAT in the U.S. (rebates could have been made to low and middle income consumers, perhaps into tax-free accounts that could have been spent for any purpose, in order to offset the regressive nature of the VAT). In fact, Trump opposed the efforts of House Ways and Means Committee Chair Kevin Brady and House Speaker Paul Ryan to create a border adjustment tax as an alternative to the VAT. Once again, Trump abandoned a key issue that helped him get elected.
Quote:
Originally Posted by WRnative
This is wrong because exchange rates reflect much more than trade balances. The U.S. has run massive trade and current account deficits since 1989, when the above the article was written, and yet the dollar exchange rate has remained elevated due to such considerations of foreign currency manipulation, the security and transparency of U.S. security markets, especially the massive U.S. Treasury bond market, and the robustness of the U.S. judicial system.
Clarification:
The U.S. has run massive trade and current account deficits since 1989, when the above article was written, and yet the dollar exchange rate hasn't adjusted sufficiently to restore American manufacturing competitiveness. This is because of outright currency manipulations by foreign governments; foreign investors investing in U.S. equity and debt securities due to the transparency and robust legal protections afforded by the American system; the size, liquidity and status as income-producing safe haven of the U.S. Treasury debt market; and the physical security afforded by holding assets in the U.S. both due to its relatively stable political regime but also due to its judicial system.
There is a reason that China invested in U.S. Treasuries to help prop up the U.S. dollar.
So China's financing of U.S. deficits helped maintain the value of the U.S. dollar thereby facilitating China's continued exports to the U.S. Of course, at some point, now much closer today than two decades ago, U.S. manufacturers will have little capacity to supply the domestic market.
Quote:
Originally Posted by WRnative
Many, such as famed investment icon Jim Rogers, believes that eventually the dollar will cave under the weight of the hollowing out process that so clearly has impacted American manufacturing. In fact, the U.S. dollar as a momentum and "safe harbor" may have a little in common with crypto currencies such as Bitcoin.
Clarification:
In fact, perceived attributes of U.S. dollar assets as "safe harbor" assets may ultimately be illusionary, whether or not that also is true of crypto currencies such as Bitcoin.
While the 2006 article that you linked is accurate IMO, once again, as is typical with American media and American political leadership, conspicuous in its omission is ANY discussion or understanding of the impact of the global VAT regime on the decline of American manufacturing. It's no coincidence that the widespread adoption globally of the VAT beginning in 1960 corresponded with the decline in American manufacturing IMO.
There is some chance that this might change if Lawrence Lindsey is appointed vice chairman of the Fed.
Lindsey is one of the few persons in America's leadership that understands and speaks publicly about how the global VAT regime disadvantages U.S. manufacturers.
<< The largest component of the Chinese tax system is the Value Added Tax, which generates roughly one third of all Chinese tax revenue. But Value Added taxes are rebated on exports, so this tax does not apply. Conversely, an item built in America and then sold to China involves labor costs that pay both income and payroll taxes and capital costs that involve the whole panoply of U.S. taxation. When they arrive in China the import cost is subject to Chinese Value Added Tax. And this is not just the Chinese. Throughout Europe Value Added Taxation has increasingly replaced direct taxation on personal and corporate incomes over the last couple decades and under World Trade Organization rules it is perfectly legal for them to rebate the tax on exports and impose it on imports. We complain a lot about the advantages the Chinese give themselves through
manipulation of their exchange rate. At the same time we induce this massive self inflicted wound on ourselves in the form of our income based tax system. And whenever someone advocates raising rates within our current tax regime they are implicitly calling for these distortions to be larger and therefore for Chinese goods to become even more competitive here and our goods to become even less competitive overseas.>>
You never say what mistakes were made in the Rust Belt and how they were repeated. What are you talking about? In the face of the implementation of the global VAT regime around the world, and the failure of the U.S. to understand and react to the threat, I doubt that the Rust Belt had any chance of recovery. Consider the massive development of the Canadian auto manufacturing industry at the expense of the U.S., largely due to the presence of the VAT, drug price controls, and national healthcare in Canada, resulting in a much more favorable manufacturing environment in Canada than in the U.S.
<<Though dominated by foreign firms (largely American), Canada boasts a strong domestic parts manufacturing sector that emerged in the last part of the 20th century. Concentrated in Southern Ontario, Canada’s auto sector evolved as a consequence of industrial policies such as protectionism and free trade. >>
Relatively high wages and benefits compared with China, Mexico, etc., certainly are an issue.
However, automation, transportation costs, the complication of supply lines, and more expensive energy, offsets a great deal of the labor advantage.
What can NOT be offset is the impact of 20-30 percent value-added taxes that are assessed on U.S. exports much like tariffs, and rebated to exporters of goods from foreign countries, including China, Japan, Korea, Canada, Mexico, Europe, etc.
Very few Americans understand the negative impact of the VAT regime. Trump somewhat alluded to it, but it make it sounds as if the likes of Mexico are cheating by having a VAT regime. In fact, it is the ignorance and duplicity of American political leaders such as Trump and almost all other American political leaders, and the ignorance of the media, that has so imperiled the American manufacturing economy and therefore our national security.
The Rust Belt didn't inflict the archaic U.S. tax system on itself, although its politicians and media leaders were culpable, and remain even more culpable, in their failure to grasp the implications of not instituting a VAT even as Canada, Mexico, and other nations began to explicitly use VAT regimes to wrest manufacturing operations and jobs away from the U.S.
Again, the U.S. is the only significant global economy without a VAT. The VAT regime is institutionalized in the General Agreement on Tariffs and Trade (GATT).
Unfortunately, leading American economists such as Martin Feldstein and Paul Krugman have understated the impact of the VAT, arguing that exchange rates adjust to reflect the absence of a VAT in the U.S.
<<A value added tax is sometimes advocated as a way of improving a country's international competitiveness because GATT rules permit the tax to be levied on imports and rebated on exports. This leads to political support for the VAT among exporters and producers of import-competing products. For a general VAT on all consumption, this argument is incorrect except in the very short run because exchange rates or domestic prices adjust to offset the effect of the tax on the relative prices of domestic and foreign goods. When prices or exchange rates have adjusted, a general value added tax will have no effect on imports and exports.>>
This is wrong because exchange rates reflect much more than trade balances. The U.S. has run massive trade and current account deficits since 1989, when the above the article was written, and yet the dollar exchange rate has remained elevated due to such considerations of foreign currency manipulation, the security and transparency of U.S. security markets, especially the massive U.S. Treasury bond market, and the robustness of the U.S. judicial system.
Many, such as famed investment icon Jim Rogers, believes that eventually the dollar will cave under the weight of the hollowing out process that so clearly has impacted American manufacturing. In fact, the U.S. dollar as a momentum and "safe harbor" may have a little in common with crypto currencies such as Bitcoin.
Admittedly, the dollar has weakened since the publication of the above article, but the massive current account and trade deficits persist, suggesting still great overvaluation of the dollar based on fundamentals.
Foreigners buying U.S. assets, whether corporations, securities or American debt, support the U.S. dollar and keep the current account deficit from hemorrhaging. Of course, at some point foreign demand for U.S. assets will become sated, or there actually will be a decided effort to dump U.S. assets, especially debt. Then the past 40 years of living off the nation's collected wealth, of spending vast wealth policing the world, and of neglecting the competitive position of our nation's economy will come home to roost with disastrous consequences for the American people.
Exacerbating this inflection point will be that consumption, often of imported goods, represents 70 percent of U.S. GDP. The rising cost of imported goods will stifle American consumption and further negatively impact the economy.
The recent strength of the dollar vs. the euro (see 3-year chart below) reflects the much higher interest rates prevailing in the U.S. as the Fed has begun tightening monetary conditions even as the European Central Bank continues its policy of quantitative easing, resulting in relatively low, even NEGATIVE real interest rates.
House Ways and Means Committee chairman pushed for a border adjustment tax to offset the impact of the global VAT regime, since the VAT is anathema in the Republican Party.
<<The plan is similar in some respects to the value-added tax systems in countries like Mexico and the United Kingdom. But the minutiae would be unique to the U.S., which has some analysts concerned that other countries would take retaliatory trade measures against the U.S. for what they argue is an isolationist policy.>>
The reaction to the BAT was immensely negative and it was dropped from the recently approved Republican tax bill.
<<Bill Simon, former Wal-Mart CEO, shares his support for a border adjustment tax and explains how it will help American manufacturers create middle-class jobs.>>
So we go on, merrily abandoning our manufacturing heritage, impoverishing our middle class, and spending what's left of centuries of accumulated wealth....
Well as far as I’m concerned it seems like the free trade agreements have greatly affected U.S. manufacturing. So for what I meant by the chances the Rust Belt had to recover as well the mistakes it repeated. It could of stood against all the free trade agreements and fought to protect the manufacturing it long had. And it could of worked to revitalize, but not gentrify, the neighborhoods of the cities thereof. But to further clarify I think the federal government altogether could of stopped the free trade agreements, and that’s what good old Ross Perot could of done. And maybe just maybe the Rust Belt could of recovered as a result. Instead this country made the mistake of voting for Clinton.
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