China
Have you ever played monopoly against someone with hotels on Boardwalk and Park Place? Doesn't seem to matter what you do they inevitably win the game. Even when you start writing IOUs in the end they will call the debt in and you are screwed.
Watching George Bush try to run away from the press in China and finding a locked door I was struck by two things. The first is at this point the locked door is symbolic of the 3 years he has left. Basically he's in way over his head and would like to get out. The second was the smile on the Chinese officials' faces. They know this moron is securing their future position as the new world super power, mortgaging off any hope we had of a balanced relationship for the sake of misguided policies that do nothing for the wellbeing of Americans.
Watching George Bush try to run away from the press in China and finding a locked door I was struck by two things. The first is at this point the locked door is symbolic of the 3 years he has left. Basically he's in way over his head and would like to get out. The second was the smile on the Chinese officials' faces. They know this moron is securing their future position as the new world super power, mortgaging off any hope we had of a balanced relationship for the sake of misguided policies that do nothing for the wellbeing of Americans.
posted by mochi at 2:17 AM
17 Comments:
I can't believe they sent Fredo to handle the family's busines, instead of Michael or even Sonny.
Unfortunately I think they are missing a Michael...
Liberals give the President way too much credit...
-Jack
You're right, Jack... I have been a lot nicer to Bush than he deserves!
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When it comes to securing trade deals, Bush is no lame duck. For argument's sake, let's assume Bush is in it for the money, his and those who put him in office. The ones pulling the stings want barriers to trade lowered, which will make it easier to sell and buy from China and other Asian countries. Free trade and the rising tide it brings with it "lifts all boats." The way I look at it (as a firm believer in Adam Smith and all things capitalistic), if Chinese officials were smiling at the prospect of trading with America, that's good for all. American consumers will get cheaper goods, American companies will sell more products in Asia, and American industries will be free to relocate to tax havens overseas (that one should get the comments flowing!).
Bush is a capitalist, and that's good for everyone, including Marxists and socialists who have a problem with high achievement (there's another comment generator!).
American consumers will get cheaper goods, American companies will sell more products in Asia
In theory. But in theory, Communism works. :) Don't assume that any trade agreement Bush brings home will have much, or any, upside to U.S. consumers and manufacturers. Let's hope for it, but let's just wait and see before we jump to the conclusion that China wants what we want.
Mochi, I think your post here is a little open ended and a bit general. I guess I would need a few more specifics (concerning trade initiatives, policy, etc.) to go on.
But in response to Kevin's comment:
I am not much of a believer in protectionism, and as I have said many times before I am against trade barriers--particularly those created by our own government which stifle our ability to compete in a global economy. I believe in free trade, but it also has to be fair. American businesses have too much government regulation and taxation to compete. You being a lawyer would recognize this. According to the CATO Inst. the average cost of regulation to the American consumer is $20,000 per household. That is above and beyond taxation, and so one could see why foreign manufacturers have a much greater edge on keeping prices low. (Its not always the favored "cooly wages" argument, although when it is, it is often the American government and its interference in free markets- payroll tax, minimum wages, etc. that skew that variable also).
Trade is the cornerstone of both economic wealth and prosperity. But our government sorely needs to review its policies toward business otherwise we won't have any jobs or money to buy those good cheap Chinese goods.
Yes, government regulation adds a good deal to the cost of goods paid by U.S. consumers. It also adds a lot of safety. Not just to the products themselves, but for the working conditions of the laborers. Is there regulation we could do without? Most likely. I wouldn't know where to begin, but would be willing to do away with any unreasonable or unnecessary regulation.
That said, regulation is not all that makes our products more expensive/less competitive than a country like China's products. Low standards of living which allow for low wages, government subsidies that allow for little or no real profit margins, and yes, slave labor or its equivalent. These are the real obstacles our prodcuts face in global economy, not simply regulations.
Sean, lets think about it a little.
Lets apply it to a hypothetical example using real numbers. Let's produce widgets in China and in the United States and do a comparison.
Say an American worker who makes $15 an hour produces 1000 widgets a day. The same 1000 are produced by a Chinese worker at $3.00/hour. Labor spread across those widgets would break down to:
American - 1.5 cents
Chinese - .3 cents
What American companies are beginning to find out is that outsourcing (after it came envogue) did not particularly save companies a whole lot because labor in manufacturing is often not a significant variable.
Back to my original premise, we find through many studies that taxation and regulation IS a significant expense for American business. Does it make our VCR's safer? Are our cars any better than foreign made ones?
Keep in mind, Sean, that Congress passes over 200,000 laws a year, much of that micromanaging industry to the point of stifling productivity. There is plenty of regulation we could do without as evidenced by Ronald Reagan and his deregulation which caused uprecedented growth in business and the economy.
Agree that regulation is not ALL, but it is a huge part.
Some stats(remember, the cost of regulation always gets passed on to the consumer--or the business fails):
Health care regulation alone is approx. $339.2 billion a year.
FDA regulation: $49 billion
Health Insurance regulation: $14.4 billion
Farming regulation: $56 billion
4,509 regulations were at various stages of implementation throughout the 50-plus federal departments, agencies, and commissions. Of the 4,509 regulations now in the works, 149 are "economically significant" rules that will have at least $100 million apiece in future off-budget costs.
Of the 4,509 regulations now in the works, 996 impact small business. Rules impacting small businesses are up 36 percent over the past five years.
Estimated costs of meeting the demands of off-budget regulations hit over a trillion in 2004. That's 46 percent the size of the $2 trillion in federal outlays, and 8 percent of U.S. gross domestic product.
Regulatory costs rival the $946 billion in corporate pretax profits, and they exceed Canada's gross domestic product ($689 billion).
In 1998, the median two-earner family's after-tax income of $41,846 contained $7,400 in hidden regulatory costs. Thus, regulatory costs eat up about 18 percent of the after-tax family budget.
Regards,
-Jack
Pleasant change to hear a conservative upholding workers rights. The US needs to pressure China, through trade incentives/sanctions, to lift social conditions. The more we get into debt with China the less leverage we have.
Would you prefer the 18% of hidden regulatory costs or the average income of a middle class household in China? That would be $8,000 per year.
Also Jack, if the widget company made 100 million widgets, the savings in using Chinese labor would be $12 million. Not exactly chump change. When you take into account things like call centers going to India the savings is even larger. Dell doesn't outsource because of US government regulation, they do it because the standard of living in India is crap and they can pay workers a fraction of what they can here.
Also with India, all the outsourcing is starting to actually elevate the standard of living (slowly but surely) which is starting to raise labor costs, which likely will lead to using countries like China instead... what incentive does China have to stop human rights abuses?
It's simply the side affct of ruthless capitalism.
GM is the perfect example of what happens when the odds are stacked against American business, and the chickens rule the roost. The Japanese and Asian conglomerates, unhampered by $60k per year hourly, uneducated workers, are crushing us. I suggest you check out www.fairtaxplan.org for a possible solution to trade barriers, one one that might lure foreign companies to America as opposed to the other way around, and enable American companies to pay a living wage without be driven out of the country.
Are our cars any better than foreign made ones?
Better? No. But then again, foreign cars are required to meet U.S. safety standards before they can be sold here. So foreign companies are under at least some of the same regulations as U.S. companies.
I would disagree with your hypothetical. Let's look at the only reliable numbers we have (from a BusinessWeek article):
The goal: to calculate average manufacturing compensation in China in 2002 -- the last year for which data was available. BusinessWeek was given a preview of her findings, which she will present to the BLS later this month.
Her estimate? The cost of Chinese factory labor is a paltry 64 cents an hour.
64 cents an hour. Roughly .2% (that's point 2 percent) of your "real world" example.
For comparison, hourly factory compensation in the U.S. in 2002 was $21.11, and an average of $14.22 in the 30 foreign countries covered by the existing BLS report.
Source of the above quotes.
So, hourly U.S. labor costs, as of 2002, were roughly 3,300% higher than China's labor costs.
Clearly, competing with China has less to do with "regulatory costs" as it does with slave labor used by China. I'm all for capitalism, but China is not practicing capitalisim, its practicing some bastard step-child of Communism with Capitalistic features.
"Its practicing some bastard step-child of Communism with Capitalistic features."
Seems to be working for them...
Sean, not arguing that labor is a factor, just that it is not the only factor. Keep in mind that labor in most modern day manufacturing is not the major factor in the cost of production. Maybe when it comes to gluing together tiny paper umbrellas, but not things like electronics, durables, etc. Not denying that the wages are lower there, just that dealing with the ways our government makes it difficult for American companies and American workers to compete in a global economy.
Smorg also brought up a valid economic point. As demand for foreign labor increases the price of it will naturally increase. Market forces are subject to economic LAWS (that cannot be breached) unless by artificial means--and our government introduces far too much artifice into our markets as it is.
Have enjoyed the discussion,
-Jack
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