Quote:
Originally Posted by Mircea
Uh, your logic is flawed, not to mention whatever nonsense your vomiting around here isn't even remotely related to Economics.
Take a job from the US, put it in India, and that job creates 50 other jobs.
Right?
Ford is opening a plant in India, who are Indian workers going to get parts? Are they going to fall out of the sky? Or is Vishnu going to personally deliver them?
Ah, well, you see, you need Indian rail workers and truckers to deliver those parts, and they need rail cars and trucks, which have to be maintained etc, etc, etc.
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Certainly this is true. Of course, it's cheaper to keep supply chains in manageable order. Best to keep inventory low since demand is erratic this days. Cheaper to deal with suppliers near the assembly plants, and wiser being that companies prefer "just in time inventory" levels... Therefore, it seems logical that the plant in India will be having it's parts manufactured in India.
And it makes absolute sense for Ford to manufacture cars in India. Indians also buy cars, just like us. I don't see why anyone should take offense to that.
As far as more jobs for mechanics and such... Well, actually, as Americans find it increasingly difficult to afford new cars, mechanics should see a big boost in business. Older cars tend to require more maintenance. No argument there.
Quote:
Originally Posted by Mircea
And why were they poor agrarian countries?
That's because Great Britain and the US stole all of their wealth and resources. The US didn't have colonies in China? Yes, the US had colonies in China. Where do you think the term "China Marine" came from? The marines in China protecting the US as it stole wealth and resources. And Britain was right there and so was Germany -- see WW I. Gotta get the Germans out of China right? And Britain didn't lord over the Indians?
It would be poetically just to have another country come lord over you; steal your wealth, steal your resources; oppress your people; kidnap them in the middle of the night and spirit them off to an isolated prison where the can be tortured and then murdered.
Wouldn't you enjoy that? Why wouldn't you? Turn about is fair play, no? You did that to so many others, it's your turn now.
And so China and India were poor agrarian countries, what law says they must remain that way? I detect the foul odor of bigotry -- some false belief that you're superior to the Indians and Chinese.
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I don't think anyone wants to see China and India in bad shape. The thing I believe people tend to take issue with... Will their rise come at the expense of the rest of the world? We do know China is a currency manipulator and we do know they do not engage in "fair trade" policies. We scream bloody murder when anyone suggests we employ tariffs as a strategy to seek a fairer trade policy. Of course, no one examines the tariffs placed on goods from the U.S. in China.
I personally want to see India and China obtain success. I believe they have potential as a valuable trade partner, and I do believe we can all benefit. The problem I have... This is not happening, and it won't happen for a VERY long time. Labor laws and environmental regulations are nearly non existent in these countries. The workers are enduring stone age working conditions. China subsidizes much of it's manufacturing base, so profitability isn't even required. Goods are openly dumped on the free market, and it's foolish to believe this doesn't, or hasn't put legitimate American and European businesses OUT of business. Hey, that's lost tax revenue right there. Tax money needed for our roads, education, the things that make our country a 1st world nation. Frankly, I believe China is an economic terrorist.
I'm all for free market economics. We don't have that today. We have currency manipulators, chronic polluters, and I didn't even touch on the stunning level of theft of intellectual property that is practically encouraged in China. What's the point of even bothering to invent if the Chinese are simply going to reverse engineer your work and sell it for pennies on the dollar, while you're lucky to turn a profit at any point... Tell me THAT is not going to stunt R&D, and good old entrepreneurship...
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Originally Posted by Mircea
That is not the problem. That is the result of the problem. I'll sit back and laugh my ass off while you explain to everyone how a person in another country earning $2.15/hour can afford to buy something by a P&G worker making $28/hour. Did you know that P&G workers start at $22.50/hour?
Show your work.
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That's fine and all... IF you believe in supply side economics. I do not. You need a consumer base to BUY those cheap goods. I don't know what those comparable goods cost in other countries, but $2.15 sure doesn't buy much here... Makes ya wonder how much their government can accomplish taking taxes out of such small earnings. Again, not something I have looked into or am familiar with.
Quote:
Originally Posted by Mircea
And you are too ignorant to realize how lucky you are that you are not on the Gold Standard, because if you were still on the Gold Standard, you would not be on the internet right now.
I have repeatedly proven that the Middle Class is stupid and has done nothing but throw their money away.
I've been waiting for 2 years for someone to refute my claims -- no one has -- Truth hurts I guess.
Amused....
Mircea
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Certainly I would agree. Stupid, lazy AND greedy. The senseless pursuit of the senseless accumulation of cheap, crappy, poorly made goods. Quality be damned, it's all about quantity for the middle class. And they got what they demanded. Too bad it doesn't afford a middle class lifestyle. Sucks to be middle class. And they wonder why their kids can't afford to leave the house... Add to that list, sore losers. When something bad happens to them, it's unfair, the system is broken, and so forth... The system they complain about is the very system they demanded
Every great nation seems to squander their wealth at some point. Yet I don't feel the wealthy are all that much smarter. By crushing the middle class, they will essentially squash one source of their income like a bug. For those who rely on investments for a large chunk of income, it remains to be seen where that will take us. If you follow my posts, you will see I believe we are headed for more troubled waters. The China system is not sustainable when the American and European consumer base runs out of $$$ to buy their cheap crap. The wealthy do not buy poorly made garbage. They buy on quality, and are prepared to pay a substantial chunk of change for it because they can. Those that will do well are those who cater to those higher expectations. That's why I always suggest the American business strategy should be to compete on quality, not necessarily only on price. Those that buy cheap are buying because they have to. At some point, those consumers are going to have to cut back even more. The perpetual race to the bottom has no winners when you cross the finish line. China WILL suffer, as we are seeing today. It may be hard to tell at first, but they won't be able to hide it for ever. The paper dragon will be revealed, because this, after all, still a free market. As I often suggest, examine Brazil and Australia to get a good idea of what's going on in China.
At any rate, the unfortunate thing is the world in which the baby boomers have left for my generation is certainly not ideal. It would be hard to argue that they have left things as good or better as they found them. Yes, we have a lot of gadgets that we can buy. Unfortunately, jobs available that provide the kind of income to afford these slave wage nation gadgets aren't as abundant. Worse, those same baby boomers have ill prepared their offspring to navigate the black waters of today's modern global economy. When said job is not available, you get the whine gallery of OWS, or some lame counterculture movement. Unfortunately, these whiny dorks can't export their pleas to slave wage nations, so our trade deficit continues to grow. The middle class is paying for decades of bad decisions... Paying in full for a change, with their children's future. Will they bother to start doing jobs where they might get dirt under their finger nails??? Depends largely on how comfortable the couch at home is. Hence, immigrant labor is still in relative high demand.
Quote:
Originally Posted by Mircea
Suppose that was true. What does it matter? Where does it say you are entitled to a job, or that a certain number of people must be employed?
Well, it doesn't say that anywhere. How do you know the Capital used to support that one job hasn't been reallocated elsewhere and created two or more jobs?
Well, now you have something new to think about.
Laboriously...
Mircea
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There is nothing saying a job is an entitlement. Of course, given the choice, I would rather see more American's working than we have today. Money changing hands = GDP, tax revenue, and so many other wonderful things that benefit everyone. Government filling in the voids to boost GDP to still pathetic numbers is stupid.
Of course, only the free market is capable of setting the real number of workers required. That again is going to require consumers with disposable income. Those in China save an awful lot of money, and don't seem to have a taste for consumption the way we do. Worse, cheap knock offs are much preferred of the real thing. This is going to prove to be quite a quagmire for the business community as a whole. How exactly do you make a profit if consumers aren't spending??? You lay off workers to match current demand, and don't manufacture/produce to full capacity. It's a downward spiral until something drastic changes. As I have mentioned, I don't see this process reversing, although I do predict it's going to continue to get worse. A change of president's simply won't make a dent in this, which is what everyone seems to be hoping for. Hope and change and a dollar still is only worth a dollar, as the last dolt has proven.
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Originally Posted by Mircea
That's right. I'm going to assume you were typing faster than you were thinking, because we need to make a small correction here from this .....
....to this...
Capital is always being destroyed, created and shifted around.
The property theory you use, Capitalism, Socialism or Communism doesn't matter, and neither does the economic system you employ with your property theory, Free Market, Command, Traditional or Hybrid.
The bottom line is that Capital has an inherent need to expand, and to do that, Capital has to be destroyed, created, reallocated, shifted etc etc etc.
Note that this happens faster where you use Capitalist property theory, because Capitalism is the most responsive to changes in the Market and the demands of the Market.
It happens much more slowly -- and is much more painful -- where Socialist property theory is used due to the bureaucratic nature of Socialism. Although we've never seen a true Communist property State, I think it's a safe bet to assume the type of bureaucracy exists, albeit in the form of the people who can't reach a consensus on what to do -- resulting in grid-lock and massive suffering until people figure out what to do.
Capital will always flow from the most inefficient use to the most efficient use, even if you try to block it through protective tariffs, taxes or other laws, it still happens -- there's no stopping it.
Lauding...
Mircea
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Speaking of capital... Here's an interesting thought I was thinking of today... You know, due to the years of competing with slave wage nations, we have had a generation that simply hasn't had much in the way of opportunity. Since this is American, and everyone believes they are entitled to be winners, an awful lot of those kids have decided to go to college. Government intervention has driven up the $$$ (thanks a lot feel good liberals) and the debt has been packaged and sold as some of the safest investable vehicles one can purchase. The problem is, it is not. What do you imagine will happen when that bubble pops??? What effect will that have on "capital"? What's going to happen when people bet the house on what they thought was the safest of safe investments?
A lot of this could have been prevented had we actually had free trade, and actual job opportunities for a lot of these young people. Also, politicians who want to cater to the hope and dream crowd have not put this country in a very positive position. These feel good bubbles are not the stuff free market economies are made of.
Quote:
Originally Posted by Mircea
Yes, indeed. In addition to being legally obligated, a CEO is morally and ethically obligated as well. These people fail to understand the nature of publicly traded corporations (not the same as a private corporation).
It is not the purpose of a corporation to employ workers. The hiring of any worker is merely incidental to the primary function of the corporation, which is to make as much money as possible for share-holders. If a corporation can make profits without any employees at all -- and that day is looming on the horizon -- then that is what a corporation should do.
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Where I work, we program machines to run "lights out". That is to say, when we all go home for the day, those machines continue to spit out parts. I do not get paid according to how long that machines runs. I'm paid based on the time it took me to get it running, as well as correcting any bugs or quirks during initial running time. I do think we are inching closer and closer to a time when there will be a structural surplus of labor. Don't know what's going to happen then. I think an awful lot of folks are going to see socialism and even communism as the best option on the table. Kind of scary to think about if you ask me.
Just an interesting aside... When I took business classes in college, I always found it interesting how, if time constraints were an issue, the section on "ethics in business" was the most common candidate for exclusion... I think we are just now seeing the results of such tactics
Quote:
Originally Posted by Mircea
But the Laws of Economics can never be violated. The Law of Business Economics is very simple:
1] You must manufacture a product or provide a service that is in demand; and
2] The product you manufacture or service you provide must be of the highest possible quality; and
3] The product you manufacture or service you provide must be competitively priced.
Violate even one of those 3 Laws and you fail. It's just that simple.
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Well, if one can offer the price advantage to such an extent that many subsidized Chinese companies do, quality can be an awfully neglected detail. Heck, we know the products have the potential to contain lead or other harmful byproducts. We readily accept that most of their crap will break in a few years. I bought a pair of vice grips made in China when I was younger. Didn't last but a week. I learn, but others don't seem to catch on. China doesn't seem to be failing, except that we have exported so many of our income earning opportunities for American consumers...
Maybe the 4th detail you should have listed... Consumers can only consume relative to what they earn. Better yet, a nation can only consume relative to what it produces. Supply side economics is a fantasy.
Quote:
Originally Posted by Mircea
But that isn't why and that is not what's happening.
Let's look at the facts:
USA 312 Million People
World 6.6 Billion People.
Get it?
I'll try a different approach.
Product sale price $48 - All costs $45 = $3 net profit.
Product sale price is $4 - All Costs $1 = $3 net profit.
Get it now?
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How many of those 6.6 billion are capable of participating in the free market, and to what degree??? Again, income. Again, supply side economics is a fantasy. Products sitting on a shelf that cost a dollar are a complete loss.
And you might want to fact check your "facts"... Let's see if you catch that one...
Quote:
Originally Posted by Mircea
Uh, okay, let's take the logical extension.
Product sale price $48 - All costs $45 = $3 net profit * 312 Million People = $936 Million net profit
Product sale price is $4 - All Costs $1 = $3 net profit * 6.6 Billion People = $19.8 Billion net profit
Now do you get it?
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And again, you don't make any money unless you actually make the sale. The system described worked flawlessly when credit was flowing and consumers didn't have a care in the world. We'll find out how sustainable the system is in the coming years.
Quote:
Originally Posted by Mircea
And now for the very obvious, how in the hell can I sell a product that costs me $45 for $4 and make a profit?
I'll wait for one of you brilliant internet armchair economists to figure that out.
Economically...
Mircea
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I think you are often overestimating the costs of manufacturing a lot of goods. I have worked in manufacturing since HS. I have done a wide variety of work. Parts that cost a dollar to manufacture, and parts that cost thousands of dollars to manufacture. In my experience, most things can be manufactured in this country at a very competitive price point. I think you would be shocked at the complexity of parts I have dealt with that basically sell for under $5. Parts that literally have dozens of specifications, details, tight tolerances and so forth. We are still a very competitive nation in this regard.
In fact, I have toured dozens of plants that have "China" displays. Basically a showcase for all the young, hotshot suits who think outsourcing everything to China or some other slave wage nation = profit. Often times, it does not, which is why we are still the #1 manufacturing power on the planet.
Now, there are a couple issues I have. In order to make that part for under $5.00, often times is will require cheap labor to handle the menial task work. $12/hr might be pushing it in some places. The problem??? Well, the culture of everyone is a winner makes it difficult to find that worker. A lot of them would be content on unemployment, sitting on mom and dad's couch, or taking 8 years to get their 4 year degree. Many that will do the job will not apply the effort required to do the job properly. Many companies would like to pay more. There are all sorts of issues preventing this. Other companies employ illegals, driving down the wages. Things happen in China that are fishy. They can often make parts cheaper than I can even find the material. Something doesn't add up. The business crowd will take a chance on a foreign company if they can underbid me by 25%. They are catching on, because 25% saved is a complete loss when the product fails quality control. But the damage is done. The wage structure is all screwed up, making it hard to find the right workers, or encourage anyone to take a chance in a production career. A lot of companies have gone bankrupt due to these factors, yet suppliers are still weary of raising prices.
Second problem... I don't think it would be the end of the world if that product that cost $5 today cost $6 or $7 a part. So the rich have to actually make some of that money "trickle down", big whoop. So corporations won't be recording record profits during a sluggish economy. They'll survive. Most importantly, I would be able to find the right worker for $15/hr and he/she might actually stick with the job for a period of time. Heck, if they are smart, I might even be able to teach them my job at some point and they can have a career instead of chasing marginally useful liberal arts majors on the tax payers dime, followed by a career at Starbucks. Instead, we have a system where the kids stay home and play video games, the migrant workers take the jobs, costing tax payers untold sums of $$$, tax receipts remain desperately low, quality of work suffers, and the world's economy continues to swirl down the toilet. This idea that we can devalue our currency, see inflation rise, and yet pay workers a 1998 wage simply is not sustainable. And if you think China is going to win by paying workers a bowl of rice a day, you are mistaken. Everyone will lose.
The rich will be fine. If I had 2 billion, and my investment portfolio plummeted 50%, I'm not sure I would loose much sleep over it.
What we have today is not sustainable in my opinion. There will be no winners once we have established a winner in this race to the bottom. We'll all get trophies for last place.
And in closing, I don't discount much of what you have stated. You give a very lifeless analogy of economics. I'm a big fan of free markets myself. We don't have nearly enough of them in play today. Seems a precursor to a successful business these days is lobbyist, crooked politicians, depressed wages, disenfranchised and divided workers, corporate welfare, shady backroom deals,
And if all else fails, just kill a kitten. I don't know what good it does exactly, but since morally corrupt behavior is rewarded to such an extent today, it seems like it would fit right in with the business culture in America.
You're going to continue to see complaining from the disenfranchised as their numbers mount. You may even see a breakdown of the system to some extent. As people experience the "every action has an equal and opposite reaction" phenomena, they will look for someone or something to blame. Most will look past the obvious culprit... Namely, the demand of the consumer base for the past 30 years. Instead, they will blame the big bad boogie men. Many of those boogie men did break the rules to achieve success. I suggest it's almost a requirement to make it to the very top of the food chain. At any rate, it ultimately started with the type of folks who refused to buy union made products... While benefiting from the higher income the union afforded them. Prosperity...
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Clinton Signs China Trade Bill into Law
America's middle class was outsourced to India and China for greedy CEOs to pay themselves millions in salary & bonuses
