So, the other day I had a conversation with an apparent liberal on the Sodahead website.(You can read it here.) The original question was if Obama was trying to starve us. The question was posed because of the recent aid pledge to Jordan by Obama, including 50,000 metric tons of wheat. All the while, the Army Corps of Engineers are flooding prime farmland to alleviate the pressure from the Mississippi flooding. I believe they started that practice in Missouri earlier. I was bored so I thought I’d pop by and see if I could get into a good discussion. Now, the Sodahead site isn’t known for its cerebral content, I now know why………
Joe: I linked this because its fairly lengthy, but the it was a c&p about the wages of the average Chinese worker and how it would be impossible to compete against them. And here was his concluding statement. “There is a wide variation of pay among industries: textile industry workers averaged about 40 cents per hour (7,268 yuan per year), and garment workers outside of the cities “are paid less than that,” according to Banister
YOU CAN NOT COMPETE WITH CHINA…UNLESS YOU LIVE LIKE THE CHINESE PEOPLE LIVE”
Me: Joe, to a point, that’s true and I agree. So, now, put on your thinking cap and figure out what must be done in order for the U.S. people to maintain and grow our standard of living. (Note: I’m not even addressing the obvious market manipulation keeping the Yuan value down.) This nation has to become more self-reliant. In other words we need more of our own energy and it needs to be cheap. We need to produce our own steel again. We need to make sure our food is cheap and plentiful.
We have to remove the barriers in place that prevent industries from running here. That means, first, the EPA needs to get out of the way. We need to quit worrying about fictional problems such a climate change and little fish. Its going to come down to you or the fish and believe it or not, as irritating as you are, I pick you over the fish. We need to fire up as many coal plants as we possibly can. We need as many hydro-electric dams as we can build. We need nuclear plants. We need the steel mills to fire back up. We need the idiotic, self defeating trade unions to get the heck out of the way. We need to quit burning our food in our fuel tanks. (Food is still one of this nation’s greatest assets and we need to ensure that it remains that way.) we need to drill as much oil as we can suck out of the ground and increase our damned refining capacity, and lastly we need to quit pretending we can have free and fair trade with every 2nd and 3rd world nation. We can’t. (and that’s where your offering comes in.)
Joe, if we don’t do these things, then every state in the union will be forced to make the same choices Arizona is faced with. Worse, so will the federal government. There simply is no money left. We’re going to have to do the things our fathers did. Earn it.
Update! I’ve been playing with the settings on this blog, I’m trying to get it to where once approved for comments, they will simply be posted here, so I don’t have to baby sit everything stated. Bear with me. Thanks.
Joe: PLEASE..If you well not work for the same wages as the Chinese people you can not compete with the Chinese people..VERY SIMPLE you need no charts or graphs.
Me: Joe, remember when I asked you to stay coherent?(This was a reference to a prior, related, but not pertinent part of our conversation.) If we do the things I listed above, we don’t have to compete with them. We’ll have all the things we need right here. Perhaps I wasn’t explicit enough, though I thought I was clear, we need to add some protectionism for the U.S. industry. (That was the “free and fair trade” stuff.)
Joe: NO sorry ..You are 100% wrong.. It is very simple.. The jobs go where the wages are lowest. IT IS THAT SIMPLE..
Me: lol, no, they don’t have to. I’ll explain. As you pointed out, China still doesn’t pay well, so they’re not yet a consumer market. What does it mean to corner a market in China if the people have no disposable income? In the U.S. still, there is great wealth to be had if you can get a significant market share of just about anything. But China still wants to manufacture and sell to us, right? This is where the protectionism comes in.
Let’s say, we have a plant open in the U.S. making widgets and they can sell the widgets for $10 a piece and still make a profit. But, China makes them and even after transport costs can sell the here for $5 a piece. Obviously, the plant in the U.S. would close w/o some protection. Simply add a $5 tariff on all widgets coming in from abroad. Now, each widget costs $10 a piece.(Remember this explanation, there’ll be some humor later.) You see how that works? Now, we’d expect the Chinese to be a bit miffed if we were to do this and they’d retaliate. This is why it is important to have all the resources necessary here in the States. It doesn’t work if we’re reliant upon some other nation for a necessary resource, such as REE(rare earth elements), necessary for the production of all sorts of gizmos such as cell phones, computer parts etc…. Which, we have an abundance of, and we used to have the world’s largest producer in cali, but the mine isn’t functioning right now.
This is how the people of this nation can continue and improve their standard of living. Like I said, we need to rescind NAFTA and other agreements and pull out of the WTO, but it can be done. It has been done before.
Joe: So you say charge everyonre in the United states 50% more..So for say a 500 dollar TV the cost would rise to 1000 dollars..Are we going to manufacture TVs in the USA again?? I don’t think so. but if we did what would we pay the workers ???
(The sequence of the conversation gets a bit muddled here, mostly because of Sodahead’s format, and my posting additional thoughts on the same response from Joe, but I’ll reconstruct the best I can.)
Me: Wages would necessarily increase. But, yes, why not? Zenith made a good TV. Or, we could wallow in self-defeatism, and cheerily hand off our economic strength to China. The point is, we need a livable wage. McJobs don’t cut it. More, as the unemployed and McJobs continue to increase, there are less and less people able to fill the tax roles. This equals less revenue for our state and federal governments. We have the fewer and fewer supporting the more and more, and at some point, we’ll simply not have that ability any longer. Its time to quit playing around. Quit dreaming about a service based economy and start producing things with intrinsic value again.
Me: And, yes, but at least 100% of the $1000 stay here. As opposed to exporting the $500.
Me: I should also explain that this would engage some other dynamics, such as strengthening the dollar, so prices wouldn’t necessarily raise congruent with the tariffs, but rather the value would. The dollar is weak right now because of the debt and the trade imbalance. If we take the steps I proposed, then the trade imbalance would improve significantly and because of the increase of domestic activity, the tax rolls would increase allowing us to pay down some of the debt.
Further, that $1000 that stays here, in part goes to pay the worker, who then uses his money to do the same thing. Which leads to more domestic activity and more tax revenue without have to raise the tax burden on anyone. But, like I said, this only works if we have the necessary resources engaged. We have the natural resources….for the most part, we’d probably still have to import oil, only not near as much. The down side would be everybody would be pissed at us, but they pretty much already are, only their making a killing off of us while they bitch about us.
Joe: Wait why did Zenith leave the United states?? I tought[sic] Republicans said high taxes & wages.. Wages & taxes well never be lower in the USA then they are in China.
Me: Uhmm, taxes are lower here. China’s economy is still communist, but I expect things will change there pretty soon.
And repubs, in as far as my memory can take me are never for higher taxes,(well, they are politicians so you can only trust them so far) although Bush I did raise them in response to dems basically forcing him to sign a budget after a govt shutdown. And, Zenith didn’t as much leave as they were bought out and moved.
Joe: Really So everything would cost at least 50% more ?? So will the wages in the USA go up 50%.. What about real estate?? Homes would cost 50% more and would everything else, NO YOU HAVE A VERY STUPID IDEA.
Me: Joe, I only used the $5/$10 for illustrative purposes. It wouldn’t be like that in all cases. In fact, in many cases, we wouldn’t have to tariff products because of the cost of shipping would exceed the cost of the product. Usually heavier items cost much more to ship, so its cheaper simply to produce them closer to where you want to sell them. And there other considerations. For instance, I work in the utility business. There are a few meter manufacturers. One company, Itron, makes meters here in the states….. Georgia I think. Landis&Gyre make theirs in Reynoso, Mexico….. right across the border. The meters are almost identical in functionality, and, their prices are almost identical. Why its this way, I can only speculate that the owners are taking a larger profit share, but I don’t know that. Still, in that particular case, no tariff would need be placed because the U.S. company and the workers and compete head to head with the other company.
Joe, I’ve enjoyed our little exchange. I know I’ve probably introduced some foreign concepts to you so I’ll let you stew on them for a while. If you’ve any questions, I’d be happy to answer them. Also, while I don’t agree that the idea is stupid, I can’t take credit for it being mine. This has been a common practice in days gone by. Its been successful in some cases disastrous in others. But mostly because the execution of the policy was poorly thought out. But, it would work here in the U.S., because we have the materials necessary. We just need the industries fired back up.
So there it is. I need to note, the conversation will look different when you go to the link, Sodahead gives you the ability to edit your comments after you post. Joe has done this, but not to the point where the gist of the conversation is ruined. This was a strange conversation in that industrializing and protectionism seemed a foreign concept, not only to Joe, but others. I couldn’t help notice that no one jumped in, neither pro nor con. A word about protectionism: I have a particular reflex against it. It goes against my grain. However, given the wages of nations such as China, and our experience with NAFTA and the like, its becoming quite obvious that the U.S. industry will not succeed in an open market/open trade scenario. Sure we can do better with enforcement of our agreements, but the bottom line is, all things being equal, we’ll lose because of the wages. True, there are many other factors going into the success of industry and wages are usually a small percentage of a company’s budget, but it is the most controllable.
But, because this seemed a foreign concept to these people, I thought there could be some benefit to having a post about this and having a discussion about some of the issues brought up. I think, after some refinement, there would be an economic platform that we could advocate. At any rate, any thoughts and/or concerns are encouraged to be voiced. Flames will have an unhappy ending.
Quick question suyts, are you “James Sexton” on WUWT?
Yes Scott, James and suyts are one and the same. Suyts, was all I ever went by in the internet…….. since the 90’s, But Anthony went on one of his rants about anonymous commentators, hence, James Sexton.
Bill Gates comes to mind. Look at how rich he is, starting in his garage. And look at how many people benefited/jobs/money along the line.
and then there’s food. Putting food in cars is stupid. We are still the worlds bread basket. They don’t buy ethanol from us, but they do buy food. Of course, idiot in chief is giving it away.
Thanks Lat, and yes, president Obama is following in a long line of idiots in chief in that they insist on not using one of our greatest assets to our benefit.
I’m actually looking for some specific input in order to clearly articulate some sound fiscal positions. It seems to me, this nation has gotten so far from basic economic and fiscal direction that we can’t, as a nation, even discuss what is productive and wealth generation without getting sidetracked into tangential issues.
There are some good ideas here, but the economy may already be beyond the point of no return. Basically, the problems are insoluble since no one is willing to make the necessary sacrifices. Our system is flawed because politicians only care about getting re-elected and keeping their hand in the cookie jar rather than doing what is right.
The whole economy is probably going to crash big time in the not to distant future. The best hope is things might get so bad that it will trigger a revolution. Then we can start over, learn from past mistakes and do it right the next time.
Andy, thanks for popping by. I share your frustration about our economy, but not your pessimism. I honestly believe that it wouldn’t take much to get this ship righted again. But, I do believe that time is an issue. As to the politicians, this fault lies with the people of this nation. We’ve been way too complacent for way too long. This nation has people more desirous to place blame than fix the problems. Sort of a collective “curse the darkness rather than light a candle” mentality. For people like you and me, its frustrating to watch the continuous train wreck, all the while watching people blissfully board the train. They don’t even know or understand the peril the economic policies place this nation in.
On a side note, just to illustrate the problem, I have a daughter attending a university. She’ll be receiving her bachelors in English lit.(I think this is her form of rebellion) next year. She’s decided to go on and work towards her masters and eventually her doctorate. She will never be required to take even the most basic of economic classes. No micro, no macro…..nade. And we wonder why this nation is full of people that don’t understand that not all jobs are the same as far as productivity and contribution to the GNP.
I got an engineering (and also a science) bachelors degree from a very well-respected college. Despite the tendency for engineers to eventually end up in management positions, no economics courses were required. I did end up taking one…thought micro was simple and logical, but macro really screwed with my head. I never got a good understanding of it, and I wonder if part of that was the way it was intwined with politics.
Probably. It’s really impossible to separate economics and politics. To illistrate the statement, I’ll ask a question. How many people do you know who don’t understand that communism is not a political government idea, but rather an economic one? It’s a fine distinction, but an important one.
Like you state, at the base, economics(micro) is pretty straight forward and simple, but if one is to dig just a little deeper, it can be mind boggling if you let it.
Scott, I guess I let my own personal experience paint a view that wasn’t correct. I incorrectly assumed that most degree holders would have been required to take at least a semester of both micro and macro as I was required to do so, as was my brother. (We both went into the computer science field.)
One learns something everyday!
I read the entire thread at Soda Head, & here’s what I got out of Joe’s end of the conversation…
Chinese workers make less…
We can’t compete…
You are 100% wrong…
You’re an idiot…
TVs will be $1000…
You’re still 100% wrong…
You’re still an idiot.
Hard to argue with that sort of intellect!
lol, yes, you’re right, and like I said, he’s even edited out some of his more rude comments. But, it wasn’t the point of this post to make an arguement with or point out the behavior of Joe. I think we can all discern the type of person I was trying to have a converstation with. But rather, to illustrate the level of understanding of basic fiscal issues the general populous has.
Joe, was well informed. He had a great wealth of information, but he didn’t understand what it meant. And even though I thought I had explained my position clearly, he didn’t understand, nor concieve, what I was stating. And, one could note, that there was only one other person that commented on the economics of the conversation, stating I “had made some good points.” I don’t think the average person reading understood what I was stating. I could be wrong, I hope I’m wrong, but I don’t believe I am.
At any rate, I was hoping for some input to refine the ideas I’ve posited to make a conherent statement, which hopefully can be picked up by some policy makers as a part of a platform. A hope anyway, so feel free to critique or bring up other issues for discussion.
Just some of my opinions on the topic….
I think a major part of this comes down to watered-down and sometimes outright wrong material (especially history) taught in schools today. As an example, most young people today have very little understanding of what the founding father’s beliefs/worldviews were. If a teacher tried to do it correctly in any sort of detail, they might find themselves under fire for not separating church and state. And if one doesn’t understand their worldview, then they won’t get their motivations and what drove them. (This also opens up the doorway for all sorts of historical revisionism by college professors, but that’s a separate issue).
If you don’t know what the country was founded on and why it was founded that way, you have no reason to follow in the forefather’s footsteps. With some improper guiding, one easily walks into an expectation that the state is there to provide for one on an individual basis, which was never its intended purpose.
I agree, on a separate thread at Soda….. something about 10 things that drive conservatives crazy, the very first posit was,
“1. Our history debunks Religious Right mythology: American history stands as a
rebuke to the Religious Right. America’s founders established a secular government with freedom of religion and its necessary
corollary, separation of church and state, built into the First Amendment………..”
So, it was pointed out, that the words “Separation of Church and State” are not in the constitution.
I showed him this John Adams quote,“Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”
Now, I can’t be sure, but I got the feeling that these were foreign thoughts to most of the readers there. Even to many of the ones there to argue for the “religious” side. I assumed these first two facts (words of the Constitution and Adams quote) would have been plastered all over that thread. I only saw Adams quoted by myself and only once a reference to the exact wording of the Constitution.(i didn’t read all of the responses, so they may be there, but….) I’m underwhelmed by the information being provided to our young people and the level of knowledge displayed over there. It is very disquieting in that I believe it is more representative of the general public than say a climate blog such as Anthony’s or Steve’s. So, yes. You’re right.
Well then, I’ll be serious for a moment.
I think you made some very logical points, but as you stated, protectionism “goes against my grain” as well, for reasons ranging from the lack of freedom to choose where I get my products to the consequences it could have on our export market.
Joe’s point that we’ll never be able to compete with the low-wage countries IS true, unless tariffs are huge. I often wonder when buying apple juice for my son, how little the Chinese must pay if picking, producing & shipping juice over 7,000 miles to the US is cheaper than having it done domestically. But his example of Japanese/American cars is horribly wrong. The reason they cost the same is there is a 2.5-10% import duty an vehicles AND the US manufactures are making FAR less profit they they’re Japanese counterparts. The import duty is the main reason the Japanese started opening plants here years ago.
Maybe the compromise would be to tax manufactured goods and let raw materials in to the country tax free. And maybe putting the “tariff” on to the domestic sellers instead of the exporting country. We’ll call it the Wal•Mart tax. Companies can still buy imported goods cheaply, but they have to pony up on sale of said goods.
Combine that with a business tax reform that lets companies take FULL deductions based on profit vs. payroll (ie if a company makes $1M in profit and they carry salaries of $500K they pay taxes based on a gross of $500k) up to balancing at a 1:1 tax to salary ratio. (ie. if Microsoft wanted to pay no tax they would need to carry a payroll of $8B). That would put a few people to work!
Robb, I’m crazy busy today, but be sure to check back, I’ll probably have some questions and some observations regarding your offering.
I will offer my thoughts, but I want to be clear, I don’t consider my thoughts the final word in the discussion and will be open to clarifications and rebuttals.
I agree with most of your premise, but I think you’re missing a factor or two.
First, when you state, “Maybe the compromise would be to tax manufactured goods and let raw materials in to the country tax free. And maybe putting the “tariff” on to the domestic sellers instead of the exporting country. We’ll call it the Wal•Mart tax. Companies can still buy imported goods cheaply, but they have to pony up on sale of said goods.”,
I’m assuming you’re speaking of taxing the goods manufactured here. I’m not sure that is what would help us at this moment. I wish to encourage manufacturing here, not discourage, as an additional tax would. Also, I’m not sure what raw materials you are referring to, I believe the U.S. has pretty much all the raw materials that we need. I could be wrong in that I haven’t investigated the recent material needs for various types of production, but back in the 80s we pretty much had all that we needed. Also, taxing at the end of production, seems to me, is basically an additional sales tax to the consumer. This would discourage economic activity rather than simulate it.
One of the factors which I believe you are missing is the fact that the U.S. is still the worlds largest consumer base. Again, this is one of our greatest assets. Regardless if the tariffed nations gets angry and retaliates, they will still want to sell their wares here. We are the ones that buy. I guess, what I am asserting, is that we don’t need the rest of the world, the rest of the world needs the U.S. We feed them. We buy their wares. We have iron, coal, and bauxite. REE is plentiful here, we just don’t mine it. We have oil and natural gas. We just don’t drill enough of it. We still have one of the worlds largest workforces, and can get as much labor as we need. (Or even want.) The forestry industry? We got it. Fisheries? Yep. Let’s not forget food production. Is there something beyond our shores that we need?
When we buy imported goods, that money leaves the U.S. It doesn’t come back. Even if we buy something produced here at double or triple the cost, the money stays here and is moved around to the benefit of all the citizens here. As far as choice goes, I’m not advocating any monopolies or government run enterprises. I would imagine, if the above actions I’ve advocated were implemented, we’d have more start-up investment than we could imagine.
Any way those are my thoughts for a start.
That last idea of yours is particularly interesting and makes a lot of logical sense. Remember, the govt still gets their come via the income tax of said individuals…
The problem with your self-sustaining U.S. isn’t a logical or fundamental one…it’s one of actually putting it into practice. The problem is induced by the way the current generation is educated…simply: other countries=good (particularly Europe), while U.S=bad. They are led to think the U.S. is backwards and we need to be more like foreigners and intermix with them more, not less. Thus, while your idea might work with people such as yourself, there’d be a rebellion from a lot of people if it was tried in reality.
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What is the best search engine http://google.com or http://yahoo.com?
UHMM, neither. Google is biased so as to not show you proper results. Yahoo, …….not so much, but I think they’re using the same algorithms as Bing, though Bing seems a bit more comprehensive than Yahoo. Ask is fair, but wanting…………. thanks for coming by and asking such an impertinent question.
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