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I have a better idea. We practice free trade as much as possible and require our trading partners to do the same. Then we let the exchange values of currency adjust to balance trade over the long term. Easy and simple.
Our biggest trading partner, China, is actively manipulating it's currency, keeps it's internal market protected from competition (e.g. the only way a Western automotive company is allowed to build cars in China is by partnering with a Chinese company in a technology sharing partnership), heavily subsidizes domestic companies with government funds, and is engaging in industrial espionage on an unprecedented scale. If the "free" market worked the exchange rate would make Chinese products much more expensive long time ago. Instead they keep depressing their currency in order to maintain positive trade balance.
Japan has been actively manipulating it's currency for over 40 years as it was establishing itself in the U.S. market, has a number of protective tariffs and "unspoken" protective laws, and has been heavily subsidizing it's industry.
India and Russia have been engaging in illegal dumping practices for decades (remember when US still had steel industry ?)
Yes, free trade is a swell idea that works just great in the real world. Just like Communism. Or perpetual engine.
The only thing "free" in free trade markets is the freedom for the corporations to build things in poor countries, sell in developed countries, make money on the spread and destroy jobs in developed countries and the environment in poor countries, without having to worry about tariffs or regulations. This, by it's very nature, is a temporary process of wealth transfer. With all of the wealth leaving the U.S., if you believe in free trade, you'd expect the quality - and cost - of life in China to go up, making Chinese products less cheap vs e US, and resulting in better trade balance. This should've happened 15-20 years ago. Clearly something is wrong with that theoretical model. Perhaps it should be adjusted for the real world conditions where rich and powerful people like to bend the rules whenever they can, and U.S. politicians can be easily (and relatively cheaply) bought.
Last edited by Ummagumma; 06-23-2015 at 09:02 PM..
... Our academic institutions aren't poorly performing, BTW. Not after HS. ...
RRuff, “as the twig is bent, so the tree is inclined”. It is within the pre-kindergarten and grade school years that children are prepared to benefit from any later education they may be exposed to.
In most cases opportunities of superior high school, vocational or higher education are cases of too little too late.
For example there’s no doubt that superior training for prisoners would have significantly superior cost-benefit ratios.
But how do we justify lesser resources for children in order to increase educational and training resources devoted to prisoners that will someday be released into our society?
Wouldn’t devoting greater resources spent more intelligently reduce the numbers and costs of people passing through our criminal justice systems and thus be of greater cost-benefit ratios?
Any significant improvement of a nation’s academic and vocational education and training systems will be similarly reflected by the nation’s improved economy.
Supposn, as requested I will respond to your thoughts on:
"You have not responded to the contention that nation’s annual global trade deficits are always immediately to their economic detriment. I concern myself with trade deficit of goods rather than our total trade deficits because I do not accept your contention that we can reasonably monitor and affect our global trade balances of services."
I agree with you on your first point by not totally on your second one. Trade deficits are very bad for any economy, for all the obvious reasons, we both understand. Your notion of focusing on trade deficit of goods rather than including services is well noted. However, the government has somewhat of a handle on measuring services. You can view the US Bureau of Economic Analysis to see the different categories. The link shows the services exported and imported, very impressive list. Are they really capturing all the data to reflect true numbers?
I don't believe they are capturing when a foreign help desk supports the US economy or anything along that line of reasoning.
With all our conversions about the original post, our tradeable service sector jobs need to be preserved. It is the single most important issue facing our economy. We can start to charge duties on tradeable services from the list the government currently provides. We can then figure out a way to expand the monitoring of all tradeable services to help with equalizing wage rates. Then we need to eliminate the reasons for companies moving offshore. Easier said then done but can be done.
TalentLost, almost all imported services are effectively transmitting information, analysis and/or opinions over national boundaries. Should government be assessing the monetary value of intellectual property?
You'resuggesting we measure the volume of data being transmitted. I see no net good from taxing the exchange of information or otherwise increasing the costs of international communication.
I suggested a general concept that MIGHT POSSIBLY somewhat reduce some customer services delivered from abroad but I’m unaware of any specific proposal that would significantly reduce imported services.
It has been suggested that regulations could be devised to increase USA carriers’ shares of aircraft or ship transportation.
But anything that sufficiently increases the costs to purchasers would induce purchase of tickets to Canada or one of the Carrabian Islands where they would then purchase tickets to continue their journey at regular global market prices. The greatest beneficiaries of such a proposal would be the Canadian or Carrabian airport or harbor involved.
The only thing "free" in free trade markets is the freedom for the corporations to build things in poor countries, sell in developed countries, make money on the spread and destroy jobs in developed countries and the environment in poor countries, without having to worry about tariffs or regulations. This, by it's very nature, is a temporary process of wealth transfer. With all of the wealth leaving the U.S., if you believe in free trade, you'd expect the quality - and cost - of life in China to go up, making Chinese products less cheap vs e US, and resulting in better trade balance. This should've happened 15-20 years ago. Clearly something is wrong with that theoretical model. Perhaps it should be adjusted for the real world conditions where rich and powerful people like to bend the rules whenever they can, and U.S. politicians can be easily (and relatively cheaply) bought.
TalentLost, regarding suggestions for increasing USA carriers’ shares of international aircraft or ship transportation commerce:
Because it involves cargo and passengers physically passing through USA ports, it is feasible to negotiate bilateral agreements with other nations. I’m generally opposed to USA participating in bilateral trade agreements but this is one of the extremely rare situations where a trade agreement may actually also be of net economic benefit to the USA.
(NAFTA boosts USA's annual global trade deficits which reduce our jobs and median wage; when the Trans Pacific Partnership passes, it will further undermine our economy).
TalentLost, regarding suggestions for increasing USA carriers’ shares of international aircraft or ship transportation commerce:
Because it involves cargo and passengers physically passing through USA ports, it is feasible to negotiate bilateral agreements with other nations. I’m generally opposed to USA participating in bilateral trade agreements but this is one of the extremely rare situations where a trade agreement may actually also be of net economic benefit to the USA. (NAFTA boosts USA's annual global trade deficits which reduce our jobs and median wage; when the Trans Pacific Partnership passes, it will further undermine our economy).
Respectfully, Supposn
can someone explain why they think this next trans pacific partnership is going to be worse for the US?
I understand where they come from with things like NAFTA and how the companies moved the factories over there (I don't agree that NAFTA is bad but not going to get into it).
but the companies are already in Asia... they can't exactly move "more" over, and if they did, there's nothing currently legally stopping them from doing it. So what does the US actually lose in this partnership? More jobs going overseas? That would have happened anyways without the partnership. Unless the agreement lets them "import" more workers via visa allocations, but I didn't see that in the agreement
from what is posted on the gov site about it https://ustr.gov/tpp and how it will attempt to standardize wages/environment... it seems to make it more costly to support factories overseas because they still have cost of shipping it back to US/Europe. So it might make more sense to just make it in the US for the US market, and bring factories back too.
I can see why other counties wouldn't like it, but what reasons do people in the US have for not liking it? I mean aside from it coming from Obama, because fox news doesn't like him
can someone explain why they think this next trans pacific partnership is going to be worse for the US? ...
I can see why other counties wouldn't like it, but what reasons do people in the US have for not liking it? I mean aside from it coming from Obama, because fox news doesn't like him
EyeB, Trans Pacific Partnership specifics of both what’s already been agreed to and what is still being negotiated are all unconfirmed rumors; the negotiations are not public knowledge.
What is known is that those negotiations are being carried out by the same classes of people that have negotiated all of our other trade agreements,
U.S. enterprises, (many of them being subsidiaries of global enterprises) did not only advise USA negotiators of our previous trade agreements, but also effectively wrote or directed the drafting of all USA proposals for the drafting of those treaties.
USA treaties have superior legal status equal to clauses within our Constitution and require exactly the same procedures to repeal them. The USA has participated in some trade agreements; I’m pleased that we have never entered into an international trade TREATY.
No USA bilateral trade agreement has ever promoted reduction of USA’s annual trade deficits but those agreements certainly contributed to the increase of our annual trade deficits.
//////////////////
EyeB, I’m a populist and I’m not particularly opposed to President Obama. Most support for the trans-Pacific Partnership comes from Republicans and the majority of Democrats are opposed to the trade agreement. Our opposition is not due to the races of Pacific peoples but we are particular opposed due to their much lesser median wages. If our government believe that an altruistic foreign policy is in our best interests, than let us all pay for it in a manner similar to our paying for the Marshall Plan. USA’ foreign policy should not be primarily paid for by USA families dependent upon USA wage and salaries.
Comparative advantage, (i.e. the concept of the most advantageous choices among all alternatives) is often presented as the justification basis of pure free (global) trade.
Although the interests of commercial enterprises and that of the government are often similar, they are separate entities and it is not unusual for those interests to diverge and what the preferences of our commercial community are often contrary to the economic interests of our nation.
Outsourcing for the least expensive goods and service products, and reducing the numbers and expenditures for labor are to individual enterprises best interests. The net losses of jobs, reduced median wage and/or increased public welfare are contrary to our nation’s best interests. That is USA’s annual trade deficits’ net affects upon our economy.
I am not talking about the communication but the importing of those services. Two issues we have, first we need to stop the importation of services and second how do we do it. Importation of services can be quantified and all charges are made to equalize wages. So if an insurance company has a back office operation off shore that employees 200 people in various job categories, that supports the US market those wages of each category would be equalized to what the wage rate would be In the US. A process claim person who makes $6.50 hr off shore vs comparable work skills in US for $17.50 per hour. A duty amount of $11.50 per hour would be assessed. What I described is for illustrative purposes the actual amounts would be debated.
That is what I mean by equalization of wages, we are not protecting are labor market instead we are leveling the playing field to focus on who can provide a better service, without using wage rates as a factor.
That is all we have to do to stop the onslaught of foreign tradeable service labor. The reason I used communication was as a means to ascertain the percent of labor time focused on the US for a help desk. If a support desk in India services the US and Europe equally, then the wage rates adjustment would only affect 50% of their local labor costs.
Again the main focus is on the tradeable service labor force. I understand their are many other categories that make it enticing to use off shore labor, lax environmental laws, no health insurance, basically cheaper standard of living.
This doesn't stop companies from moving offshore to expand their markets, you can't just service the US market without some adjustments. Otherwise we have free trade. If we are going to have free trade on services then why don't we have free trade on products. Because when we were a manufacturing labor force you would wipe it out. Oh yeah, they did remove duties on products with trade agreements and it did wipe out our manufacturing. The same thing will happen again only this time it will be all services deemed tradeable (original post), that is a large percent.
Can our tradeable labor force be absorbed into our non-tradeable labor force. That transition time is how long we will be in a recession. When you look at the aging labor force, almost 50% of our entire labor force is 40-64 years old we have a serious situation.
Eyeb as requested
First I will explain in an abstract then apply to current situation. If we had a village consisting of 200 people that had an economic output of $1,000,000 and decided to displace 10% or 20 people so we can increase output to $2,000,000 that would be considered a good thing. Because output doubled there is money or a safety net to help the 20 people learn new skills to be productive again.
The safety net can be unemployment insurance and grants for retraining the workforce. The country as a whole is better off. Although the 10% have many challenges ahead of them depending on their age.
The above scenario happened to our manufacturing jobs. Our labor force retrained and also moved to the job categories defined in my original post. Instead of a family member following in the footsteps of their father working at the auto plant they learned computer skills and forged a new path. The redefining of our labor force from manufacturing to services took a long time because there was duty imposed on imported products helping to slow down the changes so the 10% could catch up and our young adults can redefine their career paths. NAFTRA was just the final blow to manufacturing and the beginning of the issue for services.
The TPP trade agreement would instantaneously increase unrestricted trade on services. If you view the original post the percentage of workers in all the categories is tremendous. The amount of people who could lose their jobs is catastrophic the can be extrapolated from the US 2010 Census. I derived the numbers from page four.
Total Working Population 20-64 = 225,447,982 million people
% of Working Population 40-64 = 45.41% or 102,380,409 million people
% of Working Population 20-39 = 36.72% or 82,826,589 million people
I started the working demo group at 20 years old to give an 18 year old 2 years training before becoming an active full time member of the work force. The 40-64 demographic should go to 67 years old, the legal age to retire with full social security benefits. However the number used will be more than enough to validate the issue. If anything if I started at 18 and went to 67 the % would be higher for the 40-64 demographic.
It is a serious problem when almost 50% of your labor population is 40-64 years old. Having programs that retrain people who lost their jobs because of trade agreements is an absolute joke. People spent 10-15 years establishing themselves then all of a sudden lose their lively hood. There is not enough time in one’s life to make up that fact. I wrote a blog post describing what happens when an economist loses their job because of a trade agreement. Economic research can be performed in other countries just send the data. Moreover the amount of people that we need to retrain is serious not 10%.
We do not have the money in our economy to retrain so many people. In addition, because of unrestricted free trade on services we don’t even have the time to make the transition (remember no duty charges to slow it down).
We can discuss trade deficits, exchange rates, economic growth but it is about people not about dollars. When you focus on the composition of our labor force the mathematics says it all. There are many inferences that can be made from the US census information. Many current event issues can be explained because of those numbers.
As one example, state pensions cannot be funded because there is no money. It is no wonder that the legal system is letting state governments rewrite the pension laws, ouch.
Again, when you hear about people who are over 50 and looking for work in their respectable professions they are given only two chances they will find employment, slim and none. Where do you think the money comes from to fund the pensions?
Another example, how is Social Security going to be funded, by foreign labor? The 40-64 demo group making half the wage of what they earned before their jobs were lost, pays less into social security. Can you say social security crisis? No wonder the government always wants to privatize the system. Remove the burden from the politicians so they can’t be blamed.
Another example, school loans that are not paid off, wow why is that happening? College grads are feeling the pinch. Reducing employment for 40-64 year Old’s and replace them with 25 year Old’s from other countries, a double whammy.
We need to slow up the process of unrestricted free trade on tradeable services so that labor force can move into non-tradeable services. However, can all the non-tradeable service sector jobs absorb into the tradeable service labor?
We are talking about millions and millions of people. Those people also represent credit debt both secured and unsecured; I don’t think our country can handle all those people going bankrupt.
As in my original post do we even want to lose all those non-tradeable jobs? That is what maintains our economic strength and sovereignty. People can have many opinions but the census numbers combined with free trade on services is frighting.
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