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Businesses are still in a "protection mode." They are stashing cash, buying back stock, avoiding long term expenses, keeping labor at a bare minimum and resisting the need to increase salaries. R&D is way down since 2008. I doubt that stable or slightly decreasing prices would make much impact. In any case deflation seems extremely unlikely. I do think the Fed is making a mistake in pushing for inflation. I see nothing good about inflation and it has a tendency to snowball out of control with devastating impact.
Businesses are still in a "protection mode." They are stashing cash, buying back stock, avoiding long term expenses, keeping labor at a bare minimum and resisting the need to increase salaries. R&D is way down since 2008. I doubt that stable or slightly decreasing prices would make much impact. In any case deflation seems extremely unlikely. I do think the Fed is making a mistake in pushing for inflation. I see nothing good about inflation and it has a tendency to snowball out of control with devastating impact.
You want to get them out of protection mode? They have to know the outstanding debt is good and know that spending money now is better than spending money later as prices will be higher later. Also they need to know that spending money here will cost less than spending money there will.
US minimum wage everywhere, then up the minimum wage, and increase it 5% a year after that.
That should get them out of protection mode. A $15hr minimum wage wont need extra cash to stop economic implosion, a $30hr minimum wage will.
US minimum wage everywhere, then up the minimum wage, and increase it 5% a year after that.
I've told you a bunch of times why your proposal is not economically feasible. The real productivity of labor varies hugely by place depending on their level of development. You can't just arbitrarily decide to raise wages in a poor exporting country and expect everything else to stay the same.
The only reason we buy manufactured goods from poor countries is precisely because their labor rates are so low. That is their competitive advantage. If you remove that by forcing a huge labor cost increase, what do you think will happen? They will stop exporting to the US immediately, and they will all be out of work. They won't get a pay increase, they will be starving.
I've told you a bunch of times why your proposal is not economically feasible.
It may not be feasible for them but it is feasible for us.
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Originally Posted by rruff
The real productivity of labor varies hugely by place depending on their level of development.
Agreed.
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Originally Posted by rruff
You can't just arbitrarily decide to raise wages in a poor exporting country and expect everything else to stay the same.
Agreed but that is what you are talking about doing with revaluing the currencies. What I'm talking about is just revaluing their export workers not their whole economy. They can subsidies their export workers to get USD for oil.
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Originally Posted by rruff
The only reason we buy manufactured goods from poor countries is precisely because their labor rates are so low.
And if we undo that jobs come back here.
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Originally Posted by rruff
That is their competitive advantage.
Japan used domestically drown capital to build their economy with not foreign capital. They can too.
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Originally Posted by rruff
If you remove that by forcing a huge labor cost increase, what do you think will happen? They will stop exporting to the US immediately, and they will all be out of work. They won't get a pay increase, they will be starving.
In an agrarian economy most make very little money doing subsistence farming.
Two lax compliance. If we just look at new export import agreements and not so much for old ones then the growth happens above a line.
Mathematically there is no difference between revaluing currency and increasing wages. The easiest way to get the pay in line is to change the exchange rates.
Agreed but that is what you are talking about doing with revaluing the currencies. What I'm talking about is just revaluing their export workers not their whole economy...Mathematically there is no difference between revaluing currency and increasing wages. The easiest way to get the pay in line is to change the exchange rates.
There is a huge difference between revaluing currency for the US to acheive trade parity, and forcing every country to pay US MW.
A lower US$ value (like 10%) will have a small effect on countries like China and Mexico, but will make US exports significantly more competitive. We don't want to get crappy labor intensive jobs back, but rather increase higher value added production.
Currency values are the simplest and most efficient way to do this. It's how free trade is supposed to work. Let each country optimize for their competitive advantage and everyone is better off.
There is a huge difference between revaluing currency for the US to acheive trade parity, and forcing every country to pay US MW.
A lower US$ value (like 10%) will have a small effect on countries like China and Mexico, but will make US exports significantly more competitive.
And we need their cooperation to do this. China isn't playing nice.
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Originally Posted by rruff
We don't want to get crappy labor intensive jobs back, but rather increase higher value added production.
Tell that to the lower value workers, here.
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Originally Posted by rruff
Currency values are the simplest and most efficient way to do this. It's how free trade is supposed to work. Let each country optimize for their competitive advantage and everyone is better off.
But it isn't working that way and they are in worse shape than we are so anything we do to devalue our currency they can do more of.
True but we can't revalue our currency and we can insist they get paid more money. (In USD)
Why do you keep saying this? We have complete control over the value of the US$, particularly on the downside.
And how on earth do propose forcing individual factories in foreign countries to pay US MW? The Chinese government is barely able to enforce anything themselves. The immediate response to even attempting such a thing will be rampant fraud, that we will have zero ability to police.
Just add that to the fact that these factories would shut down immediately if you *were* able to enforce it.
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