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Old 06-22-2020, 01:51 PM
 
Location: Ohio
22,170 posts, read 15,464,011 times
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Quote:
Originally Posted by Supposn View Post
Trade deficit nations’ lesser than otherwise GDP due to their net balance of trade, are particularly reflected by their lesser numbers of jobs and wage amounts.
No, they don't and you've been repeatedly proven wrong.

Quote:
Originally Posted by NJ Brazen_3133 View Post
I am talking about how to just keep production here.
It's simple. These are the steps you must take:

1) Open your borders
2) Let in 430 Million immigrants
3) Ignore the fact that you're now a minority in your own country
4) Don't get upset when out and about and you don't understand anything because no one is speaking English

There are many reasons not to produce things here.

Labor is one reason.

B-b-b-b-b-but there are 6 Million unemployed!

Sorry, wrong answer, that's not how it works.

Every person has at least one skill-set to provide them with gainful employment. Some people have more than one skill-set and some people have a helluva lot more than one skill-set.

What percent of your population has the manufacturing skill-set?

On a damn good day, maybe 20%.

Except there are different manufacturing skill-sets and those skills are not necessarily transferable. Someone with the heavy manufacturing skill-set may be able to transfer to clean manufacturing, but it's unlikely someone with the light manufacturing or clean manufacturing skill-sets can transfer to heavy manufacturing.

Train them!

That's not how it works.

Not everyone can be a plumber or a doctor that takes out babies or a CEO or be a farmer.

It doesn't matter how many semester hours of college or years of training or seminars or webinars or self-help books or hypnosis or Enchanted Unicorns or wishful thinking, it will never happen, not ever.

Take masks.

They aren't neighbors. All those people with the clean manufacturing skill-set you would need to make masks don't all live in the same town.

When companies locate a facility, they don't throw a dart at a map.

There's a lot of planning involved and part of that is the availability of, and access to, the labor you need.

That's not the only consideration. Why do you think there's no manufacturing in Eastern Kentucky? Because it costs a godawful lot to bring supplies in, and a godawful lot to get your finished product out, and you don't have access to natural gas and you may not even have access to the amount of electricity you need.

One reason masks aren't made here is because here is the only place you can sell your masks. You can't sell your masks globally because you cannot price them competitively and the only way you can price them competitively is to jack up your prices here to subsidize your losses selling them competitively globally.

Except jacking your prices here doesn't work because you cannot compete globally.

On top of that, it drives up the cost of medical care, so you burn through Medicare faster, Medicaid costs you more, and your health insurance goes up.

Sometimes, the choice is obvious:

1) produce something that is highly competitive and has little profit margin and results in paying employees low wages just so you can do more than just breaking even; or
2) produce something that yields a higher profit margin and allows you pay employees good wages

It's pretty obvious which one you should do.

Fat Union Fred gets paid to $35/hour to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.

Ovidiu in Romania gets paid $1.40/hour
to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.

Batalog the Filipino gets paid $0.60/hour
to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.

Which worker is more productive?

That's a trick question. They are all equally productive.

The machine goes as fast as it goes and no faster.

The problem comes trying to market those plastic spoons competitively.

It's better to let Ovidiu and Batalog make the plastic spoons and let Fat Union Fred make something else that can be competitively marketed and provide an higher profit margin.

Those are just some of the reasons we import things instead of producing them here.
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Old 06-22-2020, 03:44 PM
 
7,409 posts, read 2,759,706 times
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Quote:
Originally Posted by Supposn View Post
Does comparative advantage justify USA’s free-trade policy?
As a purely economic theory, yes, comparative advantage justifies our trade deficit. It is true that as a nation the US should spend more time making state-of-the-art high tech robots than spinning cotton in a textile factory because comparative advantage says you should avoid the opportunity costs of not doing high value specialized work, and import cloth from countries who are best at textile work. Making a $30 shirt doesn't add nearly as much to GDP as a $200k industrial robot.

But Ricardo's theory didn't consider or anticipate the social costs of comparative advantage. Shutting down the textile factory puts blue collar workers out of work, and since they don't have the skills to design or program robots, they have to settle for low paying jobs in industries that cannot be exported, like retail or hospitality. This can cause political stress and social unrest.

It could be that comparative advantage taken to its fullest is not sustainable because it leads to anti-free trade populism and nationalism, which brings with it protectionism and tariffs, and the repatriation of the outsourced jobs. This would increase the nation's opportunity costs, shrink markets, shrink GDP and may cause more damage to working class than if the nation had stayed with globalism. It's a simple economic theory but the ramifications are complex.
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Old 06-22-2020, 06:14 PM
 
8,414 posts, read 7,541,298 times
Reputation: 4011
Quote:
Originally Posted by VitaminB12 View Post
But it's not static. Such heavy handedness can work for awhile, but deciding when to stop heavily subsidizing (through regulations or taxes) production is tough.
I think we are talking about different things
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Old 06-22-2020, 07:29 PM
 
12,645 posts, read 16,089,685 times
Reputation: 8598
Comparative advantage is not the same as absolute advantage. The classic example is the best typist in town is a lawyer, but an average one at best. Sure, she might command top dollar as a typist, $50 an hour, or average attorneys pay, $250 an hour. Which is the best choice?
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Old 06-22-2020, 07:33 PM
 
8,414 posts, read 7,541,298 times
Reputation: 4011
Quote:
Originally Posted by Mircea View Post
No, they don't and you've been repeatedly proven wrong.



It's simple. These are the steps you must take:

1) Open your borders
2) Let in 430 Million immigrants
3) Ignore the fact that you're now a minority in your own country
4) Don't get upset when out and about and you don't understand anything because no one is speaking English

There are many reasons not to produce things here.

Labor is one reason.

B-b-b-b-b-but there are 6 Million unemployed!
I dont want to quote your whole post as is too long.

As there are more jobs, wages will get pushed upwards. More people with more money can spend more. It equals out at the end.

Plus at some point all nations will have high a standard of living hopefully. What will manufacturing do then? Who will make the goods? I guess we will have to artificially interfere in other nations development and hinder their progress through war or proxy wars to ensure a continuous supply of cheap, desolate, and desperate workers. Perhaps our wars are about that. Iraq, and Yemen be new manufacturing hubs.

In another thread I was discussing the manufacture of Blue Rays. Sure when it came out, was cheap enough for everyone to buy one because made overseas. Well, as of right now, does anyone watch Blue Rays anymore? Every movie if streaming now. What was the point of Blue Rays then? It was just another bubble. We sent all that money overseas, to enrich foreigners, and a handful of people back here.

Yet, even if no one can afford blue rays because no overseas production, then it will just a luxury/novelty item. That, in turn, will just give the doomed Movie Theatre industry another selling point, and people will still be flocking to the big screen to watch their favorites until of course the advent of streaming.

Another item similar to blue rays is gaming consoles. Gaming consoles are more expensive now than ever, and I believe sales are also way up too. The lower production costs probably not factoring in consumers' budgeting. Yet, even if the price is prohibitive for consumers, then the arcade industry can step in. Consumers will simply visit the arcades to play the games. An industry which does not exist anymore. All those opportunities and jobs not available anymore, thanks to overseas production.

At the end of it all, overseas or domestic, doesnt really matter.
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Old 06-22-2020, 07:56 PM
 
8,414 posts, read 7,541,298 times
Reputation: 4011
Quote:
Originally Posted by Mircea View Post

Take masks.

They aren't neighbors. All those people with the clean manufacturing skill-set you would need to make masks don't all live in the same town.

When companies locate a facility, they don't throw a dart at a map.

There's a lot of planning involved and part of that is the availability of, and access to, the labor you need.

That's not the only consideration. Why do you think there's no manufacturing in Eastern Kentucky? Because it costs a godawful lot to bring supplies in, and a godawful lot to get your finished product out, and you don't have access to natural gas and you may not even have access to the amount of electricity you need.

One reason masks aren't made here is because here is the only place you can sell your masks. You can't sell your masks globally because you cannot price them competitively and the only way you can price them competitively is to jack up your prices here to subsidize your losses selling them competitively globally.

Except jacking your prices here doesn't work because you cannot compete globally.

.
When you say masks, do you mean the masks we using to protect against Covid-19? I have these cheap imitation surgical masks made in China. But I also have these construction/particulate masks from 3M that are made in USA as claimed on the box. These construction masks are probably most popular for that niche.

Domestically made 3M masks are much better than the cheap stuff from China people are using during this pandemic. Is probably the reason why cases seem to skyrocket. Those masks from China arent helping at all.

So not true, we can and are making masks here. Perhaps those 3M masks are more expensive. But its the day laborers, and unskilled workers who are buying and using them.

The cheap chinese stuff seems like nothing more than tightly winded up polyester, or cotton. You likely can do this with a sewing machine. The manufacturing of this simple and cheap item does not have to be a huge venture capitalist who buys up a huge tract of land, and constructs a huge factory with the latest amenities, and most expensive equipment, so this venture capitalist can make gazillions pieces, and flood market, and undercut everybody so he can make his "profits".

Last edited by NJ Brazen_3133; 06-22-2020 at 08:14 PM..
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Old 06-22-2020, 08:13 PM
 
8,414 posts, read 7,541,298 times
Reputation: 4011
Quote:
Originally Posted by Mircea View Post

Fat Union Fred gets paid to $35/hour to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.

Ovidiu in Romania gets paid $1.40/hour
to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.

Batalog the Filipino gets paid $0.60/hour
to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.

Which worker is more productive?

That's a trick question. They are all equally productive.

The machine goes as fast as it goes and no faster.

The problem comes trying to market those plastic spoons competitively.

It's better to let Ovidiu and Batalog make the plastic spoons and let Fat Union Fred make something else that can be competitively marketed and provide an higher profit margin.

Those are just some of the reasons we import things instead of producing them here.
Fat Union Fred will spend his money domestically. More of the wealth will trickle down, and around. Plus plastic spoons are not that price elastic. So money saved by hiring either Ovidiu, or Batalog will just line pockets of few owners.

And to expand on that why cant Fred, or Ovidiu, or Batalog be their own owners? They make and set their own wages. They are the ones that know how to operate machine. If the machines themselves are that exclusive and prohibitive, then certainly Japan or the Nissei company should keep the monopoly on plastic spoons.
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Old 06-22-2020, 08:52 PM
 
1,574 posts, read 829,185 times
Reputation: 404
Quote:
Originally Posted by Supposn View Post
... Trade deficit nations’ lesser than otherwise GDP due to their net balance of trade, are particularly reflected by their lesser numbers of jobs and wage amounts. ...
Quote:
Originally Posted by Mircea View Post
No, they don't and you've been repeatedly proven wrong. ...
Mircea, many, (I suppose it’s presently the fashion that most) credible economist believe that although USA’s chronically consistent annual trade deficits of products somewhat reduce our annual GDP’s, USA’s net annual trade balances’ comparatively small proportion of our GDPs, Trade deficit’s net negative effects upon our annual GDPs are of comparatively little net consequence.

Due to the conventionally accepted manner that nations’ GDPs are calculated throughout the world’s communities of economists and statisticians, for any given amount of individual nations’ annual spending for goods and services, trade surplus nations increased, and trade deficit nation’s decreased their annual GDP.
There are extremely few, (if any credible economists that contend otherwise, but it’s not an undeniable fact; there our people such yourself believing their opinions trump facts.

Many credible economists believe nations’ annual trade deficits’ detriments to their nations’ GDPs particularly reflect those trade deficits effects upon their nations’ numbers of jobs and their amounts of wages. Some of those same economists also believe nation’s net trade balances understate their effects upon their nation’s numbers of jobs and the amounts of those jobs’ wages.
trade surplus nations increases, and trade deficit nation’s decreases to their nation’s domestic production of goods and services are not accounted as due to foreign trade when the prices or costs of that additional production is not reflected within the valuation of internationally traded goods and services.

Respectfully, Supposn
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Old 06-22-2020, 09:05 PM
 
1,574 posts, read 829,185 times
Reputation: 404
Quote:
Originally Posted by Mircea View Post
... Fat Union Fred gets paid to $35/hour to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.

Ovidiu in Romania gets paid $1.40/hour to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.

Batalog the Filipino gets paid $0.60/hour to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.
Mircea, you post fiction and pretend it's factual? Where did you find such misinformation? Respectfully, Supposn
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Old 06-22-2020, 10:17 PM
 
7,409 posts, read 2,759,706 times
Reputation: 9741
Quote:
Originally Posted by Mircea View Post
Fat Union Fred gets paid to $35/hour to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.
Ovidiu in Romania gets paid $1.40/hour
to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.
Batalog the Filipino gets paid $0.60/hour
to operate a Japanese-made Nissei plastic-injection molding machine producing 8 plastic spoons per hour.
Your example demonstrates Japan has a comparative advantage over the US, Romania and the Philippines because they used invested their intellectual resources in designing and producing the machine, instead of wasting time on low value work (making spoons). Japan will happily import the spoons from the Philippines, who will supply the lowest bid.
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