You are telling me that the capability to buy more stuff makes you richer, but that being able to buy more stuff doesn't make you richer; or that the capability to buy less stuff makes you richer as long as you handwave it right. Do you understand why this is ludicrous?
every year the people of China are getting richer, and the people of the United States are now getting poorer.
Every year, the purchasing power per individual American is going up. How is capacity to work the same hours and purchase more "getting poorer"?
You know China has the biggest parliamentary body in the world? People tell me we can't have 1,000 Representatives in Congress because it would be a mad house; China has 2,980.
Those 2,980 are elected. Their elections are ridiculous: people elect local officials, who then elect officials in broader assemblies, and so forth, equivalent to how the US used to elect the Senate (and US elections today are largely controlled by Central Committee, notably in the Democratic Party, by way of influencing voters).
Wal-mart explicitly encourages brands to make lower-quality versions to sell at their stores for a lower price, capitalizing on the brand name recognition
If they're labeling these as the same product and yet they're different, the FTC should put a boot in somebody's ass.
As I mentioned: they have the same brand products of food in their grocery area (plus really horrible store brand). It's clothing, blankets, and kitchen wares (plates, cups, utensils) that are often vastly-inferior--anything that's generally a minor purchase, something people don't think about what to buy but just that they need to buy it. They definitely pressure those suppliers for cheaper goods.
This is super obvious. A direct and rational cause and effect.
It's only as obvious as that mice are spontaneously created by the conditions of placing grain wrapped in a shirt. People believed that for a long time; they reasoned that they saw no mice, then there were mice, thus the mice must have been spontaneously created. Where there is grain, there are mice--they don't come, breed, and spread, but rather appear from the ether.
Your information is limited, and your conclusions are thus imprecise. What happens if you compare trade deficits to unemployment? And no, the conclusion is not that a falling trade deficit causes rising unemployment, either, even though the chart appears to show that (the correlation is the other way around: less capacity to buy, thus less importing).
If Paul CREATES and sells $50 of potatoes in a primary industry, but BUYS $60 of mexican melons, where's the fucking wealth going?
This is a micro-economics question. Paul is of course operating on credit.
Shut down trade and Paul would then have to buy $120 of US melons or something.
It's more that, between Paul, Mike, and Brian, the US CREATES and sells $60 of potatoes, and CREATES and sells $120 of melons. In doing so, they exercise 6,000 hours of US productive labor.
Instead, Paul CREATES and sells $60 of potatoes. Meanwhile, people IMPORT $60 of Mexican melons. Now Mike and Brian have 4,000 hours to expend on CREATING chairs or wheat or cars.
There's an interesting issue here: the US consumers can now spend $60 on US goods and purchase 2,000 hours of labor (yeah it's like, 1790, no inflation yet). That can employ Mike but not Brian.
Here's the thing: people retire somewhere between 66 and 74. Jim was going to retire at 74, but he's got his Social Security going on (just ignore the anachronism) and a technological change has improved the farm work for keeping cows. Jim could go fight with Brian for that new chicken farm job that's opened up since folks are buying more eggs with the money they're saving on milk, but he retires at 72 instead of trying to get a job for the next 2 years.
Now Paul, Mike, and Brian all have jobs; Jim retired.
This is actually a hell of a lot more complex today: we bring in nearly 300,000 H-1B Visa permanent workers each year; college students go to grad school or drop out based on job availability; and, again, you've got the whole thing with people not retiring exactly at 66 1/2. You also have some funky thing that caused something called "Baby Boomers" that one time, where continued high employment availability leads to continued population growth until the job market slows down; the opposite is also true.
Long story short, we have high labor force participation and low unemployment. Our labor markets have shifted around structural change and continue to do so. Meanwhile, we all get more for every hour we work.
I explicitly said our economy is growing enough that it's not a problem. You talk a lot but you don't listen well.
Sorry, I assumed too much about your knowledge of macroeconomics. Let me remedy this.
Economies grow in two major ways. The lesser growth effect is the accumulation of factors of production: more population, more factories, and so forth. That kind of growth doesn't increase standards of living; it only increases GDP. In numerical terms, GDP-per-Capita and GNI-per-Capita stay the same.
The other type of growth is structural change. Structural change involves technical progress (the wooden shipping pallet eliminated 92% of labor in loading and unloading goods d
The very definition of inferior goods is that demand decreases when wages increase, which has overlap with, but is not the same as, cheaper goods.
Yes, and "when wage increases" is an important but imprecise concept. The difference is really that people would like to buy a nicer thing, but it's expensive; whereas cheaper goods which are not inferior are rationally-preferable even when you have unlimited money.
My point is that now you can afford a $100 backpack; but if you buy the $20 backpack, you can afford nicer food instead of GreatValue (WalMart) brand shit. You'll probably opt for the shitty backpack and clothes, for reasons stated above about their useful lifespans being cut short by your kids growing up, as well as for reasons that your buying power is still compacted and you can extend your standard-of-living by buying more goods or other less-inferior goods.
For people to cease buying those inferior goods, they have to become wealthy enough that the economic consideration of a $5 can opener over a $15 one is not whether they can spend the other $10 on something else, but whether the $10 can opener is nicer. So long as you have to think about every purchase, you're going to buy the cheapest shit you can get (unless you get Vimes's Course on Personal Budget and Finance).
hey are socially seen as basically the worst place to shop, and people may shop at other places just to avoid Walmart employees and customers, if they are economically capable of doing so.
I know plenty of people who go to WalMart even though they make six-figure salaries. They're a combination of poor purchasing decisions and habit. WalMart is convenient: groceries, clothing, ammunition, fishing tackle, and blu ray players all in one place. Most of their stuff is brand-name goods you can get anywhere else, so shopping at WalMart can easily result in the same products purchased as if you shopped anywhere else.
I've never understood the mentality of people who get bored, so go to WalMart just to walk around, and maybe buy something, maybe not. I don't spend a lot of time in stores; I have a thing I need, I go in, I buy all the things I need, and I leave five minutes later. Apparently WalMart is a place some people want to go when they're bored of being home, though, so whatever.
Sure, but that's outside the control of this branch of economics. Economics in general is concerned with achieving the most ends with the least means.
In behavioral economics, those sorts of things are addressed by people forming governments to protect those things they call natural rights. You may notice a problem: people decide their vote doesn't matter, and don't vote. People also can't all be experts in everything that's happening, so we must vote in people who specialize in doing this (politicians are basically paid consultants who are supposed to represent our needs and desires in a time-consuming exercise requiring knowledge we don't have time to acquire).
Those societies then form the framework of rules within which we attempt to form strategies to achieve the greatest ends with the least means. It's more-efficient to let a dictator run everything, although the dictator may decide that certain things are better a certain way, and then you have to deal with those consequences--which inevitably mean insecurity. In a way, representative democracy attempts to avoid the severe damage of such dictatorships's failure modes while giving up the advantages of the occasional benevolent genius dictator who might actually solve the world's present problems immediately; and, being well-aware of the difficulty in locating such a benevolent dictator and the high likelihood that one is out there somewhere at all times, we go so far as to remove all emergency provisions allowing us to leverage such a thing now and then so as to avoid the inevitable outcome of instilling a tyrant who talks nice.
Higher wages across the board would be detrimental to WalMart if and only if the class of people earning those wages were more-interested in less-inferior goods than in lower prices. If the minimum wage pushes prices up at WalMart and its competitors, WalMart's business strategy is contingent on people deciding they like WalMart's lower prices.
WalMart doesn't just sell inferior goods. I'm not entirely sure what's different about clothing bought at WalMart versus Sears, at a glance; and besides, your kids are going to outgrow them in a year anyway. They have groceries. They have toys. They have a lot of the same brand products as everywhere else. They have school supplies that nobody cares about anyway (remember getting a new $15 backpack every year? Pencils? Paper?) which are inferior to high-quality $130 Ogio backpacks. They have computers and cell phones and video games. You can buy a Mossberg 505 Assault Shotgun at WalMart.
WalMart also carries some no-name junk like plastic cups and shitty pillows.
WalMart makes their entire business on low prices, at a 3% profit margin (impressive). They've said they're neutral in minimum wage; they seem to support it, some say because a higher minimum wage will crush WalMart's small competitors.
Higher wages will inevitably lead to higher prices. It's not by much, but it's there. A $2 raise is about a 10% price increase on average--$20 pants become $22 pants--and they don't want everyone running to Target, causing loss of WalMart jobs, gain of Target jobs, and disruption for working families.
A minimum wage increase would cause a wage increase at WalMart and Target, causing the associated price increases. Structurally, nothing changes: WalMart still has lower prices, even if those prices are slightly-higher. Any impoverished Target employees shopping at WalMart are still shopping at WalMart, are better-paid, are paid more than enough to offset the price increases themselves, and so funnel more money into WalMart (so they can keep their same profit margin without as much of a price increase). WalMart gets richer.
It's WalMart's 3% NOP that gets me. That's insanely-low; it's impressive, to say the least. Adidas Shoes has 5%; about 8% is reasonable, just by being a common baseline; Comcast usually has 11%; and Microsoft and Apple hold above 20% NOP. I support a fair corporate income tax with a higher tax rate when the corporation's NOP is above reasonable levels; that generally means WalMart gets a tax cut and Apple gets to pay 48%. I don't honestly have a problem with this.
it's not falling apart, just hemorrhaging wealth to other nations. Specifically China. But the economy is growing so we can live with a half trillion open wound every year.
A half trillion dollars of imports is not our nation becoming poorer. We aren't shipping our wealth out. We're working our labor to efficiently produce, and trading that efficient production for production which is done more-efficiently (lower cost to us) elsewhere.
We can make 20 million tonnes of potato and 10 million tonnes of melon with equal exercise of labor (cost). Mexico can make 10 million tonnes of potato and 20 million tonnes of melon with the same labor. Instead, we make 30 million tonnes of potato, Mexico makes 30 million tonnes of melon, and we trade a third of our potato for melon. Now, instead of exercising the labor to make 40 million tonnes of potato (US) or melon (Mexico), we're exercising the labor to make 30 million tonnes of either and trading 1/3 of it. That means 25% of our potato-melon labor can go on to farm wheat or cotton, or transition into manufacture (the evil that destroyed America's good agricultural heritage) or IT, medicine, and services (the evil that destroyed America's good manufacturing heritage).
In other terms: we're spending $2 billion on 20 tonnes of potato and $2 billion on 10 tonnes of melon; now we're spending $2 billion on 20 tonnes of potato and $1 billion on 10 tonnes of melon (basically, we bought that other $1 billion of potato and traded it for $2 billions of melon). We've got $1 billion lying around to spend on other stuff.
So here's the thing: what if potato isn't a thing? What if Mexico has their own potato, and sells us melons?
Well, instead of spending $2 billion on 10 tonnes of melon, we spend $1 billion to have that 10 tonnes imported. We still have $1 billion of spending money lying around to spend on other stuff.
All of these melons need to be shipped, sold, and so forth as well, along with anything else we buy. Shipping, of course, got more efficient (the wooden shipping pallet turned 48 hours of labor into 4 hours); and IT services like Spotify and Netflix deliver over a highly-efficient data pipe (Internet download).
The Marxist dream is to wall off Mexico and force a handful of people to work to make melons while the rest of the consumer base pays twice as much for melons, remaining poor.
The Keynesian reality is that our labor force expands to meet carry capacity for jobs, created by consumer demand, and this slowing of expansion results in that same "natural unemployment rate" under economic conditions (it's 5% in the US, and I'm trying to pin us to the 2-3% full employment rate) whether you're a poor nation with no trade or a wealthy nation importing a lot of stuff cheaply instead of making it inefficiently.
The whole idea that you must be bleeding money because you're importing more than you export is economics as a zero-sum game. It's a world where technology doesn't exist and babies are instantiated by God snapping his fingers and having the Stork deliver them on his schedule.
Pretty much anything the buying is willing to pay for is a net-wealth gain
It's only a net gain if you're getting at the same quality as you would otherwise but with lower price (or cost, I guess, since your price is labor trade... it gets complex here). People are rational, but not knowledgeable: a lot of sellers make their living by convincing people a low-quality good is better than a high-quality good, and inverting price (you pay more for less because it says Sony Vaio or Apple on the tin).
it's a real fucking kick in the teeth to the previously middle class factory workers, or those expecting that lifestyle. Certainly a contributor to the growing GINI coefficient.
Sort of. Technology does the same thing as trade: it creates structural change. Your GNI-per-Capita goes up--we're richer on a per-
If I were a better fundraiser, I'd probably be sitting on an easy win.;) People seem to know who I am wherever I go, though, which is uh. Interesting. Now the question is do voters know who I am?
If you like reading economics lit, I'm pulling in data from the Nordic model among other places. There's another book on the same topic. I don't always agree with their conclusions, and sometimes they don't make conclusions (e.g. they point out that indefinite unemployment insurance is easy to game and that people stay on it not-as-long when it's limited to 2 years, and also point out that this doesn't necessarily mean more employment because these people may be trading into jobs other people were getting and so the unemployment rate can stay the same either way--a deficiency I've commented on in our 6-month system here: it relies on people floating in and out, not on reducing actual unemployment).
You forgot to mention that while some goods can be bought more cheaply you also see your wages fail to keep pace as has been the case since the 70's.
Working 40 hours and being able to buy more means your wages are keeping pace with your cost-of-living increase.
That said, so long as you're not arguing that wages (other than the minimum wage, which needs government support) are falling or remaining stagnant, you're not wrong; with a 10% increase in average purchasing power, you can have everyone's purchasing power go up by 5% and they're all still...well, richer. They're also lagging behind.
I've actually suggested a completely-new approach to tax and income policies which ties minimum wage to 1/4 the GNI-per-Adult ($10.20 in 2018 based on a policy I wrote) and effective tax rates to the GNI-per-Capita and some equivalence scale magic (it's a straight-forward process, but tedious to explain; being straight-forward makes it less-complex, but having some math involved makes it slightly-annoying).
That all essentially means your taxes go down if you don't get a proportional share of the productivity (if it goes up 10%, your income goes up by inflation, then goes up by 10% from there, and you pay exactly the same effective tax rate at that point), and the minimum wage also goes up in proportion to productivity growth (except it never goes down). That maintains the structural foundation, and doesn't force the structure into a given shape above that--except it sort of prevents it from becoming more bottom-heavy (or at least resists).
The per-capita income is about $59,000 and the per-Adult income is about $86,000. You need some structure below to have structure above, but the people at the bottom shouldn't be immobilized by poverty or completely unable to care for themselves. When that center point moves, the people at the bottom should move along with it: the entire structure should shift forward instead of simply elongating, and the bottom should shift forward in the same proportion as the center.
Generally represents lower of our consumer expense share each year; caveat: we eat more out-of-home, and food out-of-home is food plus paying for a time-share of servants to cook and serve and clean for us, which is more than just food.
Construction costs
Screwing around with international trade and making oil more-expensive has been a part of it; the bigger part has been running down mortgage interest prime rates, causing home prices to run up so the monthly mortgage payment is the same (which pins consumers to their mortgage, whereas a high prime rate market with depressed home values enables consumers to put little extra payment into their mortgage and avoid large amounts of interest costs).
Since you absolutely must pay 2-3 times as much of the cost of the house to buy it, we can charge 2-3 times as much for the same house if we build it, and so construction workers can run up their labor prices and take a big chunk of that, too. Want home improvement? That guy could be building a house for twice as much; you better up your hourly offer or he's not fixing your bathroom.
That's still not the whole story. It's huge and complex and annoying because of how the housing market works (it's not strictly a production market, but mostly a market of trading family heirlooms).
Sure. The main problem with the fallacy is it costs more to produce crap at exactly the same quality in the domestic nation than in the foreign trade partner; and producing at a higher quality is also cheaper in the trade partner nation than doing so domestically. You get cheap crap because people buy cheap crap and sellers are trying to undercut each others's prices in a world where consumers don't care about quality comparisons.
No, you're right; it's just that things like Cordoba Guitars are made in China, Fender Guitars are often made in Korea, high-end bicycle frames are made either by Trek or in China, high-end bicycle components were made in China or Japan until SRAM moved from China to Taiwan in 2016, and so forth.
Logitech? China. Apple? China. CISCO? China. Intel? USA. Oxo Good Grips, some of the best-made kitchen tools I've seen? China. Breville, some of the best kitchen appliances? Designed in Australia; manufactured and assembled in China. KitchenAid? Manufactured around the US, with a lot of higher-end products manufactured in China, and the final assembly for all stand mixers done in the USA so they can sort of claim all mixers are "made" in the USA.
WalMart actively pressures their suppliers to reduce costs or get out. When they hit a cost wall, WalMart pressures them to manufacture in China. WalMart's entire business model is basically selling cheap crap.
Sometimes, I really just like to point out that a question was in similar vein to "what if your stomach ruptured? You still need a way to get nutrition into your body." A nutrient IV might do that; however, if your stomach ruptured, you'd be dead.
In Nordic nations, they use collective risk sharing--generally social insurances like unemployment and disability insurance--to handle structural change.
Basically, you get wealthier by improving technology or trade, which means you expend fewer resources (ultimately, labor) in total to achieve the same ends (that's basically what economics is: people economize, which means they try to expend the least means for the most ends). This brings structural change: you need fewer workers somewhere, so you shift around the position of your employments (a factory town might collapse here or there; people lose their jobs, other people gain jobs, and you end up net-even on jobs before population growth).
Structural change has winners and losers; typically, you're looking at less than 0.1% of your workforce being the losers--if you lose 50,000 jobs in a particular exchange, that's 0.03% in America, and the secondary impacts might bring it up to 0.1%. So 99.9% of your consumer base is better off, and they're better off by so much that the winners can compensate the losers and still be way ahead. That's collective risk sharing.
In Norway, they've taken this so far as to have a fund preparing for the eventual global decline of oil demand. Norway is a big oil exporter, and renewable energy is the future. It makes sense, then, for workers and corporations to pay into a sort of fund that will then allow the government to manipulate the structural change and rebuild Norway's economy so as to restore order and protect the losers in this exchange when it comes. In theory, you'd want to diversify your holdings in some manner immune to national collapse, such as by holding a debt portfolio spread between various nations and thus being protected against a global recession that more-heavily impacts some than others (see: Greece, Italy, Spain).
I've suggested a sort of Universal Dividend in the United States, largely because you can build one under 2016 tax laws without creating new deficits, cutting services, or increasing tax burdens. It's a strange and complex shuffle: I restructured Social Security on top of the Dividend (retirement and disability bridge the gap between the Dividend and their payments as would otherwise be obligated under current rules), and the taxes are offset by the Dividend in theory as a rolling tax refund (pays twice-monthly, so a slightly-higher tax rate as you go through the middle classes turns into a slightly-lower tax rate when you count the Dividend as a tax refund).
The funding structure for this Dividend is a separate FICA tax on all personal and corporate income. It's 1/8 (12.5%), and in 2016 would have paid every adult in the United States a total of $6,700 in twice-monthly payments of $280. That has the largest proportional impact on the poorest, and has a large localized impact in areas of concentrated poverty: an increase in consumer spending creates a need for labor to keep up, or else your stores simply can't stock and sell goods fast enough. That's essentially similar to Keynesian Stimulus, like the one Barack Obama used to stop the 2008 Great Recession (remember getting a $300 check in the mail?), but always on.
This type of direct-cash risk share is similar to both a social insurance and a universal basic income. Every time productivity increases, the Dividend increases in the same proportion--it's profit sharing (= dividend) of the whole of wealth creation. Because of the localized-poverty concentration effect above, it provides interesting protection--more as more is needed--against things like automation (technology), outsourcing (trade), and immigrant labor (also trade, but they spend their income here). It does this, of course, by sharing the benefits of those things.
You can buy the same low-quality trash made by an American, but for a 20%-40% higher price, and so can work longer hours and buy fewer things.
Alternately, you could buy a higher-quality American-made good--although many companies have China make those higher-quality goods as well, and they also cost less than an American manufacturer can achieve at the price point.
Really, there's so much low-quality trash because people see two can-opener-shaped objects, one for $3 and one for $15, and reason they're the same object. One lasts 20 years and one lasts 20 uses, but they buy the cheap one every time. The more-expensive one requires a more-expensive die-cast process, better quality control, higher-quality metal, and so forth, so you're not going to get it for $3.
Look at the highest-quality goods you own. Most of those are also made in China.
So you don't buy a new TV and instead buy a new pair of shoes to replace your worn, failing ones. You buy nicer food. You insulate your house better (and save more money, thus able to buy nicer things).
I still have a OnePlus One. I wish the 5t didn't have round corners and the 6 didn't have round goofy corners and rabbit ears.
I also wish it wasn't so expensive to pay people to clean and maintain my lawn--or that I had more money and cared more about paying people to do that than about buying anything else.
Who are you, really, to tell anyone how to live? Are they wrong for buying XBox over the functionally-superior Sega Dreamcast and killing one of the greatest not-Nintendo game console producers every to exist?
No you don't. Productivity is the amount produced per person (or per working-hour, depending on context). Population growth to carry capacity is unchanging productivity; population growth stops at carry capacity because productivity decreases when you exceed your maximum technological production rate and start pulling excess labor per unit produced.
there's the folks who want to keep economic and physical resources on hand and maintain and develop manufacturing capability to ensure self sufficiency.
That's not quality-of-life; that's your local economics market. Back before manufacturing was big, America had this huge dialogue about how evil manufacturing was encroaching on the good American way of life where 90% of the workforce was in agriculture.
Quality-of-life is how people live, not how your nation's means of production are composed. It's about the people. It's about being able to eat, about being secure and not becoming homeless, and about having access to hygiene and medical care and social mobility.
On one side, what happens if international trade goes to hell?
Your nation has already fallen.
If we lose stable electricity for a day or two, our entire logistics system falls apart. We rely so much on communications and on shipping from town to town--much less across the states or to other nations--that we can't even keep stores stocked without trucks showing up every single day. After five days of high-speed communications being down across the nation, this nation isn't recovering; it's already over, the Constitution is no longer and shall never again be in force, and there is no capacity to maintain order and domestic tranquility.
Trade with other nations is a mechanism of stability. It gives us allies who are vested in helping us stay in one piece, and severely reduces the likelihood of war because neither side could sustain it.
why live like a Great Depression survivor when that crisis may never come?
In which case your isolationist nation is getting invaded by someone with the military prowess of Canada.
As with most things, the most successful strategy is probably a middle ground between the two extremes.
That assumes either side is an extreme, rather than that we're simply not leveraging mechanisms we should use. Holding your breath every 60 seconds could be said to be a middle-ground between breathing and not breathing when faced with, for example, air pollution.
Owning things doesn't improve your standard-of-living, unless you base the quality of your life on how many material things you own.
You work 40 hours. You trade that labor for things. You can get a limited amount of stuff in trade--that's purchasing power.
Food. Housing. Clothing. Your car. High-speed Internet. Healthcare. These are things for which you need buying power.
Lowering the cost of goods and services means your purchasing power extends further: instead of choosing between a car and healthcare, you can have both.
Literally nothing else is standard-of-living except what you can buy for your time worked.
True, although we prohibit the sale of pirate IP here, so they can't export their stolen IP to America (and other countries operating under certain international treaties). Strengthening these international IP agreements was one of the big things for which people attacked the TPP: we don't like the Berne Convention (I'd rather limit copyright to 14 years, or some such).
My point is importing cheap stuff from China actually makes our economy more-powerful and raises our standards of living. People think it just means jobs go away and we get poorer somehow.
Yes, he wants to be the exporter--the one threatened in the trade relationship by the capacity of the importer to just go to the next country over and pull the plug on your economy--so he's willing to harm America by reducing the benefit we get from lower-cost goods.
Slashdot Mirror
Investing and selling stuff makes you richer
You can't eat money.
You are telling me that the capability to buy more stuff makes you richer, but that being able to buy more stuff doesn't make you richer; or that the capability to buy less stuff makes you richer as long as you handwave it right. Do you understand why this is ludicrous?
every year the people of China are getting richer, and the people of the United States are now getting poorer.
Every year, the purchasing power per individual American is going up. How is capacity to work the same hours and purchase more "getting poorer"?
You know China has the biggest parliamentary body in the world? People tell me we can't have 1,000 Representatives in Congress because it would be a mad house; China has 2,980.
Those 2,980 are elected. Their elections are ridiculous: people elect local officials, who then elect officials in broader assemblies, and so forth, equivalent to how the US used to elect the Senate (and US elections today are largely controlled by Central Committee, notably in the Democratic Party, by way of influencing voters).
Wal-mart explicitly encourages brands to make lower-quality versions to sell at their stores for a lower price, capitalizing on the brand name recognition
I often see stuff that's also at WalMart; but your point is interesting.
Sony XBR55X800E at Best Buy and WalMart. Same with various models in stock at the store just up the street from me right now.
If they're labeling these as the same product and yet they're different, the FTC should put a boot in somebody's ass.
As I mentioned: they have the same brand products of food in their grocery area (plus really horrible store brand). It's clothing, blankets, and kitchen wares (plates, cups, utensils) that are often vastly-inferior--anything that's generally a minor purchase, something people don't think about what to buy but just that they need to buy it. They definitely pressure those suppliers for cheaper goods.
This is super obvious. A direct and rational cause and effect.
It's only as obvious as that mice are spontaneously created by the conditions of placing grain wrapped in a shirt. People believed that for a long time; they reasoned that they saw no mice, then there were mice, thus the mice must have been spontaneously created. Where there is grain, there are mice--they don't come, breed, and spread, but rather appear from the ether.
Your information is limited, and your conclusions are thus imprecise. What happens if you compare trade deficits to unemployment? And no, the conclusion is not that a falling trade deficit causes rising unemployment, either, even though the chart appears to show that (the correlation is the other way around: less capacity to buy, thus less importing).
Some folks have studied this in other nations, and written interesting things about such.
If Paul CREATES and sells $50 of potatoes in a primary industry, but BUYS $60 of mexican melons, where's the fucking wealth going?
This is a micro-economics question. Paul is of course operating on credit.
Shut down trade and Paul would then have to buy $120 of US melons or something.
It's more that, between Paul, Mike, and Brian, the US CREATES and sells $60 of potatoes, and CREATES and sells $120 of melons. In doing so, they exercise 6,000 hours of US productive labor.
Instead, Paul CREATES and sells $60 of potatoes. Meanwhile, people IMPORT $60 of Mexican melons. Now Mike and Brian have 4,000 hours to expend on CREATING chairs or wheat or cars.
There's an interesting issue here: the US consumers can now spend $60 on US goods and purchase 2,000 hours of labor (yeah it's like, 1790, no inflation yet). That can employ Mike but not Brian.
Here's the thing: people retire somewhere between 66 and 74. Jim was going to retire at 74, but he's got his Social Security going on (just ignore the anachronism) and a technological change has improved the farm work for keeping cows. Jim could go fight with Brian for that new chicken farm job that's opened up since folks are buying more eggs with the money they're saving on milk, but he retires at 72 instead of trying to get a job for the next 2 years.
Now Paul, Mike, and Brian all have jobs; Jim retired.
This is actually a hell of a lot more complex today: we bring in nearly 300,000 H-1B Visa permanent workers each year; college students go to grad school or drop out based on job availability; and, again, you've got the whole thing with people not retiring exactly at 66 1/2. You also have some funky thing that caused something called "Baby Boomers" that one time, where continued high employment availability leads to continued population growth until the job market slows down; the opposite is also true.
Long story short, we have high labor force participation and low unemployment. Our labor markets have shifted around structural change and continue to do so. Meanwhile, we all get more for every hour we work.
I explicitly said our economy is growing enough that it's not a problem. You talk a lot but you don't listen well.
Sorry, I assumed too much about your knowledge of macroeconomics. Let me remedy this.
Economies grow in two major ways. The lesser growth effect is the accumulation of factors of production: more population, more factories, and so forth. That kind of growth doesn't increase standards of living; it only increases GDP. In numerical terms, GDP-per-Capita and GNI-per-Capita stay the same.
The other type of growth is structural change. Structural change involves technical progress (the wooden shipping pallet eliminated 92% of labor in loading and unloading goods d
The very definition of inferior goods is that demand decreases when wages increase, which has overlap with, but is not the same as, cheaper goods.
Yes, and "when wage increases" is an important but imprecise concept. The difference is really that people would like to buy a nicer thing, but it's expensive; whereas cheaper goods which are not inferior are rationally-preferable even when you have unlimited money.
My point is that now you can afford a $100 backpack; but if you buy the $20 backpack, you can afford nicer food instead of GreatValue (WalMart) brand shit. You'll probably opt for the shitty backpack and clothes, for reasons stated above about their useful lifespans being cut short by your kids growing up, as well as for reasons that your buying power is still compacted and you can extend your standard-of-living by buying more goods or other less-inferior goods.
For people to cease buying those inferior goods, they have to become wealthy enough that the economic consideration of a $5 can opener over a $15 one is not whether they can spend the other $10 on something else, but whether the $10 can opener is nicer. So long as you have to think about every purchase, you're going to buy the cheapest shit you can get (unless you get Vimes's Course on Personal Budget and Finance).
hey are socially seen as basically the worst place to shop, and people may shop at other places just to avoid Walmart employees and customers, if they are economically capable of doing so.
I know plenty of people who go to WalMart even though they make six-figure salaries. They're a combination of poor purchasing decisions and habit. WalMart is convenient: groceries, clothing, ammunition, fishing tackle, and blu ray players all in one place. Most of their stuff is brand-name goods you can get anywhere else, so shopping at WalMart can easily result in the same products purchased as if you shopped anywhere else.
I've never understood the mentality of people who get bored, so go to WalMart just to walk around, and maybe buy something, maybe not. I don't spend a lot of time in stores; I have a thing I need, I go in, I buy all the things I need, and I leave five minutes later. Apparently WalMart is a place some people want to go when they're bored of being home, though, so whatever.
Sure, but that's outside the control of this branch of economics. Economics in general is concerned with achieving the most ends with the least means.
In behavioral economics, those sorts of things are addressed by people forming governments to protect those things they call natural rights. You may notice a problem: people decide their vote doesn't matter, and don't vote. People also can't all be experts in everything that's happening, so we must vote in people who specialize in doing this (politicians are basically paid consultants who are supposed to represent our needs and desires in a time-consuming exercise requiring knowledge we don't have time to acquire).
Those societies then form the framework of rules within which we attempt to form strategies to achieve the greatest ends with the least means. It's more-efficient to let a dictator run everything, although the dictator may decide that certain things are better a certain way, and then you have to deal with those consequences--which inevitably mean insecurity. In a way, representative democracy attempts to avoid the severe damage of such dictatorships's failure modes while giving up the advantages of the occasional benevolent genius dictator who might actually solve the world's present problems immediately; and, being well-aware of the difficulty in locating such a benevolent dictator and the high likelihood that one is out there somewhere at all times, we go so far as to remove all emergency provisions allowing us to leverage such a thing now and then so as to avoid the inevitable outcome of instilling a tyrant who talks nice.
All behaviors are evidently the same behavior.
Higher wages across the board would be detrimental to WalMart if and only if the class of people earning those wages were more-interested in less-inferior goods than in lower prices. If the minimum wage pushes prices up at WalMart and its competitors, WalMart's business strategy is contingent on people deciding they like WalMart's lower prices.
WalMart doesn't just sell inferior goods. I'm not entirely sure what's different about clothing bought at WalMart versus Sears, at a glance; and besides, your kids are going to outgrow them in a year anyway. They have groceries. They have toys. They have a lot of the same brand products as everywhere else. They have school supplies that nobody cares about anyway (remember getting a new $15 backpack every year? Pencils? Paper?) which are inferior to high-quality $130 Ogio backpacks. They have computers and cell phones and video games. You can buy a Mossberg 505 Assault Shotgun at WalMart.
WalMart also carries some no-name junk like plastic cups and shitty pillows.
WalMart makes their entire business on low prices, at a 3% profit margin (impressive). They've said they're neutral in minimum wage; they seem to support it, some say because a higher minimum wage will crush WalMart's small competitors.
Higher wages will inevitably lead to higher prices. It's not by much, but it's there. A $2 raise is about a 10% price increase on average--$20 pants become $22 pants--and they don't want everyone running to Target, causing loss of WalMart jobs, gain of Target jobs, and disruption for working families.
A minimum wage increase would cause a wage increase at WalMart and Target, causing the associated price increases. Structurally, nothing changes: WalMart still has lower prices, even if those prices are slightly-higher. Any impoverished Target employees shopping at WalMart are still shopping at WalMart, are better-paid, are paid more than enough to offset the price increases themselves, and so funnel more money into WalMart (so they can keep their same profit margin without as much of a price increase). WalMart gets richer.
It's WalMart's 3% NOP that gets me. That's insanely-low; it's impressive, to say the least. Adidas Shoes has 5%; about 8% is reasonable, just by being a common baseline; Comcast usually has 11%; and Microsoft and Apple hold above 20% NOP. I support a fair corporate income tax with a higher tax rate when the corporation's NOP is above reasonable levels; that generally means WalMart gets a tax cut and Apple gets to pay 48%. I don't honestly have a problem with this.
it's not falling apart, just hemorrhaging wealth to other nations. Specifically China. But the economy is growing so we can live with a half trillion open wound every year.
A half trillion dollars of imports is not our nation becoming poorer. We aren't shipping our wealth out. We're working our labor to efficiently produce, and trading that efficient production for production which is done more-efficiently (lower cost to us) elsewhere.
We can make 20 million tonnes of potato and 10 million tonnes of melon with equal exercise of labor (cost). Mexico can make 10 million tonnes of potato and 20 million tonnes of melon with the same labor. Instead, we make 30 million tonnes of potato, Mexico makes 30 million tonnes of melon, and we trade a third of our potato for melon. Now, instead of exercising the labor to make 40 million tonnes of potato (US) or melon (Mexico), we're exercising the labor to make 30 million tonnes of either and trading 1/3 of it. That means 25% of our potato-melon labor can go on to farm wheat or cotton, or transition into manufacture (the evil that destroyed America's good agricultural heritage) or IT, medicine, and services (the evil that destroyed America's good manufacturing heritage).
In other terms: we're spending $2 billion on 20 tonnes of potato and $2 billion on 10 tonnes of melon; now we're spending $2 billion on 20 tonnes of potato and $1 billion on 10 tonnes of melon (basically, we bought that other $1 billion of potato and traded it for $2 billions of melon). We've got $1 billion lying around to spend on other stuff.
So here's the thing: what if potato isn't a thing? What if Mexico has their own potato, and sells us melons?
Well, instead of spending $2 billion on 10 tonnes of melon, we spend $1 billion to have that 10 tonnes imported. We still have $1 billion of spending money lying around to spend on other stuff.
All of these melons need to be shipped, sold, and so forth as well, along with anything else we buy. Shipping, of course, got more efficient (the wooden shipping pallet turned 48 hours of labor into 4 hours); and IT services like Spotify and Netflix deliver over a highly-efficient data pipe (Internet download).
The Marxist dream is to wall off Mexico and force a handful of people to work to make melons while the rest of the consumer base pays twice as much for melons, remaining poor.
The Keynesian reality is that our labor force expands to meet carry capacity for jobs, created by consumer demand, and this slowing of expansion results in that same "natural unemployment rate" under economic conditions (it's 5% in the US, and I'm trying to pin us to the 2-3% full employment rate) whether you're a poor nation with no trade or a wealthy nation importing a lot of stuff cheaply instead of making it inefficiently.
The whole idea that you must be bleeding money because you're importing more than you export is economics as a zero-sum game. It's a world where technology doesn't exist and babies are instantiated by God snapping his fingers and having the Stork deliver them on his schedule.
Pretty much anything the buying is willing to pay for is a net-wealth gain
It's only a net gain if you're getting at the same quality as you would otherwise but with lower price (or cost, I guess, since your price is labor trade... it gets complex here). People are rational, but not knowledgeable: a lot of sellers make their living by convincing people a low-quality good is better than a high-quality good, and inverting price (you pay more for less because it says Sony Vaio or Apple on the tin).
it's a real fucking kick in the teeth to the previously middle class factory workers, or those expecting that lifestyle. Certainly a contributor to the growing GINI coefficient.
Sort of. Technology does the same thing as trade: it creates structural change. Your GNI-per-Capita goes up--we're richer on a per-
If I were a better fundraiser, I'd probably be sitting on an easy win. ;) People seem to know who I am wherever I go, though, which is uh. Interesting. Now the question is do voters know who I am?
I might start a lobbying organization and publish a policy handbook whether I win or lose. It may contain some radical ideas.
If you like reading economics lit, I'm pulling in data from the Nordic model among other places. There's another book on the same topic. I don't always agree with their conclusions, and sometimes they don't make conclusions (e.g. they point out that indefinite unemployment insurance is easy to game and that people stay on it not-as-long when it's limited to 2 years, and also point out that this doesn't necessarily mean more employment because these people may be trading into jobs other people were getting and so the unemployment rate can stay the same either way--a deficiency I've commented on in our 6-month system here: it relies on people floating in and out, not on reducing actual unemployment).
You forgot to mention that while some goods can be bought more cheaply you also see your wages fail to keep pace as has been the case since the 70's.
Working 40 hours and being able to buy more means your wages are keeping pace with your cost-of-living increase.
That said, so long as you're not arguing that wages (other than the minimum wage, which needs government support) are falling or remaining stagnant, you're not wrong; with a 10% increase in average purchasing power, you can have everyone's purchasing power go up by 5% and they're all still...well, richer. They're also lagging behind.
I've actually suggested a completely-new approach to tax and income policies which ties minimum wage to 1/4 the GNI-per-Adult ($10.20 in 2018 based on a policy I wrote) and effective tax rates to the GNI-per-Capita and some equivalence scale magic (it's a straight-forward process, but tedious to explain; being straight-forward makes it less-complex, but having some math involved makes it slightly-annoying).
That all essentially means your taxes go down if you don't get a proportional share of the productivity (if it goes up 10%, your income goes up by inflation, then goes up by 10% from there, and you pay exactly the same effective tax rate at that point), and the minimum wage also goes up in proportion to productivity growth (except it never goes down). That maintains the structural foundation, and doesn't force the structure into a given shape above that--except it sort of prevents it from becoming more bottom-heavy (or at least resists).
The per-capita income is about $59,000 and the per-Adult income is about $86,000. You need some structure below to have structure above, but the people at the bottom shouldn't be immobilized by poverty or completely unable to care for themselves. When that center point moves, the people at the bottom should move along with it: the entire structure should shift forward instead of simply elongating, and the bottom should shift forward in the same proportion as the center.
what's happened to the price of food
Generally represents lower of our consumer expense share each year; caveat: we eat more out-of-home, and food out-of-home is food plus paying for a time-share of servants to cook and serve and clean for us, which is more than just food.
Construction costs
Screwing around with international trade and making oil more-expensive has been a part of it; the bigger part has been running down mortgage interest prime rates, causing home prices to run up so the monthly mortgage payment is the same (which pins consumers to their mortgage, whereas a high prime rate market with depressed home values enables consumers to put little extra payment into their mortgage and avoid large amounts of interest costs).
Since you absolutely must pay 2-3 times as much of the cost of the house to buy it, we can charge 2-3 times as much for the same house if we build it, and so construction workers can run up their labor prices and take a big chunk of that, too. Want home improvement? That guy could be building a house for twice as much; you better up your hourly offer or he's not fixing your bathroom.
That's still not the whole story. It's huge and complex and annoying because of how the housing market works (it's not strictly a production market, but mostly a market of trading family heirlooms).
It has slowed down a bit in recent decades. Oddly enough, food and clothing keep going even when the overall trend pauses.
Sure. The main problem with the fallacy is it costs more to produce crap at exactly the same quality in the domestic nation than in the foreign trade partner; and producing at a higher quality is also cheaper in the trade partner nation than doing so domestically. You get cheap crap because people buy cheap crap and sellers are trying to undercut each others's prices in a world where consumers don't care about quality comparisons.
No, you're right; it's just that things like Cordoba Guitars are made in China, Fender Guitars are often made in Korea, high-end bicycle frames are made either by Trek or in China, high-end bicycle components were made in China or Japan until SRAM moved from China to Taiwan in 2016, and so forth.
Logitech? China. Apple? China. CISCO? China. Intel? USA. Oxo Good Grips, some of the best-made kitchen tools I've seen? China. Breville, some of the best kitchen appliances? Designed in Australia; manufactured and assembled in China. KitchenAid? Manufactured around the US, with a lot of higher-end products manufactured in China, and the final assembly for all stand mixers done in the USA so they can sort of claim all mixers are "made" in the USA.
WalMart actively pressures their suppliers to reduce costs or get out. When they hit a cost wall, WalMart pressures them to manufacture in China. WalMart's entire business model is basically selling cheap crap.
Yes, Vimes's theory of boots applies. Also, Oxo makes a can opener like that and it's magical.
Sometimes, I really just like to point out that a question was in similar vein to "what if your stomach ruptured? You still need a way to get nutrition into your body." A nutrient IV might do that; however, if your stomach ruptured, you'd be dead.
In Nordic nations, they use collective risk sharing--generally social insurances like unemployment and disability insurance--to handle structural change.
Basically, you get wealthier by improving technology or trade, which means you expend fewer resources (ultimately, labor) in total to achieve the same ends (that's basically what economics is: people economize, which means they try to expend the least means for the most ends). This brings structural change: you need fewer workers somewhere, so you shift around the position of your employments (a factory town might collapse here or there; people lose their jobs, other people gain jobs, and you end up net-even on jobs before population growth).
Structural change has winners and losers; typically, you're looking at less than 0.1% of your workforce being the losers--if you lose 50,000 jobs in a particular exchange, that's 0.03% in America, and the secondary impacts might bring it up to 0.1%. So 99.9% of your consumer base is better off, and they're better off by so much that the winners can compensate the losers and still be way ahead. That's collective risk sharing.
In Norway, they've taken this so far as to have a fund preparing for the eventual global decline of oil demand. Norway is a big oil exporter, and renewable energy is the future. It makes sense, then, for workers and corporations to pay into a sort of fund that will then allow the government to manipulate the structural change and rebuild Norway's economy so as to restore order and protect the losers in this exchange when it comes. In theory, you'd want to diversify your holdings in some manner immune to national collapse, such as by holding a debt portfolio spread between various nations and thus being protected against a global recession that more-heavily impacts some than others (see: Greece, Italy, Spain).
I've suggested a sort of Universal Dividend in the United States, largely because you can build one under 2016 tax laws without creating new deficits, cutting services, or increasing tax burdens. It's a strange and complex shuffle: I restructured Social Security on top of the Dividend (retirement and disability bridge the gap between the Dividend and their payments as would otherwise be obligated under current rules), and the taxes are offset by the Dividend in theory as a rolling tax refund (pays twice-monthly, so a slightly-higher tax rate as you go through the middle classes turns into a slightly-lower tax rate when you count the Dividend as a tax refund).
The funding structure for this Dividend is a separate FICA tax on all personal and corporate income. It's 1/8 (12.5%), and in 2016 would have paid every adult in the United States a total of $6,700 in twice-monthly payments of $280. That has the largest proportional impact on the poorest, and has a large localized impact in areas of concentrated poverty: an increase in consumer spending creates a need for labor to keep up, or else your stores simply can't stock and sell goods fast enough. That's essentially similar to Keynesian Stimulus, like the one Barack Obama used to stop the 2008 Great Recession (remember getting a $300 check in the mail?), but always on.
This type of direct-cash risk share is similar to both a social insurance and a universal basic income. Every time productivity increases, the Dividend increases in the same proportion--it's profit sharing (= dividend) of the whole of wealth creation. Because of the localized-poverty concentration effect above, it provides interesting protection--more as more is needed--against things like automation (technology), outsourcing (trade), and immigrant labor (also trade, but they spend their income here). It does this, of course, by sharing the benefits of those things.
You can buy the same low-quality trash made by an American, but for a 20%-40% higher price, and so can work longer hours and buy fewer things.
Alternately, you could buy a higher-quality American-made good--although many companies have China make those higher-quality goods as well, and they also cost less than an American manufacturer can achieve at the price point.
Really, there's so much low-quality trash because people see two can-opener-shaped objects, one for $3 and one for $15, and reason they're the same object. One lasts 20 years and one lasts 20 uses, but they buy the cheap one every time. The more-expensive one requires a more-expensive die-cast process, better quality control, higher-quality metal, and so forth, so you're not going to get it for $3.
Look at the highest-quality goods you own. Most of those are also made in China.
So you don't buy a new TV and instead buy a new pair of shoes to replace your worn, failing ones. You buy nicer food. You insulate your house better (and save more money, thus able to buy nicer things).
I still have a OnePlus One. I wish the 5t didn't have round corners and the 6 didn't have round goofy corners and rabbit ears.
I also wish it wasn't so expensive to pay people to clean and maintain my lawn--or that I had more money and cared more about paying people to do that than about buying anything else.
Who are you, really, to tell anyone how to live? Are they wrong for buying XBox over the functionally-superior Sega Dreamcast and killing one of the greatest not-Nintendo game console producers every to exist?
No you don't. Productivity is the amount produced per person (or per working-hour, depending on context). Population growth to carry capacity is unchanging productivity; population growth stops at carry capacity because productivity decreases when you exceed your maximum technological production rate and start pulling excess labor per unit produced.
there's the folks who want to keep economic and physical resources on hand and maintain and develop manufacturing capability to ensure self sufficiency.
That's not quality-of-life; that's your local economics market. Back before manufacturing was big, America had this huge dialogue about how evil manufacturing was encroaching on the good American way of life where 90% of the workforce was in agriculture.
Quality-of-life is how people live, not how your nation's means of production are composed. It's about the people. It's about being able to eat, about being secure and not becoming homeless, and about having access to hygiene and medical care and social mobility.
On one side, what happens if international trade goes to hell?
Your nation has already fallen.
If we lose stable electricity for a day or two, our entire logistics system falls apart. We rely so much on communications and on shipping from town to town--much less across the states or to other nations--that we can't even keep stores stocked without trucks showing up every single day. After five days of high-speed communications being down across the nation, this nation isn't recovering; it's already over, the Constitution is no longer and shall never again be in force, and there is no capacity to maintain order and domestic tranquility.
Trade with other nations is a mechanism of stability. It gives us allies who are vested in helping us stay in one piece, and severely reduces the likelihood of war because neither side could sustain it.
why live like a Great Depression survivor when that crisis may never come?
In which case your isolationist nation is getting invaded by someone with the military prowess of Canada.
As with most things, the most successful strategy is probably a middle ground between the two extremes.
That assumes either side is an extreme, rather than that we're simply not leveraging mechanisms we should use. Holding your breath every 60 seconds could be said to be a middle-ground between breathing and not breathing when faced with, for example, air pollution.
Owning things doesn't improve your standard-of-living, unless you base the quality of your life on how many material things you own.
You work 40 hours. You trade that labor for things. You can get a limited amount of stuff in trade--that's purchasing power.
Food. Housing. Clothing. Your car. High-speed Internet. Healthcare. These are things for which you need buying power.
Lowering the cost of goods and services means your purchasing power extends further: instead of choosing between a car and healthcare, you can have both.
Literally nothing else is standard-of-living except what you can buy for your time worked.
True, although we prohibit the sale of pirate IP here, so they can't export their stolen IP to America (and other countries operating under certain international treaties). Strengthening these international IP agreements was one of the big things for which people attacked the TPP: we don't like the Berne Convention (I'd rather limit copyright to 14 years, or some such).
My point is importing cheap stuff from China actually makes our economy more-powerful and raises our standards of living. People think it just means jobs go away and we get poorer somehow.
Bernie Sanders similarly doesn't understand the macroeconomics of trade and thinks a trade deficit is your economy falling apart.
Low-cost imports make the importing nation wealthier. They raise the standard-of-living and cause economic growth.
Yes, he wants to be the exporter--the one threatened in the trade relationship by the capacity of the importer to just go to the next country over and pull the plug on your economy--so he's willing to harm America by reducing the benefit we get from lower-cost goods.
Mostly, he and Bernie Sanders don't understand economics, and they're projecting their failed grasp of macroeconomics onto a nation.
He's going to tax you 25%!