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Old 03-31-2009, 02:09 PM
 
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We're going to need universal health care because companies like GM cannot afford to pay for the pensions and lifetime healthcare they've promised their unions.
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Old 03-31-2009, 02:56 PM
 
Location: New Jersey
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is it criminal activity by U.S. companies like IBM that have something to do with the low confidence in this country...?

here's a link to a brief story about IBM selling software that helps a company outsource work to other countries (while maximizing U.S. government tax breaks):

IBM files for patent on offshoring jobs - recordonline.com - The Times Herald Record
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Old 03-31-2009, 03:59 PM
 
744 posts, read 846,430 times
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Quote:
Originally Posted by JG183 View Post
is it criminal activity by U.S. companies like IBM that have something to do with the low confidence in this country...?

here's a link to a brief story about IBM selling software that helps a company outsource work to other countries (while maximizing U.S. government tax breaks):

IBM files for patent on offshoring jobs - recordonline.com - The Times Herald Record
How is that criminal?

The low confidence is simply because people are beginning to wake up to the fact that a bubble does not sustainable economy make.
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Old 03-31-2009, 04:19 PM
 
Location: Montgomery County, PA
2,771 posts, read 3,680,148 times
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Quote:
Originally Posted by JG183 View Post
is it criminal activity by U.S. companies like IBM that have something to do with the low confidence in this country...?

here's a link to a brief story about IBM selling software that helps a company outsource work to other countries (while maximizing U.S. government tax breaks):

IBM files for patent on offshoring jobs - recordonline.com - The Times Herald Record
Slogans like offshoring jobs (as if offshoring is something that you do to a job), and shipping American jobs overseas embrace the fallacy that a job gained overseas is a job lost at home. Economists debunked this over 100 years ago.
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Old 03-31-2009, 07:36 PM
 
Location: New Jersey
1,395 posts, read 2,030,037 times
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Originally Posted by elflord1973 View Post
Slogans like offshoring jobs (as if offshoring is something that you do to a job), and shipping American jobs overseas embrace the fallacy that a job gained overseas is a job lost at home. Economists debunked this over 100 years ago.
a fallacy that has endured 100+ years ?

enlighten me...
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Old 03-31-2009, 08:48 PM
 
Location: Montgomery County, PA
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Quote:
Originally Posted by JG183 View Post
a fallacy that has endured 100+ years ?
Yes. Right up there with creationism. Just as creationists ignore or dismiss a large chunk of science, protectionists are oblivious to the last 100 years of economics.

Quote:
enlighten me...
The problem with the argument is that it assumes that there is a fixed quantity of jobs. This is clearly nonsensical -- if this were true, increasing population would always result in an increase in unemployment but this in practice never happens.

There are many things economists disagree on. However, one thing nearly all economists -- from NY Times columnist Paul Krugman to libertarians like Rothbard agree on, is that economic growth (that is, economic output) is the main engine of prosperity. Unemployment goes up when the economy stagnates, and goes down when the economy grows. Protectionist trade policy on the other hand has a terrible history of preventing unemployment.

The problem with protectionism is that it results in an inefficient allocation of resources. In an extreme case, suppose the government paid UAW members to build sandcastles on the beach (actually a pretty good analogy to what they're doing). These guys would get to keep their jobs, but the aggregate national economic output would suffer, and this would ultimately affect living standards (because not as much "stuff" is being produced) In absence of political interference, workers graduate to the most productive jobs (because the market pays more for producing "stuff" of greater value). So that American worker who gets laid off finds something more economically useful to do unless the government steps in and "saves" them.

So what happens if there are no jobs left because it's cheaper to hire workers in India, in finance, technology, manufacturing, and everything else ? That never happens! What would happen instead is that America would have to charge the rest of the world less for its labor, and India would be able to charge us more for theirs (that is, our currency drops in value which means that we can't buy cheap imports any more, and their middle class can start shopping for our exports)

Protectionist ideas were the norm until great economists like Adam Smith and Frederic Bastiat set them straight. Bastiat wrote an essay called "The Broken Window" and "Petition of the Candlestick Makers" addressing these problems. The gist of the broken window is that it is not enough to look at the immediate effects (e.g. the job that is "created" or "shipped overseas"), one must consider what is not seen. The gist of the petition is that it points out that protectionism is ultimately detrimental to productivity.

That Which is Seen, and That Which is Not Seen; by Frederic Bastiat
Bastiat's famous Candlestick makers' Petition
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Old 03-31-2009, 09:11 PM
 
Location: New Jersey
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ok, I remember a bit about Bastiat's position, from my college economics professor.

FB was greatly influenced by the controversial atmosphere in which he lived.

his doctrines appear unduly warped by his propaganda against protectionism and Socialism, while underlying all his argument is the (unsound) idea that the organization of society under laisser-faire competition is the most perfect that can be effected or even conceived of. Even many far right-wing pundits agree that the lack of regulation is what got us into this mess.

Particularly, his reasoning on land value is quite erroneous. To hold that the value of land equals the expenses of rendering it accessible, clearing, fencing, etc., is untenable in the light of facts.

For example, much land is now worth far less than such expenditures. His view overlooks the fact that such outlays are made with the idea that they will pay for themselves, and something more — that long ago they have been replaced and ceased to operate. The value of a good Illinois farm or a New York lot is far greater than such expenses.

it's vain to argue that even the gifts of nature cannot be appropriated and be made the basis of a payment to the owner. That is not the way to meet Socialistic attacks

Bastiat's limitations are well exhibited in his theory of value. The words "efforts" and "services", he uses almost as fetishes, but they explain nothing.

If service means more than labor, how much more ? What determines the value of the service ? Bastiat gives us no adequate answer. Moreover, by confining himself narrowly to exchange value, he leaves out of consideration the important phenomena of utility and subjective value.

Bastiat said: You protectionists cannot apply your theory as a general one. As between individuals, families, communities, and provinces, you accept free trade. But you say the political economy of individuals is not that of peoples !

And just here appears his absolutism. He does not regard national lines. He follows to the extreme the cosmopolitanism of the Classical School, many of the other doctrines of which he attempts to rectify.

On account of its shallowness and manifest disregard of certain facts of social life, Bastiat's writing has had little influence on the leaders of economic thought.

Its popular influence, however, was remarkable, and it is this which has justified the devotion of so much space to it. This influence was increased by the extreme "free trade" party in England (the Manchester Party), after the city where it had its stronghold. But Bastiat's system has also reacted upon this party, leading it to greater extremes in doctrine. In Germany a party was also formed between the years 1840 and 1850, opposing all interference of government, and accepting Bastiat without reserve.

Bastiat did not deny that the poor and unhappy existed, though he found the ground for their condition in a mere lack of freedom, and bade the laborer be content and grateful to the capitalist. Give me a break ! You want robots, build them on your own.

His followers, in their admiration of our present social organization, denied the existence of a social problem. The world looked so happy to them that they could find no poor man in it.

I've got news for you -- those Americans who lost their jobs to outsourcing are indeed poorer as a result.

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Old 03-31-2009, 09:21 PM
 
Location: Montgomery County, PA
2,771 posts, read 3,680,148 times
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Quote:
Originally Posted by JG183 View Post
ok, I remember a bit about Bastiat's position, from my college economics professor.

(snip)

I've got news for you -- those Americans who lost their jobs to outsourcing are indeed poorer as a result.

OK, where did you copy-and-paste that from ?

Edit: I see, you plagiarized it from this: "History of economic thought", By Lewis Henry Haney. http://books.google.com/books?id=FI0...um=1&ct=result

Aside from the fact that this is plagiarism, it is also non-responsive to my argument. It may be true that the American who lost his/her job to outsourcing may be poorer, at least until they find another job. But is a fallacy to extrapolate from that, that America as a whole will be poorer as a result of outsourcing (or even that there will be more Americans unemployed than there would have been without outsourcing).

What "is not seen" (in Bastiat's terms) is that the economy performs better in aggregate when scarce resources (e.g. labor and capital) are allocated efficiently.

You can't create prosperity by applying punitive taxes to producers and then paying UAW members to build sandcastles on the Jersey Shore.

Last edited by elflord1973; 03-31-2009 at 09:26 PM.. Reason: citation added
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Old 03-31-2009, 09:38 PM
 
Location: New Jersey
1,395 posts, read 2,030,037 times
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Quote:
Originally Posted by elflord1973 View Post
OK, where did you copy-and-paste that from ?
great minds think alike !


Quote:
Originally Posted by elflord1973 View Post
You can't create prosperity by applying punitive taxes to producers and then paying UAW members to build sandcastles on the Jersey Shore.
I'm no fan of the UAW, but since we're on a slippery slope -- you guys keep saying U.S. workers (who become unemployed as a result of outsourcing) will find other, more relevant work.

How exactly will that happen ?

I personally embrace the information revolution that was helped immensely by the emergence of the Internet. But for a great many people, it is (and will continue to be) an impractical means to reinvent themselves. As we move further into the info age, do we just leave those people behind ? I just don't see a man who spent the last 25 years on an assembly line graduating to one of those "most productive jobs" you allude to.
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Old 03-31-2009, 09:39 PM
 
263 posts, read 334,488 times
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Quote:
Originally Posted by elflord1973 View Post
So what happens if there are no jobs left because it's cheaper to hire workers in India, in finance, technology, manufacturing, and everything else ? That never happens! What would happen instead is that America would have to charge the rest of the world less for its labor, and India would be able to charge us more for theirs (that is, our currency drops in value which means that we can't buy cheap imports any more, and their middle class can start shopping for our exports)
Haven't you heard? America charges less for their labor and of course india charges more for theirs. Here's a good example:

IBM's laid off employees offer jobs overseas - Feb. 5, 2009

The jobs here are lost and replaced by nothing. Americans became a nation of salesmen (real estate, used cars, etc) and contractors (with nothing to build). Oh I forgot and greedy paper pushers. Globalized labor market with no growth (like now) translates to unemployment everywhere.
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