snousle

That's right up your alley, isn't it? ;-)

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bitterlawngnome.livejournal.com

the sock is the easy part.

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pink-halen.livejournal.com

I think what irks me the most is not jobs that go overseas but company headquarters are moved in an effort to save taxes. These companies move their official headquarters somewhere else while maintaining a de facto headquarters here in an effort to change how we view them for tax purposes.

In many cases we have priced ourselves out of the market for some jobs demanding high salaries that are out of line with a world economy. In other cases, we pay too much for some services which means that job seekers come to the US by any means. We have let our education system produce inferior workers who demand elite salaries.

In our lust for ever cheaper goods we have devalued US made goods because of price alone. We import cheap goods and export expensive goods and wonder why we have a trade deficit.

We aren't the only country experiencing this. Japan now buys Korean cars because they cannot afford locally produced ones. Now the Koreans cars are getting too expensive for the Koreans.

Your bottom line is correct. Americans Don't understand imports and exports. They think it is a simple problem. It is far more complex. It's not trading widgets.

I often muse how this will all change drastically when transportation costs price imports out of our budgets. We may still be able to get products by boat because that is so cheap in terms of cost per ton-mile but to get the products inland will be prohibitive. There may come a time when it is cheaper to make or buy it locally than to have it shipped in.

I'm not saying that we need to ban foreign imports. But I think it is sad that companies like Walmart have destroyed American businesses by demanding that they lower costs. I think it is sad that we accept low quality because price is the only thing that counts. I think it is sad that there are some products that are no longer made in the US.

It seems that those yelling the loudest don't understand the basics of the economy in general so we cannot expect them to understand imports and exports. People who clamor to increase Defense spending and lower taxes don't seem to have past mathematics. Those that know the least are trying to set policy.

Ah, Well, May you live in interesting times.

Hugs from Denver

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There may come a time when it is cheaper to make or buy it locally than to have it shipped in.

I don't agree with this; thanks to information technology, transportation in the US is actually very, very efficient. Increased costs will certainly change patterns of transportation, but the most expensive leg of the journey from China occurs on the drive from Wal-Mart to home. This is also why the "food miles" concept is completely bogus; farmers markets, to take one politically correct example, are wildly inefficient in that regard.

Unfortunately, the preponderance of cheap goods is merely a consequence of the freedom to choose. That Americans make foolish purchasing decisions, favoring short-term cheapness over long-term value, is "the price of freedom".

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the most expensive leg of the journey from China occurs on the drive from Wal-Mart to home

Probably. You seem to view that as proof there's nothing the matter with shipping raw materials halfway round the world and shipping finished products back. I think it's a clear but generally disregarded indicator that there's something seriously the matter with how the system is set up. It is a hideous waste of finite resources, but it is also a convenient way of moving pollution and endangerment and exploitation of workers far enough out of sight that we can beat our chests and congratulate ourselves for having eliminated them.

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You seem to view that as proof there's nothing the matter with shipping raw materials halfway round the world and shipping finished products back

Nope.

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Nope what? Nope there's nothing the matter with it, or nope I've misunderstood your position?

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I do not think there is "nothing the matter" with raw material export. But you have to understand and acknowledge the role of market efficiency and comparative advantage before rejecting it in favor of other considerations. Most anti-trade arguments don't even take that first step, which is perhaps why they have been so ineffective in the face of the trend towards globalization.

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furr-a-bruin.livejournal.com

Trade itself aside, I don't understand the corporate headquarters thing. Unless I am mistaken, if a foreign national comes to the US to work, ey pay US income taxes because this is where the income is generated. So why wouldn't it work that way with corporations - that they pay tax wherever they generate their income, no matter where they claim their headquarters is? If corporations want to be considered "persons" in the US - well, let 'em pay TAXES like "natural persons"

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bbearseviltwin.livejournal.com

The dirty sock sounds fun but I am not sure I could handle three hours of of Ricardian trade theory.

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It's like the Spanish Inquisition. Once you accept the supremacy of comparative advantage, the torture will end!

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barbarian-rat.livejournal.com

You post the most interesting things.

I would have said that the US had moved most of it's manufacturing overseas, but the link you provided proved that incorrect.
But I do think that in the quest for ever cheaper goods Americans have damaged our economy. Maybe the problem is that the trade imbalance is just a little too imbalanced. You are correct, protectionism is the wrong way to go.

I noticed that rice is one of our rising exports ... hummm ... rice takes a lot, I mean a lot, of water to grow, and CA used to be one of the largest growers of rice....
I was surprised to see that Medicinal, dental and pharmaceutical preparations was #3 on the top import list. I'm not sure what preparations are, I assume they aren't medications, possibly herbal remedies?

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dhpbear.livejournal.com

I guess the only trade I understand is the rough kind :)

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That's why I love shopping at WalMart! The one here in Ukiah is awesome.

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kevynjacobs.livejournal.com

I was going to say, isn't Oil our biggest import contributing to the trade deficit? Your first link confirmed that for me.

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Wow, you've picked one of the most contentious issues in economics.

I suspect, in 30 years, when folks are writing about the rise and decline of the American empire, some will be saying, "We believed too much in our economic theories of trade."

In some instances (many instances), moving the plant to Mexico was about busting the union and the rest was/is window dressing.

We've thrown our doors open to what is practically and *endless* supply of cheap labor, from China and Southeast Asia. This has vast implications. It is not your average manufacturing worker in America, who will benefit from that. We are a net loser of manufacturing jobs, for a long time now, more than is made up for by aircraft!

Technically, one does not have to have exports to get imports. It is possible to do it all through financing - if someone lends you the money, you can buy their goods. Basically, you sell off what you own, so that you can consume their Guinness, their low-standard car rotors, their caviar. That's obviously a very risky boat to float compared to 'I'll sell you wool and you sell me ferrous metals'. (You can also buy-out their mining operation, but that's a extention of the point, but not a minor one).

A couple of years ago, maybe even before the subprime crisis, Warren Buffet's comments that he was negative on the dollar because we were selling off assets to pay for over-consumption (net negative national savings) set off a battle royale on the economics blogs to discover truth about supposed "dark matter" in the BOP accounts that would prove him wrong.

The truth is that a negative balance of trade implies risk, risks that ought to be managed, not simply left to the market to sort out, arguably. (The market tends to reward, then punish, harshly).

One risk is that we are a terribly low savings nation. On top of that our largest negative trade balances are with high savings nations. Some of those nations have "artificial" means by which savings rates are boosted. Whether and how much anyone agress with that as also a factor in "free trade" (a nonsense term), the risk remains, and it seems as though a society disarms itself if it surrenders the right to put small tariffs, not large enough to halt trade or change the 'natural direction of trade', but enough to boost net national savings and preserve their own society's choices about collective costs, including aspects of the social safety net, which civilized nations prefer.

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Agree on almost all of this. It's not that I'm an automatic proponent of trade liberalization - it comes with lots of caveats - but rather, I think that knee-jerk protectionism is more hazardous. Particularly since the protectionist hysteria you hear on the trucker channel is much further removed from economic reality than even the least sophisticated arguments for free trade.

Trade imbalances are pretty much by definition differences in saving and borrowing rates, are they not? I think that differences in the personal habits of Americans vs. Chinese, Germans, etc may be a direct and even primary cause of the current imbalance.

However, I have to add that while trade is not all wine and roses for the US, the political left has a HUGE blind spot here. After decades of promoting a "think globally, act locally" perspective that does not ignore the world's poor, there is disturbingly little recognition of the incredible reductions in poverty in China and other third-world nations that have been a direct result of trade. It strikes me that no discussion on trade can even begin without acknowledging this, it's one of the biggest shifts the world economy has ever seen. But because it doesn't fit neatly into anyone's agenda, something that should be a cause for celebration on all sides gets mostly ignored.

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I thought Navistar had already moved their production. Who's on deck? PACCAR?

The Savings-Investment figure for a country partly determines the interest rate and relative interest rates should drive the foreign exchange rate. That, in turn, will have some impact on the balance of trade in goods/services, with some lag. With a "strong currency", you can buy more goods; a weak one, not so much. However, it is not the only determinant. Clearly, comparative and absolute advantage in costs drives what is produced where, to some large degree (but with surprising exceptions), and that, in turn, drives the trade imbalance.

Now, there are theorists who will tell you with confidence that the exchange rate will rise or fall, so as to keep all these factors "in balance". But frankly, that equation is so complex that ... well, let's just say, at some point, it will clearly look like the US maybe had 'too good terms of trade for too long' and the markets could adjust abruptly and savagely.

The "blind spot" is another rightwing talking point. The thinking folks on the Left have only pointed out that lifting the world's poor out of poverty will come at a price in America. Bhagwati, for instance, thinks that's "okay", a willingly paid price/risk. But the evidence is around: The "jobless recovery" during the Bush-43 era, the decline in median real wages, the pressure that puts in polarizing our politics, the greater differences between the haves and have-nots in this country.

We still attract a relative good share of investment. However, the more the poor countries come out of poverty, the less that will be true, other things being equal.

Our "psychology" for dealing with a transition to being 'one of many' is not really there. Our massive military investment forbids it.

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broduke2000.livejournal.com

Since you mentioned Navistar:

I need a wheel cyl for my '57 IHC. Up until a few years ago, it was $10. Now it's $72! The way it was explained to me: Before the Chinese boom, it was cheap steel. Now with the boom and a shortage of metals, it's actually worth more if they melt it down than if they sell it to me to fix my truck.

One word: Highway Robbery!

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I'm not sure that the casting processes are up to making that high grade stuff, so it might be more than just a metal boom, it could be that they have to be manufactured stateside.

Last year, I found out about an outfit called "Frozen Rotors". They test the junk rotors coming from China (includes a lot of impurities) and take the ones up to spec, then they put them through their freezing process to harden them.

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Cryogenic treatment of metals to improve their performance characteristics is quite interesting. Very good article on the subject from an old Popular Science magazine.

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Get in touch with Ray at Old Car Parts Northwest. Tell him Dan Stern sent you.

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http://www.policyalmanac.org/economic/archive/manufacturing_employment.shtml

Tyler Cowen (I think) was just writing on his blog about how "manufacturing is not special" and that it is a mistake to fetishize it. It's not clear just how many jobs have been "lost" relative to what would happen in a more protectionist scenario. The sector was probably fated to shrink in any case due to increases in per-worker productivity.

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Well, manufacturing has been special, in this country. For one thing, it has been the backbone of organized labor. Now, one can hate on unions all one wants, but they were arguably at the core of lifting living standards, work conditions, and generally creating a relatively well-off middle class.

Of course, to Tyler that is "nothing special". No surprise there.

Now, that said, one doesn't have to be a goods-driven nation to be successful. But, with 320 million people, we are not Switzerland or Lichtenstein.

On paper, sector productivity gains look like they trade off with less employment. In practice, however, that is seldom true. One goes through this every so often as the next generation of spoon fed rightwing economist try to come up with reasons for falling jobs figures.

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Also, in that vein, we now have a growing Service Workers Union.

Now, the hopes for that cannot be that high. For one thing, the prospects of productivity gains in, say, the health care industry are small, without fundamental changes to our whole treatment orientation.

Even still, doctors and nurses can only see so many patients. No one is going to invent a machine that lifts a bed ridden patient, checks and addresses bed sores, changes the sheets and a bed pan, etc. On the other hand, the search for manufacturing efficiencies is relentless and, historically, more fruitful. Historically, workers have shared in that.

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ednixon.livejournal.com

The more interesting thing about this post is the XM Radio 'Road Dog Truckers' channel. Is it like CB radio channel 19 ?

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