I'm all for free education, but unfortunately this also means throngs of people going to University for the social playground, for basket weaving classes, and the 'i dunno what i wanna do yet' people. This drives up the cost of education, and also bring down its value as these types of people bring down the average.
In short: If we do have a public system, it needs to not worry about grade averages, and worry about standards. If this means failing people left and right so be it, but don't dumb-down education for the sake of the majority.
First, income isn't distributed, it's earned. Generally people that work 60h a week make more money then people that don't (and please don't bring up all these little examples of millionaire playboys; these are exceptions not rules).
Finally, corporations hire workers. If you tax corporations you give them no incentive to stay in the country and hire workers. We can blame outsourcing solely on lower wages, but this also plays a large price.
And since when is taxing people not a method of preventing people from making money?
despite the effort of the likes of WalMart and McDonalds to homogenize us.
If 'homogenize' means offering goods at rock-bottom prices then homogenize away.
This of course doesn't really apply to McDonald's, since even $0 is far above the price I'm willing to pay for getting heart disease.
Everything you suggested is competly infeasible in a country that doesn't have the productivity to support it. Is it any wonder that the richest countries in the world are also the ones that have all these properties? Also note that all these benefits came after a stable economy; one that was generated through fair trade and comparative advantage.
I agree. People simply equate 4 years of University = $50,000/year. It's simply not the case. I could go to school for 4 years and learn how to snake juggle, but I doubt anyone would pay me $50,000 to do it.
The beauty of free market economics is greed. Greedy people are attracted to areas with high profits. If a sector is making lots of profit, other companies will want to jump in and undercut them to get a piece of the pie. The one that survives is usually the one that can supply the product at the lowest price.
It happened to clothing and it'll happen to cars.
The education isn't a factor either. 50 years ago a high school diploma spoke volumes, now it doesn't. A lot of the 'then' high tech jobs required a diploma, now they require a lot more simply because of 50 years of scientific breakthroughs.
Now if you want a job a bachelor's degree isn't going to cut it, you'll need a master's. The bottom line is you have to demonstrate to your employer why you're worth the salary you are, and that you can do your job better and cheaper than anyone else; even against seemingly insurmountable living standard barriers.
1. You are talking about 'trade deficits', but you are forgetting about 'capital surpluses', which ncessarily go part and parcel with trade deficits.
For example we have a trade deficit with Japan. Is this a bad thing? No, it's not. This just means that Japan is directly buying US goods. What they are doing, necessarily, is investing in the US economy. This can be buying a factory in Michigan, or buying shares in American companies. Notice in both cases jobs have been created.
Now if India (let's be realistic here) started producing software at a cheaper rate to the US, the price of said software would necessarily decrease, allowing consumers to spend more money (you argue this in point 2 which I will get to) on the US economy.
In your example, Indians would be selling us computer software, and we would be giving them nothing in return. Hogwash. People don't trade for nothing. They use American money to invest in other businesses, or use it to spend on other foreign companies, who eventually must spend it on American goods.
2. This applies to your second exmaple. Here you suggest that although we may have saved $3 on that T-shirt, the money that was spent went to a foeign company. Well American dollars must eventually be spent in America; either in investment or in a domestically produced product. Your example is flawed because it is too concerned with 'where the money is going' rather than comparative advantage.
Trade surpluses and deficits are neither good or bad; they have just been twisted that way by non-economists.
Taking the greatest novel of the 20th century and turning it into a movie should be money in the bank. I mean the screenplay is already written for you, just shoot the damn thing.
I think a lot of adaptations fail so miserably because directors are too concerned with the quick audience appeal to make a short-profit. They truly twist some great works into what might sell, instead of what is already great to begin with. If Peter Jackson is a genius at all, it is for recognizing how monumentous the Middle Earth culture really was, and not manipulating an already great story.
Just stay true to the novel, and the dollars will follow.
If we tell all American companies they can only hire American workers, here's what will happen:
All those millions of foreign laborers will first be out of work. Secondly, companies will have an incredible need for American workers. Initially this will appear to be an increase in their wages. But this will also increase the prices of all goods in the country. This means consumers will have less buying power, and more products sit on shelves. As a result companies will go belly-up across the US and unemployment will be rampant.
As for the worker abroad, there will be such a glut of laborers that the remaining domestic companies will have free reign to charge even lower wages to the remaining populous. Shockingly, you think this will cause a revolution that will be beneficial because they will overthrow their cruel beorgeois masters. Apparentely wanton looting is good for the economy. Revolutions are only good if the overthrow a corrupt government in favor of basic property rights.
Finally, lack of education and infrastructure is due to poverty. Poverty is caused by a marketplace that has been corrupted by legislation and government, not by corporations. Indeed, quite the opposite. One of the reasons Africa is perpetually poor is because of government corruption. Corporations evade these areas in favor of countries where their assets are less likely to be seized by the government. (AIDs does not fully explain this condition because AIDs has been around for only 15 years, and even African countries without AIDs are impoverished.) These corporations go to places like China, which incidentally has had record growths in GDP.
Seriously, go read up on comparative advantage or take an economics class. Corporations are not the universal-scapegoat you make them out to be.
Free trade is simply the result of millions of people making independent decisions about what to buy and what to sell. By 'regulating' you are telling those people they are incapable of making these decisions.
So what WOULD be ethical then? Telling corporations they must hire American workers? Not only would this cause prices of goods to skyrocket, but that poor laborer will no have no job at all, least of which one that pays $0.30/h.
Just because a country produces goods in one country and sends them overseas doesn't mean they're 'stealing' anything. Where in God's name do you get this idea? They trade for other goods, and we're all better off for it.
The plight of third world laborers is indeed a severe one. But low wages are just a symptom of the real problem: lack of education and infrastructure. No tariffs or boycotts will fix those problems.
This is what's known as the 'infant industry' argument and it doesn't hold water. Basically, domestic industry needs protection from outside companies so that they can compete when they mature. You are saying this is true.
We agree that both will be worse off in the short run. But will they really be better in the long run? Don't forget that while they may make decent software in 10 years, so will everybody else. Only Microsoft and co. will have a dramatic headstart since they've already been in this game for awhile.
This of course doesn't happen all the time. Small companies overthrow big companies all the time. The reason is these companies have a lot of private investment. Third parties realize the potential of the smaller industry and finance them. This happens all the time and requires no government intervention. When the government does intervene they are essentially saying that millions of investors that choose not to invest are wrong. This can only work toward the detriment of the entire nation.
The matter of China's rampant piracy is another matter however.
In a pure free market system, greed drives it to the benefit of everyone.
However greedy people don't like the free market. It wrecks their bottom line. To this end they try to prevent competetition through tariffs. But once a tariff is imposed the market is no longer free. Therefore, so long as greedy people stay within the boundaries of a free market, everyone benefits.
You've been watching a lot of "Exporting America" I can tell.... Your points:
1. The total amount of goods in the system is unchanged so trade doesn't do anything. - Technically yes, but then what's the point of trading at all? That's the beauty of comparative advantage. Let's say Costa Rica can grow 100 pineapples a year or it can make 2 computers a year. Let's also say that the US can make 100 computers, or grow 2 pineapples. Now without trade, they could just either have hordes of pineapples, or hordes of computers, but not both. So Costa Rica could grow 100 pineapples, but never have any computers, and the US could have 100 computers, but no pineapples. By trading, the 'net goods' doesn't change but the countries are clearly better off because they can have more diverse goods by trading all those uneaten pineapples for all those unused computers.
Sometimes the domestic production of a good is so great that the country's populous could never dream of consuming it all. By trading they can get a little bit of everything, and attain the kind of diversity of goods that wouldn't be avaiable before.
2. Well it doesn't matter anyway that prices are dropping because overseas laborers are doing the work we used to do, and therefore we're all unemployed and can't afford these goods - Completly false. Let's say you're Joe consumer and the price of t-shirts has dropped by $3, made cheaper at the cost of, say, 1000 US jobs. Upon buying this t-shirt you now have $3 in your pocket. Unless you use this money to wallpaper your room, or stick it in a safe somewhere, it's going to go back into the economy. You will either use this money to buy other goods (thereby giving other companies business and allowing them to expand and create jobs) or youput it in the bank (thereby making your money avaiable for loans and allowing businesses to expand and create jobs). The effect will surely be a job increase well over 1000s. Therefore, this 'corporate greed' has created more employment. Both to poor laborers abroad (who's job you wish to take) and the people at home.
If you need an example take a look at the recent steel tariffs. This 'saved' 10 000 US jobs. But what you didn't see were the hundreds of companies that rely on steel to function. Because the steel was more expensive they couldn't afford to hire as many workers.
Wal-mart saved consumers $20 billion last year. Don't you think that money has gone to help other domestic businesses expand?
Let's take a look at your points, summarized below (if I've made an egregious error in my interpretation please correct me):
1. Workers should be paid more and have better conditions because then they are more efficient - I'm going to take the role of a greedy Nike executive here. If I can make more money by investing in better conditions, which would increase efficiency, and increase output, then I most certainly will do it. Look how profitable it is! A great catharsis for my greedy whims! In short, while your claim is sound, the investment in better conditions is probably not offset by the increase in worker output, otherwise these companies would employ such a tactic. Now this leads me to the next point, "why don't they just pay them more regardless?"
2. Corporations make 800% profit margins and can afford to dip into those margins to satisfy worker needs - First off, Nike doesn't make this kind of profit on their products. If you look at their annual report, they generated $10 billion in sales, but the just the goods themselves cost $6 billion to make. Adminstrative expenses, such as marketing, made up 3 billion dollars. And after income taxes, they are left with $500 million. This is a return on investment of 5%. Not the kind of corporate-dreamland-800% that you claim. And surely even a paltry increase in the worker-wages would be significant. Even paying 1 million workers $100 more a year more will put a large dent into their earnings. The best thing Nike can do is offer a workplace over and above the local standard, which indeed they do.
Fortunately even if they try to bump up the price of their goods, Wal-mart is the great equalizer. For years retailers have put up with 'high' profit margins of their suppliers, but no longer. Commpanies like Levis are getting trumped by bargain-brand competetitors that don't have the atrocious profit-margins that Levis enjoys. All thanks to competetion from companies like Wal-mart.
More on the aside: Well like I said, it's this constant 'greed' that actually makes us better off. When competetitors get destroyed, that is usually a good thing. The inefficiencies of that competetitor have been eliminated in a pure, darwinistic fashion. But just because competetitors don't exist, doesn't mean competetiton doesn't exist either. As soon as that company tries to increase their prices, another competetitor rises up to get a piece of that pie. This is why anti-dumping tariffs are so misguided.
And mergers don't necessarily mean greater control or profits. AOL-Time-Warner had the greatest single earnings loss in the history of civilization.
Correlation is not causation, and this is a perfect example. For everyone 1 example of a positive correlation between tarrifs and economic good-times, I can find 10 others showing the opposite.
I'm not a professional economist, but here's what I can summarize from that:
1. Trade doesn't effect wages - Wages depend on supply and demand curves. But trade isn't really about wages, trade is about goods. And with trade, both parties have more goods than they would have without goods. This is the only case in economics where a 'free lunch' exists. Standard of Living isn't how much money you make, but how much stuff you can buy with it. Free trade makes things much cheaper for everyone.
2. Because free trade both destroys some jobs (from importing), and creates others (from exporting), the net effect is 0. From what I read I can disagree with this most strongly. By preventing imports, and thus increasing prices, consumers have less money with which to spend on other goods or to invest in other businesses. This means that while the protected industry retains their jobs, other businesses will be unable to create new jobs. Now the question is whether the amount of new jobs created will be greater than the amount of jobs that would be lost. From what I've read, the net effect is usually positive (at least in the long run, and maybe this is where the discrepency resides), contrary to what Dr. Sykes reports.
But the true benefit of trade is less about jobs and wages, and more about getting stuff for cheaper. That is, the benefit of trade is exemplified in that $3 T-shirt you got at Wal-mart.
I read that entire article and there was absolutely nothing regarding comparative advantage, or its 'failures' anywhere.
Trade deficits are not bad things, especially when it is considered a 'deficit' when a foreign company invests in US companies. If things were so terribly bad for the US, why would foreigners bother investing ins us? Too further this point, reducing this trade deficit to 0 could easily be achieved by not allowing any imports/exports. This would of course impoverish American in a matter of months. And since we're exchanging links:
http://www7.tamu-commerce.edu/ecofin/courses/funde rburk/428/readings/Trad-deficit-blather.htm
Second of all, there is no level playing field. No capitalist from Adam Smith to Milton Friendman has ever suggested that cpaitalism works best on a 'level' playing field. Such a thing has never, and will never exist. Nor have I ever heard Adam Smith ever suggesting 'morality' will 'correct' the market.
Hogwash. It's greed and profit-motives that make the system work so well. Sam Walton and Henry Ford, in their greed, got rich by pricing things as low as possible.
Furthermore, if China decides they don't accept that others are better at producing cars, then putting up barriers does not some-how give them any advantage as you insinuate. It simply stops a trade that normally would have occured. This is a bad thing for both parties, not just American. Essentially the Chinese are shooting them selves in the foot to spite the US.
If Japan were to prevent all imports of American products, the US would be infintely worse off if they prevented all Japanese imports from entering the US. The only reason these policies ever get enacted is to protect greedy companies within the respective countries.
I agree with you regarding our obligations as free citizens. But what are you proposing? Most of the greatest work done in third world countries is conducted by charity organizations, not by foreign 'aid.'
You are also correct regarding dictatorships and free nations. But I wasn't talking about voter rights or religious rights in my example. That Chinese person is free to choose the jobs he is offered. The government can step in and disrupt this (and they used to) but it perpetuated China's lingering poverty. Despite living under a dictatorship, the choice of jobs still remains (but not political ones of course).
I also suspect that over the long run, as Chinese people become more and more prosperous, they will become more intelligence, which is the true sword again depotism. The US should play no part in this overthrow. At best, it draws massive international scrutiny. At worst, it results in horrific warfare and thousdans of deaths, which will no doubt happen if the US went to war with China.
The best course of action is to just keep trading with China. As they become more prosperous they will find their own ways of undermining the regime.
You are forgetting that Chinese laborers are grossly more inefficient than American ones. It can take 10 times as many third world laborers to accomplish what 1 American can. So really, even $0.25/h quickly becomes $2.50/h, or even greater depending on the circumstance.
And if you don't think an increase of $0.25 is a big increase just ask a grocery store, who make pennies per profit on each sale, even on higher priced items.
An aside: Milton Friedman was one of the heavest proponents of laissez-faire economics. You have left this quote out of its context. Friedman and Smith were very aware of greed and profit, which is one of the reasons the free market performs so well. Henry Ford, and Sam Walton didn't get reach by gouging their consumers, but by charging as little as possible. Only when these companies ask the government for 'protection' does the greed really become damaging to consumers
You may a good point about Apple, but they're also a lot more expensive as well. But that's beside the point.
The AT&T example is a classic one, so are your very own power company and cable company. These are 'natural' monopolies as they call them and do need regulation simply because no other players can enter the market. Given the sheer number of MS substitutes I wouldn't call MS a monopoly.
It's too bad I don't have market share numbers for some of those products, especially Winamp as they've been around for a long time. Same with CDex. I think one of the trends in these products is they don't try and make a copy of MS software, they fill a niche that MS does not sufficiently accomplish. OpenOffice will probably never take flight amoung desktop users so long as they can pirate XP, which is practically on par with OpenOffice.
Oh and zipping functions are built into XP. I don't believe RAR functions are though.
Well Sprocket this has been an informative disucssion, at least for myself. I think it's at its conclusion however, and I thank you for keeping things civil; which isn't often a mainstay around here,
Killswitch1968
Why would free trade work in a micro-scale and not in a macro-scale? Just because different countries have different laws doesn't mean that thousands of individuals making their own independent about what they want to buy is any different; be it between a New Yorker and a Texan or a South African and an American.
You really need to read up on competetive advantage before making such uninformed statement about basic economic principles.
It's not an assumption, it's true. And if that is their choice, then who are we to tell them it would be 'unethical' for them to take that job so it's better that they just die?
Crying about a bad situation won't make the situation any better, nor will implementing some government policy.
Slashdot Mirror
I'm all for free education, but unfortunately this also means throngs of people going to University for the social playground, for basket weaving classes, and the 'i dunno what i wanna do yet' people. This drives up the cost of education, and also bring down its value as these types of people bring down the average.
In short: If we do have a public system, it needs to not worry about grade averages, and worry about standards. If this means failing people left and right so be it, but don't dumb-down education for the sake of the majority.
First, income isn't distributed, it's earned. Generally people that work 60h a week make more money then people that don't (and please don't bring up all these little examples of millionaire playboys; these are exceptions not rules).
Finally, corporations hire workers. If you tax corporations you give them no incentive to stay in the country and hire workers. We can blame outsourcing solely on lower wages, but this also plays a large price.
And since when is taxing people not a method of preventing people from making money?
despite the effort of the likes of WalMart and McDonalds to homogenize us.
If 'homogenize' means offering goods at rock-bottom prices then homogenize away.
This of course doesn't really apply to McDonald's, since even $0 is far above the price I'm willing to pay for getting heart disease.
Everything you suggested is competly infeasible in a country that doesn't have the productivity to support it. Is it any wonder that the richest countries in the world are also the ones that have all these properties? Also note that all these benefits came after a stable economy; one that was generated through fair trade and comparative advantage.
I agree. People simply equate 4 years of University = $50,000/year. It's simply not the case. I could go to school for 4 years and learn how to snake juggle, but I doubt anyone would pay me $50,000 to do it.
The beauty of free market economics is greed. Greedy people are attracted to areas with high profits. If a sector is making lots of profit, other companies will want to jump in and undercut them to get a piece of the pie. The one that survives is usually the one that can supply the product at the lowest price.
It happened to clothing and it'll happen to cars.
The education isn't a factor either. 50 years ago a high school diploma spoke volumes, now it doesn't. A lot of the 'then' high tech jobs required a diploma, now they require a lot more simply because of 50 years of scientific breakthroughs.
Now if you want a job a bachelor's degree isn't going to cut it, you'll need a master's. The bottom line is you have to demonstrate to your employer why you're worth the salary you are, and that you can do your job better and cheaper than anyone else; even against seemingly insurmountable living standard barriers.
1. You are talking about 'trade deficits', but you are forgetting about 'capital surpluses', which ncessarily go part and parcel with trade deficits.
For example we have a trade deficit with Japan. Is this a bad thing? No, it's not. This just means that Japan is directly buying US goods. What they are doing, necessarily, is investing in the US economy. This can be buying a factory in Michigan, or buying shares in American companies. Notice in both cases jobs have been created.
Now if India (let's be realistic here) started producing software at a cheaper rate to the US, the price of said software would necessarily decrease, allowing consumers to spend more money (you argue this in point 2 which I will get to) on the US economy.
In your example, Indians would be selling us computer software, and we would be giving them nothing in return. Hogwash. People don't trade for nothing. They use American money to invest in other businesses, or use it to spend on other foreign companies, who eventually must spend it on American goods.
2. This applies to your second exmaple. Here you suggest that although we may have saved $3 on that T-shirt, the money that was spent went to a foeign company. Well American dollars must eventually be spent in America; either in investment or in a domestically produced product. Your example is flawed because it is too concerned with 'where the money is going' rather than comparative advantage.
Trade surpluses and deficits are neither good or bad; they have just been twisted that way by non-economists.
Taking the greatest novel of the 20th century and turning it into a movie should be money in the bank. I mean the screenplay is already written for you, just shoot the damn thing.
I think a lot of adaptations fail so miserably because directors are too concerned with the quick audience appeal to make a short-profit. They truly twist some great works into what might sell, instead of what is already great to begin with.
If Peter Jackson is a genius at all, it is for recognizing how monumentous the Middle Earth culture really was, and not manipulating an already great story.
Just stay true to the novel, and the dollars will follow.
Ya ya, I realized the bitter irony of that typo post-submitting, blame Slashdot for not allowing edits!
Oh plus I'm Canadian.
Incredible... at any rate:
If we tell all American companies they can only hire American workers, here's what will happen:
All those millions of foreign laborers will first be out of work. Secondly, companies will have an incredible need for American workers. Initially this will appear to be an increase in their wages. But this will also increase the prices of all goods in the country. This means consumers will have less buying power, and more products sit on shelves. As a result companies will go belly-up across the US and unemployment will be rampant.
As for the worker abroad, there will be such a glut of laborers that the remaining domestic companies will have free reign to charge even lower wages to the remaining populous. Shockingly, you think this will cause a revolution that will be beneficial because they will overthrow their cruel beorgeois masters. Apparentely wanton looting is good for the economy. Revolutions are only good if the overthrow a corrupt government in favor of basic property rights.
Finally, lack of education and infrastructure is due to poverty. Poverty is caused by a marketplace that has been corrupted by legislation and government, not by corporations. Indeed, quite the opposite. One of the reasons Africa is perpetually poor is because of government corruption. Corporations evade these areas in favor of countries where their assets are less likely to be seized by the government. (AIDs does not fully explain this condition because AIDs has been around for only 15 years, and even African countries without AIDs are impoverished.) These corporations go to places like China, which incidentally has had record growths in GDP.
Seriously, go read up on comparative advantage or take an economics class. Corporations are not the universal-scapegoat you make them out to be.
Free trade is simply the result of millions of people making independent decisions about what to buy and what to sell. By 'regulating' you are telling those people they are incapable of making these decisions.
So what WOULD be ethical then? Telling corporations they must hire American workers? Not only would this cause prices of goods to skyrocket, but that poor laborer will no have no job at all, least of which one that pays $0.30/h.
Just because a country produces goods in one country and sends them overseas doesn't mean they're 'stealing' anything. Where in God's name do you get this idea? They trade for other goods, and we're all better off for it.
The plight of third world laborers is indeed a severe one. But low wages are just a symptom of the real problem: lack of education and infrastructure. No tariffs or boycotts will fix those problems.
This is what's known as the 'infant industry' argument and it doesn't hold water. Basically, domestic industry needs protection from outside companies so that they can compete when they mature. You are saying this is true.
We agree that both will be worse off in the short run. But will they really be better in the long run? Don't forget that while they may make decent software in 10 years, so will everybody else. Only Microsoft and co. will have a dramatic headstart since they've already been in this game for awhile.
This of course doesn't happen all the time. Small companies overthrow big companies all the time. The reason is these companies have a lot of private investment. Third parties realize the potential of the smaller industry and finance them. This happens all the time and requires no government intervention. When the government does intervene they are essentially saying that millions of investors that choose not to invest are wrong. This can only work toward the detriment of the entire nation.
The matter of China's rampant piracy is another matter however.
In a pure free market system, greed drives it to the benefit of everyone.
However greedy people don't like the free market. It wrecks their bottom line. To this end they try to prevent competetition through tariffs. But once a tariff is imposed the market is no longer free. Therefore, so long as greedy people stay within the boundaries of a free market, everyone benefits.
You've been watching a lot of "Exporting America" I can tell.... Your points:
1. The total amount of goods in the system is unchanged so trade doesn't do anything. - Technically yes, but then what's the point of trading at all? That's the beauty of comparative advantage. Let's say Costa Rica can grow 100 pineapples a year or it can make 2 computers a year. Let's also say that the US can make 100 computers, or grow 2 pineapples. Now without trade, they could just either have hordes of pineapples, or hordes of computers, but not both. So Costa Rica could grow 100 pineapples, but never have any computers, and the US could have 100 computers, but no pineapples. By trading, the 'net goods' doesn't change but the countries are clearly better off because they can have more diverse goods by trading all those uneaten pineapples for all those unused computers.
Sometimes the domestic production of a good is so great that the country's populous could never dream of consuming it all. By trading they can get a little bit of everything, and attain the kind of diversity of goods that wouldn't be avaiable before.
2. Well it doesn't matter anyway that prices are dropping because overseas laborers are doing the work we used to do, and therefore we're all unemployed and can't afford these goods - Completly false. Let's say you're Joe consumer and the price of t-shirts has dropped by $3, made cheaper at the cost of, say, 1000 US jobs. Upon buying this t-shirt you now have $3 in your pocket. Unless you use this money to wallpaper your room, or stick it in a safe somewhere, it's going to go back into the economy. You will either use this money to buy other goods (thereby giving other companies business and allowing them to expand and create jobs) or youput it in the bank (thereby making your money avaiable for loans and allowing businesses to expand and create jobs). The effect will surely be a job increase well over 1000s. Therefore, this 'corporate greed' has created more employment. Both to poor laborers abroad (who's job you wish to take) and the people at home.
If you need an example take a look at the recent steel tariffs. This 'saved' 10 000 US jobs. But what you didn't see were the hundreds of companies that rely on steel to function. Because the steel was more expensive they couldn't afford to hire as many workers.
Wal-mart saved consumers $20 billion last year. Don't you think that money has gone to help other domestic businesses expand?
Let's take a look at your points, summarized below (if I've made an egregious error in my interpretation please correct me):
1. Workers should be paid more and have better conditions because then they are more efficient - I'm going to take the role of a greedy Nike executive here. If I can make more money by investing in better conditions, which would increase efficiency, and increase output, then I most certainly will do it. Look how profitable it is! A great catharsis for my greedy whims! In short, while your claim is sound, the investment in better conditions is probably not offset by the increase in worker output, otherwise these companies would employ such a tactic. Now this leads me to the next point, "why don't they just pay them more regardless?"
2. Corporations make 800% profit margins and can afford to dip into those margins to satisfy worker needs - First off, Nike doesn't make this kind of profit on their products. If you look at their annual report, they generated $10 billion in sales, but the just the goods themselves cost $6 billion to make. Adminstrative expenses, such as marketing, made up 3 billion dollars. And after income taxes, they are left with $500 million. This is a return on investment of 5%. Not the kind of corporate-dreamland-800% that you claim. And surely even a paltry increase in the worker-wages would be significant. Even paying 1 million workers $100 more a year more will put a large dent into their earnings. The best thing Nike can do is offer a workplace over and above the local standard, which indeed they do.
Fortunately even if they try to bump up the price of their goods, Wal-mart is the great equalizer. For years retailers have put up with 'high' profit margins of their suppliers, but no longer. Commpanies like Levis are getting trumped by bargain-brand competetitors that don't have the atrocious profit-margins that Levis enjoys. All thanks to competetion from companies like Wal-mart.
More on the aside: Well like I said, it's this constant 'greed' that actually makes us better off. When competetitors get destroyed, that is usually a good thing. The inefficiencies of that competetitor have been eliminated in a pure, darwinistic fashion. But just because competetitors don't exist, doesn't mean competetiton doesn't exist either. As soon as that company tries to increase their prices, another competetitor rises up to get a piece of that pie. This is why anti-dumping tariffs are so misguided.
And mergers don't necessarily mean greater control or profits. AOL-Time-Warner had the greatest single earnings loss in the history of civilization.
Most certainly. And juxtaposed with the alternatives, democracy is certainly the best system we've found. But it's not flawless.
Correlation is not causation, and this is a perfect example. For everyone 1 example of a positive correlation between tarrifs and economic good-times, I can find 10 others showing the opposite.
I'm not a professional economist, but here's what I can summarize from that:
1. Trade doesn't effect wages - Wages depend on supply and demand curves. But trade isn't really about wages, trade is about goods. And with trade, both parties have more goods than they would have without goods. This is the only case in economics where a 'free lunch' exists. Standard of Living isn't how much money you make, but how much stuff you can buy with it. Free trade makes things much cheaper for everyone.
2. Because free trade both destroys some jobs (from importing), and creates others (from exporting), the net effect is 0. From what I read I can disagree with this most strongly. By preventing imports, and thus increasing prices, consumers have less money with which to spend on other goods or to invest in other businesses. This means that while the protected industry retains their jobs, other businesses will be unable to create new jobs. Now the question is whether the amount of new jobs created will be greater than the amount of jobs that would be lost. From what I've read, the net effect is usually positive (at least in the long run, and maybe this is where the discrepency resides), contrary to what Dr. Sykes reports.
But the true benefit of trade is less about jobs and wages, and more about getting stuff for cheaper. That is, the benefit of trade is exemplified in that $3 T-shirt you got at Wal-mart.
I read that entire article and there was absolutely nothing regarding comparative advantage, or its 'failures' anywhere.
e rburk/428/readings/Trad-deficit-blather.htm
Trade deficits are not bad things, especially when it is considered a 'deficit' when a foreign company invests in US companies. If things were so terribly bad for the US, why would foreigners bother investing ins us? Too further this point, reducing this trade deficit to 0 could easily be achieved by not allowing any imports/exports. This would of course impoverish American in a matter of months.
And since we're exchanging links: http://www7.tamu-commerce.edu/ecofin/courses/fund
Second of all, there is no level playing field. No capitalist from Adam Smith to Milton Friendman has ever suggested that cpaitalism works best on a 'level' playing field. Such a thing has never, and will never exist. Nor have I ever heard Adam Smith ever suggesting 'morality' will 'correct' the market.
Hogwash. It's greed and profit-motives that make the system work so well. Sam Walton and Henry Ford, in their greed, got rich by pricing things as low as possible.
Furthermore, if China decides they don't accept that others are better at producing cars, then putting up barriers does not some-how give them any advantage as you insinuate. It simply stops a trade that normally would have occured. This is a bad thing for both parties, not just American. Essentially the Chinese are shooting them selves in the foot to spite the US.
If Japan were to prevent all imports of American products, the US would be infintely worse off if they prevented all Japanese imports from entering the US. The only reason these policies ever get enacted is to protect greedy companies within the respective countries.
I agree with you regarding our obligations as free citizens. But what are you proposing? Most of the greatest work done in third world countries is conducted by charity organizations, not by foreign 'aid.'
You are also correct regarding dictatorships and free nations. But I wasn't talking about voter rights or religious rights in my example. That Chinese person is free to choose the jobs he is offered. The government can step in and disrupt this (and they used to) but it perpetuated China's lingering poverty. Despite living under a dictatorship, the choice of jobs still remains (but not political ones of course).
I also suspect that over the long run, as Chinese people become more and more prosperous, they will become more intelligence, which is the true sword again depotism. The US should play no part in this overthrow. At best, it draws massive international scrutiny. At worst, it results in horrific warfare and thousdans of deaths, which will no doubt happen if the US went to war with China.
The best course of action is to just keep trading with China. As they become more prosperous they will find their own ways of undermining the regime.
You are forgetting that Chinese laborers are grossly more inefficient than American ones. It can take 10 times as many third world laborers to accomplish what 1 American can. So really, even $0.25/h quickly becomes $2.50/h, or even greater depending on the circumstance.
And if you don't think an increase of $0.25 is a big increase just ask a grocery store, who make pennies per profit on each sale, even on higher priced items.
An aside: Milton Friedman was one of the heavest proponents of laissez-faire economics. You have left this quote out of its context. Friedman and Smith were very aware of greed and profit, which is one of the reasons the free market performs so well. Henry Ford, and Sam Walton didn't get reach by gouging their consumers, but by charging as little as possible. Only when these companies ask the government for 'protection' does the greed really become damaging to consumers
You may a good point about Apple, but they're also a lot more expensive as well. But that's beside the point.
The AT&T example is a classic one, so are your very own power company and cable company. These are 'natural' monopolies as they call them and do need regulation simply because no other players can enter the market. Given the sheer number of MS substitutes I wouldn't call MS a monopoly.
It's too bad I don't have market share numbers for some of those products, especially Winamp as they've been around for a long time. Same with CDex. I think one of the trends in these products is they don't try and make a copy of MS software, they fill a niche that MS does not sufficiently accomplish. OpenOffice will probably never take flight amoung desktop users so long as they can pirate XP, which is practically on par with OpenOffice.
Oh and zipping functions are built into XP. I don't believe RAR functions are though.
Well Sprocket this has been an informative disucssion, at least for myself. I think it's at its conclusion however, and I thank you for keeping things civil; which isn't often a mainstay around here, Killswitch1968
Why would free trade work in a micro-scale and not in a macro-scale? Just because different countries have different laws doesn't mean that thousands of individuals making their own independent about what they want to buy is any different; be it between a New Yorker and a Texan or a South African and an American.
You really need to read up on competetive advantage before making such uninformed statement about basic economic principles.
It's not an assumption, it's true. And if that is their choice, then who are we to tell them it would be 'unethical' for them to take that job so it's better that they just die?
Crying about a bad situation won't make the situation any better, nor will implementing some government policy.