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skeeterses
http://www.msnbc.msn.com/id/30848643/
QUOTE
Warren Mayor Jim Fouts tells the Detroit Free Press and The Detroit News that he wants municipal and school officials in the region to require their staffers to buy Detroit Three vehicles.

To help rescue the Big 3, a Michigan mayor wants to compel government employees to purchase cars made in the USA.
Just as with the Chinese mandatory smoking idea, this one is equally silly. On the Newsvine discussion thread, people were bashing the Detroit cars themselves, but I'm not going to do that.

This reasoning behind such a proposal is similar to the myth of how Henry Ford built his market by paying his workers enough money to buy model-Ts. The fallacy in that is that while the workers did buy model-Ts out of loyalty, it was actually the bigger market that brought money into the company. The same thing still applies today. While the Detroit automakers pay taxes to the different cities in Michigan, the automakers depend on the rest of the nation to buy their cars. If the rest of the nation doesn't buy the Big 3 cars, Michigan by itself does not have a big enough market to keep all the auto factories open. America still buys American cars of course. But just not enough of them to keep all the auto factories open.

Question for debate,
1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?
2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?


Google
Maybe Maybe Not
QUOTE(skeeterses @ May 22 2009, 09:49 PM) *
1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?
Municipalities already have, in some cases, the authority to tell employees where they can live.
http://www.newrules.org/governance/rules/m...cy-requirements
(Or just Google "municipal residency requirements.")

We place restrictions on the political activities of government employees.
http://www.osc.gov/ha_fed.htm

Contrary to what China has attempted, at least one employer (not a government employer, admittedly) even refuses to employ people who smoke.
http://hr.blr.com/news.aspx?id=10761

From the point of view of appropriate limits on government or employer authority, one could argue they probably have such authority, or at least COULD have it if the legislature, council, or people have given it to them.

Whether it's wise to use such authority in this manner is another question.





QUOTE(skeeterses @ May 22 2009, 09:49 PM) *
2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?
It seems to be good politics, but I think it's bad economics for the reasons skeeterses cites.

Paladin Elspeth
1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?

As has already been pointed out in the previous post, workers here in the United States have been compelled to behave according to the dictates of employers before, including in municipal settings. No, I do not think that government officials should have that authority, even though I think that the intentions are good.

It's too bad that the "carrot" isn't used more often than the "stick" in situations such as these. Why not provide some clear incentives instead for employees to buy American? I don't mean little gimme perks like a free baseball cap or the like--I mean things like closer parking spaces designated for American brand cars for instance. Of course, there would still be closer parking spaces for handicapped individuals regardless of the make of car they drive.

And what about peer pressure? Identify an employee of the month who quite clearly chooses "American made" for clothing, office implements, transportation, etc. Make it a contest.

2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?

The carrot approach would start out as largely symbolic, but people do respond well to praise and rewards, and it could become a matter of pride. If it becomes a matter of pride, it will be more than symbolic, and it may become a popular, status-filled activity 1) trying to find American products and 2) buying them in preference to goods manufactured overseas.

Or maybe it's just a pipe dream... unsure.gif
Ted
1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?

A thoroughly stupid idea which would set a bad president at best. You cannot have a free market if some are forced to buy certain products against their will.



2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?

Symbolic at best. Car companies, like all others, need to be competitive in their market. If they cannot do this its time to go out of business and let others do it better.

GM should go bankrupt so that others can come in and organize the company such that they can make a good product at a good price and make a profit doing it.
lederuvdapac
1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?

If the 1st Amendment to the US Constitution was recently erased due to someone spilling coffee on it than yes.

2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?

It would in fact damage our economy. Protectionism is an old, tired, and easily refuted concept. Not even the most liberal of economists argue that protectionism is a worthwhile policy. Buying American for the sake of buying American wastes resources and makes everyone poorer. If you wanted a coffee mug and Mexico sold one for $8 but America sold one for $10, you may feel the need to support your countrymen by spending the extra $2. But what you forget is that if you bought the Mexican mug, you would have a mug and $2 left over with which to buy something else. This is why competition driving down prices is a good thing. You increase your purchasing power. What is also forgotten is that the Mexican company will receive its payment in dollars ($). Dollars it will then spend back in the US. Protectionism in every fashion is moronic and damaging. The problem for most Americans (well all people for that matter) is that it requires two steps of logic to recognize its flaws.
JohnfrmCleveland
1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?

Compel his employees to buy something with their own money? No.

Preferentially buying American for government procurement? Absolutely.

2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?

Forcing the issue would not help, because it would come with built-in resistance to buying American.
__________________________________

Just to clarify, Leder, "buying American" is not the same thing as protectionism. Nobody is putting up any tariffs or anything. Buying American is more of a marketing tool.

Take your example of the mug. If I wanted to buy the American-made mug for $10 because our goods had the reputation of being higher-quality (as they once did), there is little harm in that. The extra $2 that you are worried about? It's in the hands of another American, who is just as likely as I am to spend it. In fact, that American has the other $8, too, not the Mexican. So you get a tiny bit of inflation, but at least our dollars aren't drifting away.

Think about it - if American cars somehow regained reputations for quality, if they had the cachet of German cars and everybody wanted one, how can that hurt the economy? Even if it's all baloney, and the cars still stank, and people spent a little more for a little less sometimes. It has to be better than a giant trade deficit.
Amlord
QUOTE(JohnfrmCleveland @ May 26 2009, 10:57 AM) *
Just to clarify, Leder, "buying American" is not the same thing as protectionism. Nobody is putting up any tariffs or anything. Buying American is more of a marketing tool.

Take your example of the mug. If I wanted to buy the American-made mug for $10 because our goods had the reputation of being higher-quality (as they once did), there is little harm in that. The extra $2 that you are worried about? It's in the hands of another American, who is just as likely as I am to spend it. In fact, that American has the other $8, too, not the Mexican. So you get a tiny bit of inflation, but at least our dollars aren't drifting away.

Think about it - if American cars somehow regained reputations for quality, if they had the cachet of German cars and everybody wanted one, how can that hurt the economy? Even if it's all baloney, and the cars still stank, and people spent a little more for a little less sometimes. It has to be better than a giant trade deficit.

You are wrong John.

If there is a real quality difference and the price reflected that, then we have one situation. If there is no quality difference (or indeed a lower quality on the American car, let's say it's a Chrysler which has no cars recommended for quality) then you are simply paying out more money than you should for a product (in this case, a car).

What impact does paying the inflated price have, even if the extra 20% you are paying goes to an American?

Well, you obviously have less to purchase on other things. Since cars are a big purchase and are generally bought on credit, you have higher monthly payments so you have less disposable income now and are paying interest on the extra money you paid.

Then there is the impact on Chrysler. Since Chrysler got your business, they have no incentive to make a better product. They stagnate because they are buoyed by the subsidy that the "buy American" attitude has given them.

I've personally only ever owned American cars. I like Pontiac styling, so I see value there. My brother worked at GM so I got a discount for buying a GM car (previously I got a discount on a Ford I purchased).

Whenever the price is separated from the value of the product that you get in return then the market is distorted. Competition no longer functions properly to ensure that products become both better and less expensive.

I have no problem with a "buy American" philosophy but let's not pretend that it doesn't have an element of protectionism and that it in any way to going to prompt the Big Three to make better cars. In fact, the opposite is true.
JohnfrmCleveland
QUOTE(Amlord @ May 26 2009, 04:59 PM) *
QUOTE(JohnfrmCleveland @ May 26 2009, 10:57 AM) *
Just to clarify, Leder, "buying American" is not the same thing as protectionism. Nobody is putting up any tariffs or anything. Buying American is more of a marketing tool.

Take your example of the mug. If I wanted to buy the American-made mug for $10 because our goods had the reputation of being higher-quality (as they once did), there is little harm in that. The extra $2 that you are worried about? It's in the hands of another American, who is just as likely as I am to spend it. In fact, that American has the other $8, too, not the Mexican. So you get a tiny bit of inflation, but at least our dollars aren't drifting away.

Think about it - if American cars somehow regained reputations for quality, if they had the cachet of German cars and everybody wanted one, how can that hurt the economy? Even if it's all baloney, and the cars still stank, and people spent a little more for a little less sometimes. It has to be better than a giant trade deficit.

You are wrong John.

If there is a real quality difference and the price reflected that, then we have one situation. If there is no quality difference (or indeed a lower quality on the American car, let's say it's a Chrysler which has no cars recommended for quality) then you are simply paying out more money than you should for a product (in this case, a car).

What impact does paying the inflated price have, even if the extra 20% you are paying goes to an American?

Well, you obviously have less to purchase on other things. Since cars are a big purchase and are generally bought on credit, you have higher monthly payments so you have less disposable income now and are paying interest on the extra money you paid.

Then there is the impact on Chrysler. Since Chrysler got your business, they have no incentive to make a better product. They stagnate because they are buoyed by the subsidy that the "buy American" attitude has given them.

I've personally only ever owned American cars. I like Pontiac styling, so I see value there. My brother worked at GM so I got a discount for buying a GM car (previously I got a discount on a Ford I purchased).

Whenever the price is separated from the value of the product that you get in return then the market is distorted. Competition no longer functions properly to ensure that products become both better and less expensive.

I have no problem with a "buy American" philosophy but let's not pretend that it doesn't have an element of protectionism and that it in any way to going to prompt the Big Three to make better cars. In fact, the opposite is true.


Where did I ever say that it was going to prompt the Big Three to make better cars? If anything, it would do just the opposite (as I believe I have held in other threads).

All I am saying is that it isn't protectionism. Nobody is being forced (in my example) to do anything. Buyers are freely choosing to spend a little more for a little less, for whatever reason suits them, just like they do all the time: dolphin-safe tuna, name brands over generics, designer anything, etc. (There are a million examples of this - in fact, I think that any product not treated as a commodity would fall into this category.) And the option to buy the Honda is still there, should the cost difference overcome the urge to "buy American."

Yes, there will be some resulting inflation. But America will be relatively better off (or, less worse off) than the rest of the world, because we sold the product. The buyer doesn't have as much money left over, but that is money that the (American) seller now has, so that's a wash. And the $8 that the product was really worth went to an American mug maker.

I'm not saying it's the path to long-term economic health, either. I agree that competition leads to better products at better prices. But we all know that the playing field is not level. You can't sell an American car in Japan, but we buy their cars up without complaint. You know the Chinese government subsidizes the heck out of their industries, but we buy their steel anyway. Korea won't touch our beef, but we buy their cars (I have two myself). "Buy American" is really no different than these situations - a baseless reason to favor one product over another, at some cost to efficiency. If we were enjoying year after year of giant trade surpluses, I'd really have an issue with it. But for now, it's just a little scale-tipper in the right direction.
skeeterses
There's nothing wrong with the "Buy American" philosophy in general. But Cars have such a huge cost, both economically and ecologically, that neither consumers or the Government ought to be subsidizing just for the sake of giving American workers jobs. The one thing we will never be able to make is oil, and fossil fuels are non-replenishable.

Anyway, there are things that Americans can do to "buy American" without breaking the bank. Buying local produce at the supermarket or growing vegetables in a garden will help reduce the distance that vegetables travel from the fields to the dinner table. Hand tools are another thing that still get made in America. Americans who have money to invest should set up a metal shop or even a blacksmithing shop in their backyards so that they can make tools. Shoe cobbling is another skill that Americans can learn to help reduce the amount of work that gets done in sweatshops. I know that a lot of Americans have "micro-breweries" in their basements. They need to take the next step and actually grow the grain in their yards as input for the brew. Carpentry is another skill that Americans should have in order to be able to make furniture. There's lots of things we could do to "Buy American".
Amlord
QUOTE(JohnfrmCleveland @ May 26 2009, 05:58 PM) *
Where did I ever say that it was going to prompt the Big Three to make better cars? If anything, it would do just the opposite (as I believe I have held in other threads).

All I am saying is that it isn't protectionism. Nobody is being forced (in my example) to do anything. Buyers are freely choosing to spend a little more for a little less, for whatever reason suits them, just like they do all the time: dolphin-safe tuna, name brands over generics, designer anything, etc. (There are a million examples of this - in fact, I think that any product not treated as a commodity would fall into this category.) And the option to buy the Honda is still there, should the cost difference overcome the urge to "buy American."


If it was compulsory, then it would be a form of protectionism. That's what the question for debate asked and what leder responded to.
Google
JohnfrmCleveland
QUOTE(Amlord @ May 27 2009, 08:37 AM) *
QUOTE(JohnfrmCleveland @ May 26 2009, 05:58 PM) *
Where did I ever say that it was going to prompt the Big Three to make better cars? If anything, it would do just the opposite (as I believe I have held in other threads).

All I am saying is that it isn't protectionism. Nobody is being forced (in my example) to do anything. Buyers are freely choosing to spend a little more for a little less, for whatever reason suits them, just like they do all the time: dolphin-safe tuna, name brands over generics, designer anything, etc. (There are a million examples of this - in fact, I think that any product not treated as a commodity would fall into this category.) And the option to buy the Honda is still there, should the cost difference overcome the urge to "buy American."


If it was compulsory, then it would be a form of protectionism. That's what the question for debate asked and what leder responded to.


Leder opened the door to a wider (and very worthwhile) question when he mentioned voluntarily buying American:

QUOTE(lederuvdapac @ May 26 2009, 09:44 AM) *
If you wanted a coffee mug and Mexico sold one for $8 but America sold one for $10, you may feel the need to support your countrymen by spending the extra $2.


That is what I was responding to. We all know that making it compulsory is akin to protectionism, and we all know that protectionism leads to bad things.

But the more interesting facet (to me, anyway) is the "wasted" money over and above the true value of the goods - the cachet, the name brand, the "buy American" nationalism that costs us an extra buck or two - how does that fit into the equation? It must be inefficient, because we are spending more than we are getting - so why doesn't it send us spiraling into inflation or something?

It's basically a charitable donation to the American manufacturer. Sometimes, I'm OK with that, and sometimes (like when I'm buying a car) I'm not. I figure I'm contributing to better working conditions, at least.
Dingo

1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?
Aren't most vehicles that are bought by American local, state and federal agencies, like police cars, American vehicles? That would seem to provide a huge domestic advantage right off the bat. Demanding private vehicles be American seems pretty intrusive, kind of unAmerican.

2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?
I think command economies can create enormous positive feedback, which is why wars generate such an economic boost. I don't like the idea of being ordered to buy American but it would sure boost the economy.

If I ran things I would definitely be coming up with stuff that was out of the box. Yes it's related because we are talking about the benefits and deficits of government intervention in our economy.
1. Americans could be the only ones allowed to own American property and businesses.
2. Trade would be on a roughly 50-50 basis. Other folks can sell us the equivalent of what they buy from us. Otherwise the tariffs would be huge.
3. The US, state and local governments could go directly into business in limited ways to create the products that we need, not just want. The prison-jail system would be a great place to start. Either that or businesses performing vital functions should be strictly chartered. Public officials with a mandate to serve the long term public interest would be on the governing boards. The free market is a euphemism for obsessing on the bottom line above all other considerations. That gave us the meltdown. The public interest should never be so neglected again.


lederuvdapac
QUOTE(JfC)
But the more interesting facet (to me, anyway) is the "wasted" money over and above the true value of the goods - the cachet, the name brand, the "buy American" nationalism that costs us an extra buck or two - how does that fit into the equation? It must be inefficient, because we are spending more than we are getting - so why doesn't it send us spiraling into inflation or something?


Because you don't know what inflation is. Inflation is the undue expansion or increase of the currency of a country, especially by the issuing of paper money not redeemable in specie. Rising prices, are a consequence of inflation and not to be confused with inflation itself. What you are describing, purchasing inefficient domestic goods over cheaper foreign goods, isn't an inflationary problem. Whether those dollars are spent by an American consumer or a foreign producer, it doesn't change the quantity of money.

QUOTE(Dingo)
I think command economies can create enormous positive feedback, which is why wars generate such an economic boost. I don't like the idea of being ordered to buy American but it would sure boost the economy.


Wars do not generate economic boosts. Building things that either sit in a warehouse or explode and sending a portion of your population off to fight and kill does not create wealth. It is wealth destruction.

Americans forgoing the competitive advantage of other countries to spend their money on lower quality but pricier domestic products, wastes resources (more emissions ohmy.gif ) and makes people poorer due to reduced purchasing power.

JohnfrmCleveland
QUOTE(lederuvdapac @ May 28 2009, 12:03 PM) *
QUOTE(JfC)
But the more interesting facet (to me, anyway) is the "wasted" money over and above the true value of the goods - the cachet, the name brand, the "buy American" nationalism that costs us an extra buck or two - how does that fit into the equation? It must be inefficient, because we are spending more than we are getting - so why doesn't it send us spiraling into inflation or something?


Because you don't know what inflation is. Inflation is the undue expansion or increase of the currency of a country, especially by the issuing of paper money not redeemable in specie. Rising prices, are a consequence of inflation and not to be confused with inflation itself. What you are describing, purchasing inefficient domestic goods over cheaper foreign goods, isn't an inflationary problem. Whether those dollars are spent by an American consumer or a foreign producer, it doesn't change the quantity of money.


Ahhh. Thank you.

OK, so getting back to your mug example - doesn't buying the American-made mug for $10 still help the American economy more than buying the Mexican mug? You can't count on the Mexican spending that $8 in America, after all.

I can see how it's wasteful on a worldwide basis - less goods, more money. But as a tool to keep more money in our country, isn't it effective?
Ted
QUOTE(JohnfrmCleveland @ May 28 2009, 12:32 PM) *
QUOTE(lederuvdapac @ May 28 2009, 12:03 PM) *
QUOTE(JfC)
But the more interesting facet (to me, anyway) is the "wasted" money over and above the true value of the goods - the cachet, the name brand, the "buy American" nationalism that costs us an extra buck or two - how does that fit into the equation? It must be inefficient, because we are spending more than we are getting - so why doesn't it send us spiraling into inflation or something?


Because you don't know what inflation is. Inflation is the undue expansion or increase of the currency of a country, especially by the issuing of paper money not redeemable in specie. Rising prices, are a consequence of inflation and not to be confused with inflation itself. What you are describing, purchasing inefficient domestic goods over cheaper foreign goods, isn't an inflationary problem. Whether those dollars are spent by an American consumer or a foreign producer, it doesn't change the quantity of money.


Ahhh. Thank you.

OK, so getting back to your mug example - doesn't buying the American-made mug for $10 still help the American economy more than buying the Mexican mug? You can't count on the Mexican spending that $8 in America, after all.

I can see how it's wasteful on a worldwide basis - less goods, more money. But as a tool to keep more money in our country, isn't it effective?


It might but overall the whole system is less efficient. If a consumer has say a total of say 100 to spend this month and spends $2 more on the mug he has less to spend on other things.

The reality is that everyone has more if we all buy from the low cost supplier, even if that supplier is in another country.
lederuvdapac
QUOTE(JohnfrmCleveland @ May 28 2009, 12:32 PM) *
QUOTE(lederuvdapac @ May 28 2009, 12:03 PM) *
QUOTE(JfC)
But the more interesting facet (to me, anyway) is the "wasted" money over and above the true value of the goods - the cachet, the name brand, the "buy American" nationalism that costs us an extra buck or two - how does that fit into the equation? It must be inefficient, because we are spending more than we are getting - so why doesn't it send us spiraling into inflation or something?


Because you don't know what inflation is. Inflation is the undue expansion or increase of the currency of a country, especially by the issuing of paper money not redeemable in specie. Rising prices, are a consequence of inflation and not to be confused with inflation itself. What you are describing, purchasing inefficient domestic goods over cheaper foreign goods, isn't an inflationary problem. Whether those dollars are spent by an American consumer or a foreign producer, it doesn't change the quantity of money.


Ahhh. Thank you.

OK, so getting back to your mug example - doesn't buying the American-made mug for $10 still help the American economy more than buying the Mexican mug? You can't count on the Mexican spending that $8 in America, after all.

I can see how it's wasteful on a worldwide basis - less goods, more money. But as a tool to keep more money in our country, isn't it effective?



No, not in the least. We keep more physical dollars in the country, but we diminish our purchasing power, meaning we can purchase less products and ultimately are poorer. Instead of a mug and a box of tea bags, you are only able to purchase the mug. It costs you more to buy the same amount of things. Sending US ($) dollars to Mexico increases their purchasing power as they now have dollars to spend on other products. As they benefit, we benefit because we get even lower prices. This is why the idea that free trade is a zero-sum game is bunk. Both parties benefit.
BecomingHuman
QUOTE(jfc)
OK, so getting back to your mug example - doesn't buying the American-made mug for $10 still help the American economy more than buying the Mexican mug? You can't count on the Mexican spending that $8 in America, after all.

The American economy benefits from the prosperity of other countries. International companies that prosper buy more American goods:
Tax policy toward American multinational firms would appear to be approaching a crossroads. The presumed linkages between domestic employment conditions and the growth of foreign operations by American firms have led to calls for increased taxation on foreign operations - the so-called end to tax breaks for companies that ship our jobs overseas. At the same time, the current tax regime employed by the U.S. is being abandoned by the two remaining large capital exporters - the UK and Japan - that had maintained similar regimes. The conundrum facing policymakers is how to reconcile mounting pressures for increased tax burdens on foreign activity with the increasing exceptionalism of American policy. This paper address these questions by analyzing the available evidence on two related claims - i) that the current U.S. policy of deferring taxation of foreign profits represents a subsidy to American firms and ii) that activity abroad by multinational firms represents the displacement of activity that would have otherwise been undertaken at home. These two tempting claims are found to have limited, if any, systematic support. Instead, modern welfare norms that capture the nature of multinational firm activity recommend a move toward not taxing the foreign activities of American firms, rather than taxing them more heavily. Similarly, the weight of the empirical evidence is that foreign activity is a complement, rather than a substitute, for domestic activity. Much as the formulation of trade policy requires resisting the tempting logic of protectionism, the appropriate taxation of multinational firms requires a similar fortitude.
SSRN
JohnfrmCleveland
I know I'm swimming upstream here, but just to play the Devil's advocate, I'm going to press on:

QUOTE(lederuvdapac @ May 28 2009, 01:10 PM) *
No, not in the least. We keep more physical dollars in the country, but we diminish our purchasing power, meaning we can purchase less products and ultimately are poorer. Instead of a mug and a box of tea bags, you are only able to purchase the mug. It costs you more to buy the same amount of things. Sending US ($) dollars to Mexico increases their purchasing power as they now have dollars to spend on other products. As they benefit, we benefit because we get even lower prices. This is why the idea that free trade is a zero-sum game is bunk. Both parties benefit.


But have we dimished our purchasing power by $8? We (America) now have a mug and $10 (as opposed to a mug, some tea, and whatever portion of our $8 we would normally expect Mexico to spend on U.S. goods), and our purchasing power has gone down somewhat.

Taken to the extreme, if America can produce little or nothing that merits purchase in the free market, what happens to our purchasing power then?
_____________________________

Here's another hypothetical question:

Planet E has free trade. But as a whole, there are some shortages. There is not quite enough food, water, oil, and wood for all people. But the economy works smoothly.

Country A, on its own, has many resources. It has more than enough food, water, oil and wood to satisfy its inhabitants. It is also has all the metal ore, minerals, etc. it needs within its own borders. In fact, it is the largest economy on Planet E, and it once produced everything from toasters to high tech. It still works smoothly. But now it has a large trade deficit.

Now, if Country A were to decide to seal up its borders, and trade with nobody but itself - basically, it decides to become its own planet, Planet A - would they end up better off for doing so?

Planet A has more resources per person, its inhabitants are more educated, on average, and they are at least as technologically advanced as the most advanced countries left on Planet E. Planet A's population is about 1/20th that of Planet E.

Shouldn't Planet A prosper? Won't they do better than Planet E?
lederuvdapac

QUOTE(JfC)
But have we dimished our purchasing power by $8? We (America) now have a mug and $10 (as opposed to a mug, some tea, and whatever portion of our $8 we would normally expect Mexico to spend on U.S. goods), and our purchasing power has gone down somewhat.


I can see where you are getting confused. The problem is that you are relying on only one logical step when you need to make two or three. You only have to look to Henry Hazlitt's Economics in One Lesson to see the logic played out:

Chapter 11: Who's "Protected" by tariffs?

QUOTE
An American manufacturer of woolen sweaters goes to Congress or to the State Department and tells the committee or officials concerned that it would be a national disaster for them to remove or reduce the tariff on British sweaters. He now sells his sweaters for $30 each, but English manufacturers could sell their sweaters of the same quality for $25. A duty of $5, therefore, is needed to keep him in business. He is not thinking of himself, of course, but of the thousand men and women he employs, and of the people to whom their spending in turn gives employment. Throw them out of work, and you create unemployment and a fall in purchasing power, which would spread in ever-widening circles. And if he can prove that he really would be forced out of business if the tariff were removed or reduced, his argument against that action is regarded by Congress as conclusive.

But the fallacy comes from looking merely at this manufacturer and his employees, or merely at the American sweater industry. It comes from noticing only the results that are immediately seen, and neglecting the results that are not seen because they are prevented from coming into existence.

The lobbyists for tariff protection are continually putting forward arguments that are not factually correct. But let us assume that the facts in this case are precisely as the sweater manufacturer has stated them. Let us assume that a tariff of $5 a sweater is necessary for him to stay in business and provide employment at sweater-making for his workers.

We have deliberately chosen the most unfavorable example of any for the removal of a tariff. We have not taken an argument for the imposition of a new tariff in order to bring a new industry into existence, but an argument for the retention of a tariff that has already brought an industry into existence, and cannot be repealed without hurting somebody.

The tariff is repealed; the manufacturer goes out of business; a thousand workers are laid off; the particular tradesmen whom they patronized are hurt. This is the immediate result that is seen. But there are also results which, while much more difficult to trace, are no less immediate and no less real. For now sweaters that formerly cost retail $30 apiece can be bought for $25. Consumers can now buy the same quality of sweater for less money, or a much better one for the same money. If they buy the same quality of sweater, they not only get the sweater, but they have $5 left over, which they would not have had under the previous conditions, to buy something else. With the $25 that they pay for the imported sweater they help employment—as the American manufacturer no doubt predicted — in the sweater industry in England. With the $5 left over they help employment in any number of other industries in the United States.

But the results do not end there. By buying English sweaters they furnish the English with dollars to buy American goods here. This, in fact (if I may here disregard such complications as fluctuating exchange rates, loans, credits, etc.) is the only way in which the British can eventually make use of these dollars. Because we have permitted the British to sell more to us, they are now able to buy more from us. They are, in fact, eventually forced to buy more from us if their dollar balances are not to remain perpetually unused. So as a result of letting in more British goods, we must export more American goods. And though fewer people are now employed in the American sweater industry, more people are employed—and much more efficiently employed—in, say, the American washing-machine or aircraft-building business. American employment on net balance has not gone down, but American and British production on net balance has gone up. Labor in each country is more fully employed in doing just those things that it does best, instead of being forced to do things that it does inefficiently or badly. Consumers in both countries are better off. They are able to buy what they want where they can get it cheapest. American consumers are better provided with sweaters, and British consumers are better provided with washing machines and aircraft.


Hazlitt goes on to smash the idea of protectionism in the rest of the chapter.

QUOTE(JfC)
Taken to the extreme, if America can produce little or nothing that merits purchase in the free market, what happens to our purchasing power then?


In order to consume something, you must first produce. That is one of the central concepts of Say's Law, something Keynesians and mainstream economists completely ignore. If the US could not produce anything of value to export, then we will not be able to then consume imports. Increasing our purchasing power would then depend on more production, not more consumption of domestic products.

QUOTE(JfC)
Planet E has free trade. But as a whole, there are some shortages. There is not quite enough food, water, oil, and wood for all people. But the economy works smoothly.

Country A, on its own, has many resources. It has more than enough food, water, oil and wood to satisfy its inhabitants. It is also has all the metal ore, minerals, etc. it needs within its own borders. In fact, it is the largest economy on Planet E, and it once produced everything from toasters to high tech. It still works smoothly. But now it has a large trade deficit.

Now, if Country A were to decide to seal up its borders, and trade with nobody but itself - basically, it decides to become its own planet, Planet A - would they end up better off for doing so?

Planet A has more resources per person, its inhabitants are more educated, on average, and they are at least as technologically advanced as the most advanced countries left on Planet E. Planet A's population is about 1/20th that of Planet E.

Shouldn't Planet A prosper? Won't they do better than Planet E?


Why would Planet A be better off? What situation are you comparing? If you are comparing Planet A to Planet E in an autarkic system, then yes the country with more resources would be marginally better off than the one without any. But if you are comparing Planet A practicing autarky to Planet A practicing free trade, then the latter would be better off than the former. How would Planet A have a trade deficit (import more than they export)? Wouldn't they have a trade surplus (export more than they import)?
Ted
QUOTE
jfc
Now, if Country A were to decide to seal up its borders, and trade with nobody but itself - basically, it decides to become its own planet, Planet A - would they end up better off for doing so?

Planet A has more resources per person, its inhabitants are more educated, on average, and they are at least as technologically advanced as the most advanced countries left on Planet E. Planet A's population is about 1/20th that of Planet E.


Soooo after sealing its borders the highly educated workers of Planet A set about making things that were made at ½ the price on Planet E. Thus the price doubles and everyone pays more for that shirt or whatever. Their buying power is diminished and all other industries and services get less

Meanwhile the highly skilled workers of Planet A that were making the tractors and precision tools needed by Planet E are laid off because Planet E has responded to the sealing of the borders by doing the same.

The reality is everyone makes out better if goods are made where the cost to do so is lowest. And that could be a country with lots of low skilled workers or a country with many high tech machines. Free Trade benifits all. Although it does not exist in a pure form anywhere in the world.

QUOTE
“Free trade is a type of trade policy that allows traders to act and transact without interference from government. Thus, the policy permits trading partners mutual gains from trade[citation needed], with goods and services produced according to the theory of comparative advantage.
Under a free trade policy, prices are a reflection of true supply and demand, and are the sole determinant of resource allocation. Free trade differs from other forms of trade policy where the allocation of goods and services amongst trading countries are determined by artificial prices that do not reflect the true nature of supply and demand. These artificial prices are the result of protectionist trade policies, whereby governments intervene in the market through price adjustments and supply restrictions[citation needed]. Such government interventions generally increase the cost of goods and services to both consumers and producers.
Interventions include subsidies, taxes and tariffs, non-tariff barriers, such as regulatory legislation and quotas, and even inter-government managed trade agreements such as the North American Free Trade Agreement (NAFTA) and Central America Free Trade Agreement (CAFTA) (contrary to their formal titles.)--any governmental market intervention resulting in artificial prices that do not reflect the principles of supply and demand.
Most states conduct trade polices that are to a lesser or greater degree protectionist.[1] One ubiquitous protectionist policy employed by states comes in the form agricultural subsidies whereby countries attempt to protect their agricultural industries from outside competition by creating artificial low prices for their agricultural goods.[2]”

http://en.wikipedia.org/wiki/Free_trade
Dingo
QUOTE(lederuvdapac @ May 28 2009, 09:03 AM) *
QUOTE(Dingo)
I think command economies can create enormous positive feedback, which is why wars generate such an economic boost. I don't like the idea of being ordered to buy American but it would sure boost the economy.


Wars do not generate economic boosts. Building things that either sit in a warehouse or explode and sending a portion of your population off to fight and kill does not create wealth. It is wealth destruction.

Well the 2nd world war gave us a hell of an economic boost. It was the New Deal on steroids as one commentator put it. You ignore for instance the expenditures of those who worked in war industries and the related development of agriculture, infrastructure etc. War is a very focused activity and it requires an economic mobilization to accompany it.

Sometimes ideology has to give way to the sheer stark facts.
lederuvdapac
QUOTE(Dingo @ May 28 2009, 09:56 PM) *
QUOTE(lederuvdapac @ May 28 2009, 09:03 AM) *
QUOTE(Dingo)
I think command economies can create enormous positive feedback, which is why wars generate such an economic boost. I don't like the idea of being ordered to buy American but it would sure boost the economy.


Wars do not generate economic boosts. Building things that either sit in a warehouse or explode and sending a portion of your population off to fight and kill does not create wealth. It is wealth destruction.

Well the 2nd world war gave us a hell of an economic boost. It was the New Deal on steroids as one commentator put it. You ignore for instance the expenditures of those who worked in war industries and the related development of agriculture, infrastructure etc. War is a very focused activity and it requires an economic mobilization to accompany it.

Sometimes ideology has to give way to the sheer stark facts.


World War II was concentrated economic destruction, not wealth creation. It was the broken window fallacy played out on a massive scale. In this piece by renowned economic historian Robert Higgs, he outlines the conditions during WW2:
QUOTE
In 1940 and 1941 the economy was recovering smartly from the Depression, but in the latter year the recovery was becoming ambiguous, as substantial resources were diverted to war production. From 1942 to 1944 war production increased rapidly. Although there is no defensible way to place a value on the outpouring of munitions, its physical dimensions are awesome. From mid-1940 to mid-1945 munitions makers produced 86,338 tanks; 297,000 airplanes; 17,400,000 rifles, carbines, and sidearms; 315,000 pieces of field artillery and mortars; 4,200,000 tons of artillery shells; 41,400,000,000 rounds of small arms ammunition; 64,500 landing vessels; 6,500 other navy ships; 5,400 cargo ships and transports; and vast amounts of other munitions.46 Despite countless administrative mistakes, frustrations, and turf battles, the command economy worked.47 But, as always, a command economy can be said to work only in the sense that it turns out what the authorities demand. The U.S. economy did so in quantities sufficient to overwhelm enemy forces.

Meanwhile, as shown above, real personal consumption declined. So did real private investment. From 1941 to 1943 real gross private domestic investment plunged by 64 percent; during the four years of the war it never rose above 55 percent of its 1941 level; only in 1946 did it reach a new high.48 Notwithstanding the initial availability of much unemployed labor and capital, the mobilization became a classic case of guns displacing both butter and churns. So why, apart from historians and economists misled by inappropriate and inaccurate statistical constructs, did people—evidently almost everyone—think that prosperity had returned during the war?

[...]

To sum up, World War II got the economy out of the Great Depression, but not in the manner described by the orthodox story. The war itself did not get the economy out of the Depression. The economy produced neither a “carnival of consumption” nor an investment boom, however successfully it overwhelmed the nation’s enemies with bombs, shells, and bullets.52 But certain events of the war years—the buildup of financial wealth and especially the transformation of expectations—justify an interpretation that views the war as an event that recreated the possibility of genuine economic recovery. As the war ended, real prosperity returned.


Recovery occurred after the government cut its massive spending and freed up labor and resources for the production of consumer goods. Unemployment on the eve of war was still 9.5%. During the war people had work, but they did not have prosperity. There was no economic boost. We had food and supply rationing for crying out loud. Who ever heard of an economic boom accompanied by rationing?
Mrs. Pigpen
QUOTE(lederuvdapac @ May 29 2009, 09:24 AM) *
Recovery occurred after the government cut its massive spending and freed up labor and resources for the production of consumer goods. Unemployment on the eve of war was still 9.5%. During the war people had work, but they did not have prosperity. There was no economic boost. We had food and supply rationing for crying out loud. Who ever heard of an economic boom accompanied by rationing?


Recovery occurred after all industry throughout Europe was bombed to the ground and they had to rely on our manufactured items to rebuild after. So, yes, the war definitely paid of for the US and led to an economic boom...not during the war obviously, but after. But you are also right that typically (almost always) wars don't lead to prosperity but the opposite. No 'broken window' fallacy in the case of WWII, because in this case all of the windows in the rest of the world were broken and we were contracted to make the repairs. It wasn't (for the most part) our windows that were broken.

1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?
Absolutely not.

2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?
Nope. Protectionism always hurts in the long term. It also potentially violates NAFTA, so we're looking at WTO lawsuits. Interestingly enough, NAFTA rules are restricted by the parties. So, for instance (as I understand it) Canada has not listed any local governments in its appendices, so an action by a local government in Canada would not be a breach of Canada’s international obligations. However, the US has listed a large number of States and local entities in its appendices to the WTO Agreement on Government Procurement. So local government protectionism in Canada may be legal in instances where ours likely wouldn't be. So, in a nutshell, we shouldn't have protectionist policies because other nations will respond in kind, particularly when we are legally bound whereas they might not be.
Dingo
QUOTE(lederuvdapac @ May 29 2009, 06:24 AM) *
QUOTE(Dingo @ May 28 2009, 09:56 PM) *
QUOTE(lederuvdapac @ May 28 2009, 09:03 AM) *
QUOTE(Dingo)
I think command economies can create enormous positive feedback, which is why wars generate such an economic boost. I don't like the idea of being ordered to buy American but it would sure boost the economy.


Wars do not generate economic boosts. Building things that either sit in a warehouse or explode and sending a portion of your population off to fight and kill does not create wealth. It is wealth destruction.

Well the 2nd world war gave us a hell of an economic boost. It was the New Deal on steroids as one commentator put it. You ignore for instance the expenditures of those who worked in war industries and the related development of agriculture, infrastructure etc. War is a very focused activity and it requires an economic mobilization to accompany it.

Sometimes ideology has to give way to the sheer stark facts.


World War II was concentrated economic destruction, not wealth creation.

Led I find it hard to get into one of these facts versus ideology arguments. It's apples and oranges. No one is arguing that the focus of war time production doesn't have destruction as a central focus. I'm not arguing for war. It's terrible.

A simple fact remains. GDP went up hugely during WW2. Unemployment went down drastically. Massive government intervention appears to be the proximate cause of this. Do you really want to argue this? Rationing means certain commodities are limited but it doesn't change the fact that women and minorities had a shot at jobs they had been shut out of before and the added money simply went to boost nonrationed industries. Poverty in general appears to have been less of a problem.

And of course if we had been heavily bombed during the war then that economic equation would have changed but it's hard to say we benefited from the destruction of others during the war. That was afterwards.

The lesson appears clear, as long as there are dormant resources to be exploited borrowing and government intervention in the economy even in a destructive endeavor can pump prime the general economy enormously. And commonly there are by products of war production that can boost a peace time economy. Aircraft, seacraft and medical advances come to mind among many.

Here is a good link developing some of the facts of our world war 2 economy.


skeeterses
I'll throw in my 2 cents on this whole notion that WW2 "brought America out of the Depression", or that it created some kind of "pent up demand." The Second World War was the most catastrophic war of the 20th Century. To say that it brought the World out of the Depression is to somehow imply that economic prosperity is way more important than the lives of the 60 million people who died during that war. But enough of my ideological argument there.

The War did generate economic activity. But FDRs New Deal Programs themselves certainly helped get America through the Great Depression. And there are plenty of ways for the Government to generate economic activity besides giving men rifles and manufacturing weapons. We must call the Government spending of that period what it is, and that is Wealth Redistribution. The wealthy people of that period bought the war bonds and paid taxes while the young poor men went to the front lines and fought. Without the wealthy folks to finance the war effort, there would have been no victory or economic recovery. The limit with this approach as far as economics is concerned is that after a certain point, there's not enough wealth to distribute. Had World War 2 gone much longer, the United States could have gone bankrupt in the pursuit of victory.

azwhitewolf
This almost sounds like something out of The Onion.

QUOTE
Warren Mayor Jim Fouts tells the Detroit Free Press and The Detroit News that he wants municipal and school officials in the region to require their staffers to buy Detroit Three vehicles.

And if they don't? Are they going to Foreign Car Time-Out? Import Hell?

Maybe, but they'll get over 100k before their first tune up. cool.gif

The good news is that the quality of public education will finally match the crap heaps in the parking lot of said schools. Putting it in that perspective, it makes a lot of sense.

1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?
Compel? Sure why not. Nothing wrong with a friendly request.
Force? Absolutely not. Not in a free market.

The cars should sell themselves, really. The fact that they don't is a testament on the workmanship. It wasn't an American auto company that offered the first 100k mile warranty, or offered better fuel mileage. They catered to the enthusiasts with big engines and super cool body styles, but most Americans ended up buying economical cars. America's version became economical, but far too late.

2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?
I bought my second and last Chrysler product. My Honda Civic, which I drove about 100+ miles daily outlasted a van I bought 2 years later that my wife drove to the grocery store in. So we got a Jeep, and I've paid more in $100. warranty-covered deductibles for the Jeep than I have with maintaining my Civic. My 6-year old Civic did need motor mounts once, covered 100%, no deductible. My wife's Jeep water pump broke - $100 deductible. Wheel bearings - $100 deductible. Noise in the engine - undetermined, but strangely fixed - $100. deductible. A/C broke - $100. deductible. Four fuses short out, killing the starter - $100 deductible. I just don't have the patience to go on, and the damn thing is only 3 years old. It's not a 4-wheel drive, either, and we keep it on the road.

And in case you're wondering, our Jeep is sitting in a repair center now - you guessed it - getting fixed again. I've already withdrawn $100 cash from the bank, and they know that I won't pay a penny more, and they're eating the tax. We made that clear on the last 3 visits.

Honda gives me a loaner for free. Chrysler has a convenient rental car office where I pay out of pocket. Hmmm.. hmmm.gif I'll take the shuttle, thanks.

Based on my experience, there's no way in hell I'd dump the second largest payment I'll make (outside my house) into a company that can't even stand behind their own products.

Perhaps it's an argument against unions, but I'm guessing they take care of their employees far better than they build their products. Then they try to compete price-wise with what Japan is rolling out, and after the benefits and bonuses for the workers are doled out, the only thing to do is buy cheaper parts, and cut corners.

And let me tell you, it shows. mad.gif

If buying a Jap car makes me unpatriotic, hey, whatever. Compel me to buy what you think I should - that's your right, your opinion and your freedom. But if you ain't buyin', you ain't pickin'.

I think it would be a fair policy, actually. Figure 2 weeks vacation every year, and 5 sick days are status quo. If they introduce 10 car-repair days to where you can take time off without penalty to get your broken Big-3 heap fixed, then you have successfully compelled me.

Fat chance, tho.
skeeterses
Look at it this way AZ, at least you're helping to keep American mechanics in business by buying Detroit cars.

Now seriously, with all the concessions that the labor unions have made as far as their compensation is concerned, do you suppose the American automakers will start using higher quality parts for the cars and still be price-competitive with Toyota and Honda? And, would you yourself consider buying a FIAT when they start building their "small cars" in American factories within the next couple years?
lederuvdapac
Like clockwork, our trading partners are fighting back:

Canada passes "Buy Canada" type resolution

QUOTE
Canadian mayors have passed a resolution that would potentially shut out U.S. bidders from local city contracts.


'Buy American' plan leads to ire, confusion

QUOTE
The "Buy American" plan in US economic stimulus legislation is drawing increasing fire from US trading partners and also has led to confusion as government agencies try to implement the strategy.

Ironically, the measure is backfiring on some US firms that are being disqualified from contracts if they use non-American materials, and making it difficult to determine who can qualify, say some business leaders.

[...]
Singapore was the latest among key US allies such as Canada and Japan to express concern over the restriction, warning that it could "beget other actions and then cause the situation to snowball in the wrong direction."

The Buy American requirements were already facing retaliation from Canada and could cause job losses and decline in trade, essential to jolting the world's largest economy from prolonged recession, warned the US Chamber of Commerce, a top business lobby of more than three million businesses and groups.


Do the protectionists and their "theory" ever get tired of being wrong?
Dingo
QUOTE(lederuvdapac @ Jun 6 2009, 05:18 PM) *
Like clockwork, our trading partners are fighting back:

Canada passes "Buy Canada" type resolution

QUOTE
Canadian mayors have passed a resolution that would potentially shut out U.S. bidders from local city contracts.

Once self-sufficiency of nations as much as possible is treated as a value then I think we should welcome Canadian resolutions like this.

You'd think with the collapse of a few American financial institutions leading to a world wide economic meltdown that the notion of "free trade" interdependency would get another look see.
lederuvdapac
QUOTE(Dingo)
Once self-sufficiency of nations as much as possible is treated as a value then I think we should welcome Canadian resolutions like this.

You'd think with the collapse of a few American financial institutions leading to a world wide economic meltdown that the notion of "free trade" interdependency would get another look see.


This is moronic. "Self-sufficiency" is code word for doing the same service or producing the same good at a higher price than someone else could do. It wastes resources and makes everyone poorer. More than that, it leaves a much larger carbon footprint as it is far more resource intensive. Very green of you Dingo.
Dingo
QUOTE(lederuvdapac @ Jun 8 2009, 06:48 AM) *
QUOTE(Dingo)
Once self-sufficiency of nations as much as possible is treated as a value then I think we should welcome Canadian resolutions like this.

You'd think with the collapse of a few American financial institutions leading to a world wide economic meltdown that the notion of "free trade" interdependency would get another look see.


This is moronic. "Self-sufficiency" is code word for doing the same service or producing the same good at a higher price than someone else could do. It wastes resources and makes everyone poorer. More than that, it leaves a much larger carbon footprint as it is far more resource intensive. Very green of you Dingo.

I'm glad you find my views moronic ledpac. If you thought otherwise I'd have to reexamine them. tongue.gif

You would think the consequences of our farming out practically everything under the sun and deregulating to beat the band would send folks like you a message but apparently ideology like religion is other worldly.

Learning to live within your own means on resources readily available according to rational well established public standards is so sensible and obvious only a purist "free market" ideologue would miss it. rolleyes.gif
lederuvdapac
Let me ask you a question Dingo. Did you build your automobile (or bicycle perhaps?)? Did you create your own clothes? Did you pick the food that appears in your refrigerator? The answer to all of these questions is probably no. The reason? Probably because you can't build your own car, don't know how to make clothes, or can't pick your own food. If you were required to do all of these activities, do you think your life would be better or worse? A life that requires you to provide for everything that you use and enjoy. But I have an idea! You may be able to construct a bicycle, but your neighbor has grown corn for you to eat. He desires a bicycle and you desire to eat. So you both decide to trade a bicycle for some corn. Who benefits in such a transaction? Both of you of course. Both of you voluntarily reached a contract that provides you both with benefits. You don't have to learn how to grown corn, you just have to know how to construct a bike.

This is called specialization and the division of labor. Having people focus on what they are good at allows them to create the highest quality products and services for the lowest price. You do not have to have the knowledge to do every thing that you use in your life. Such would be inefficient and wasteful. Where it takes one person with knowledge a couple of days to build a bike, it may take you weeks of trial and error...wasting resources.

Specialization makes everyone better off. This is not even mentioning the liberty aspect of denying one person the ability to voluntarily trade with his neighbor. The economic aspects are not even close. Your position is not accepted by anyone except the MOST liberal and extreme of people. And those people are probably not even economists.
Dingo
QUOTE(lederuvdapac @ Jun 8 2009, 04:08 PM) *
Let me ask you a question Dingo. Did you build your automobile (or bicycle perhaps?)? Did you create your own clothes? Did you pick the food that appears in your refrigerator? The answer to all of these questions is probably no. The reason? Probably because you can't build your own car, don't know how to make clothes, or can't pick your own food. If you were required to do all of these activities, do you think your life would be better or worse? A life that requires you to provide for everything that you use and enjoy. But I have an idea! You may be able to construct a bicycle, but your neighbor has grown corn for you to eat. He desires a bicycle and you desire to eat. So you both decide to trade a bicycle for some corn. Who benefits in such a transaction? Both of you of course. Both of you voluntarily reached a contract that provides you both with benefits. You don't have to learn how to grown corn, you just have to know how to construct a bike.

This is called specialization and the division of labor. Having people focus on what they are good at allows them to create the highest quality products and services for the lowest price. You do not have to have the knowledge to do every thing that you use in your life. Such would be inefficient and wasteful. Where it takes one person with knowledge a couple of days to build a bike, it may take you weeks of trial and error...wasting resources.

Specialization makes everyone better off. This is not even mentioning the liberty aspect of denying one person the ability to voluntarily trade with his neighbor. The economic aspects are not even close. Your position is not accepted by anyone except the MOST liberal and extreme of people. And those people are probably not even economists.

Wow, talk about a strawman. I mention national self-sufficiency and all of a sudden I want to build a car in my backyard and I'm against specialization. I don't think we have to go any further down that absurd road do we?

I know all about your Adam Smithian abstractions. Take your head out of a book for a moment and look around. High unemployment, collapsing financial system, disastrous balance of payments tradewise, massive yearly public deficits, looming environmental collapse; brought mostly by you guys.

I want to set good standards and goals for the country independent of the special interests of any profit making entity. Business can make its profits but strictly under preset guideline of what's in the public interest. They shouldn't be able to murder America to make a profit.

One of the first things is to establish that the long term good of America comes first and anything that undermines that in the name of corporate profit should have the economic steam taken out of it. Self-sufficiency in energy seems like an obvious national good. If we had followed Jimmy Carter's lead instead of head-in-the-sand let the market decide Reagan we wouldn't be suffering from the huge energy dependency that is so much part of our present problems and we would be well down the road to greening our economy.

I happen to believe in long term public planning. The government sets the rules and business follows them and can't legally contribute to politicians to influence the rule making process. It's called law and order. Letting the profit makers determine the rules gets us where we are now. It's the inmates running the asylum, it's criminal anarchy. The auto companies should never have been able to mess with CAFE standards. They should have had no political clout. The public interest was not served and that is part of our present problem.

What economists except a bunch of ideological know nothings in the CATO Institute think like you anymore? Events have repudiated your profit uber alles thinking.
Gray Seal
Dingo, the current economic situation has not been brought about because of economic theory. It has come about because of a bunch of smucks we elected are using the collectivism argument to facilitate their ability to give favor to a selected few. The economy is a mess because of government intervention and finagling of the dollar. Our governments are too big, too involved, and have become the major player instead of the referee. The solution is the concept of freedom rather than government giving advantage. We are losing freedom. It is not economic freedom such as free trade which has us to this point.

Certainly, I agree with you in regards to your opinions on pollution, the dumping of massive amounts of CO2 into the atmosphere, and relying more on local energy. These are all positions which are compatible with freedom and free markets. Markets would not be exactly free if people are able to damage others via pollution. Freedom is doing what you wish as long as it does not infringe upon the freedom of others. Giving more market decisions to central control is the antithesis to the solution.

The solution is not to give the smucks more power and the rest of us less freedom. Government can be used to determine proper standards/guideline under which the markets must operate defend third parties from pollution and excessive CO2 emissions. Governments should be neutral as to economic outcome. We need to elect those who will use minimal rules to defend freedom (which will include prohibiting pollution). Blanket blocking of foreign trade does not identify nor address real problems. It is smucks fishing for easy votes and easy solutions which are nonsense. As you have said, the exchange of goods and services is a good thing. What suddenly makes it a bad thing once a border is drawn on a map?

So you like long term planning by politicians? Politicians plan for the short run worse than anyone. Society needs rules to defend freedom in the short run. The long run will take care of itself. I can not predict the future and I certainly do not trust any politician to do so in my best interest.

A self sufficient nation is one without freedom. I suppose those who like the idea must have thought the US was doing Iraq a big favor when we placed trade sanctions upon them in the 90s.
skeeterses
Dingo, here's a hard truth about economics that has taken me a long time to understand as well. In the real world, countries don't necessarily get to have the industries that they want to have.

You, NT, CR, and some other people on this bulletin board want America to be a technologically advanced country manufacturing computers and cars. But the reality of the economy is suggesting that Americans should do other things like low paying service jobs, gardening, basket weaving, and other jobs that don't fit the profile of a superpower economy. A lot of parents want their kids to become doctors or teachers. But not every kid can actually grow up to do those jobs. Same thing with industries. A lot of countries would like to make cars and electronic products, but not every country has the resources to give their workers good paying manufacturing jobs.

America can make things. But, we're not going to be able to make everything that we want to have. And no trade policy is going to change that.
lederuvdapac
QUOTE(Dingo)
High unemployment, collapsing financial system, disastrous balance of payments tradewise, massive yearly public deficits, looming environmental collapse; brought mostly by you guys.


Complete propaganda. This is what the bureaucrats and politicians spout in order to deflect blame. They put the burden on the faceless and defenseless and wash their hands clean of the situation. People in private industry were certainly at fault for sure, but there actions are regulated by market forces. The politicians will then use this situation to get people like you to cede more freedom and bring more things under centralized control. Just give them a little more of your economic freedom and the "angels" in Washington will make everything alright. It is all a sham, a farce, a great facade to frighten you and to confuse you into doing whatever the politicians want. They did it after 9/11 and they are doing it now. If you think our problems can be solved by ceding control to some all-powerful central body, then I cannot convince you otherwise. I can only show you what such a society would become and ask whether that is the society you really want to live in.

QUOTE(Dingo)
I want to set good standards and goals for the country independent of the special interests of any profit making entity. Business can make its profits but strictly under preset guideline of what's in the public interest. They shouldn't be able to murder America to make a profit.


Well what is in the public interest? Who should decide? We should decide via democratic means you say? What if those democratic means trample on the rights of individuals? You use vague terms like "public interest" implying a certain set of standards and goals. Well what if those standards and goals deemed in the "public interest" run counter to your own views? For instance under the Bush Administration. Surely, you didn't agree with the actions he took although he pursued the "public interest." In such a scenario, isn't it preferable that the government not decide the public interest? If we are responsible for our own decisions, then we are the only ones affected by bad choices. When you empower government with the ability to decide the public interest, their bad choices affect everyone.

QUOTE(Dingo)
Self-sufficiency in energy seems like an obvious national good.


Why? You haven't provided an explanation as to why. Why should we force upon people expensive and complex energy technologies when we have cheap and abundant energy resources ready to be consumed? Energy made more expensive means that there is less money available for other goods and services. That means less jobs and less wealth creation. You make people poorer by forcing such a situation on them. Alternative energy will have its time down the road, but that time is not now.

QUOTE(Dingo)
I happen to believe in long term public planning. The government sets the rules and business follows them and can't legally contribute to politicians to influence the rule making process. It's called law and order. Letting the profit makers determine the rules gets us where we are now. It's the inmates running the asylum, it's criminal anarchy.


Are the politicians and bureaucrats immune from this greed and corruption that you place upon the profit-seekers? Are they completely altruistic and seek only the public interest at their own expense? I think not. Politicians make decisions not because it is in the best interest of the country but because of politics. So don't kid yourself. If you don't like the actions of a certain corporation, you can harm them by not buying their product. If enough people agree with you, the company will suffer harm and have to either change or go under. When politicians make decisions, they affect everyone and they do so through the use of force (comply or go to jail).

QUOTE(Dingo)
The auto companies should never have been able to mess with CAFE standards. They should have had no political clout. The public interest was not served and that is part of our present problem.


Is the public interest served by making cars more expensive? Or how about putting American car companies at a competitive disadvantage when foreign manufacturers are better at fuel efficiency?
Ted
QUOTE
Dingo
One of the first things is to establish that the long term good of America comes first and anything that undermines that in the name of corporate profit should have the economic steam taken out of it. Self-sufficiency in energy seems like an obvious national good.


Great idea – so tell me have you written to Obama and yout Congressional buddies that have the drilling ban still on? How are we going to be “self sufficient” in anything if the fools in congress wont let industry do the job?

And as far as “corporate profit” goes the rule is you cannot punish a corporation by beating their profits to death and expect them to then compete in the world marketplace. They will either go out of business or just leave the country.

The coming idiocy of cap and trade is about to do just that. Business that cannot run the hell out of the country will raise prices and hope to survive.

And before you blame Reagan remember it’s the Congress that spends the money. Reagan demanded a bigger military – that btw ended the cold war, but dems took their pound of flesh in big deficit social spending that drove out indebtedness.

QUOTE
I happen to believe in long term public planning. The government sets the rules and business follows them and can't legally contribute to politicians to influence the rule making process.


Great idea – lets do it. But then lets remember that those “corporations” create most jobs and we need to insure we don’t “pass laws” that put them under or drive them to other countries.

Gray Seal
Ted, government should not care one iota about "beating profits to death". Society should decide what is pollution and make standards to prevent that from happening. The argument against cap and trade because it affects profitability is empty. Government should not care about profit. Government should care about third parties being damaged by pollution ( passive involvement in a transaction where you have not been involved in the decision ). Standards of pollution should apply to foreign as well as domestic trade or such standards will be ineffectual when pollution can have worldwide effects. There can be a prohibition on foreign made products where the manufacturer has not followed US standards to limit pollution.

The drilling ban is to protect third parties. You may make an argument that the ban does not protect them as intended but the argument that "there is money to be made so who cares about affecting third parties" is one which is anti-freedom.
Ted
QUOTE
G Seal

Ted, government should not care one iota about "beating profits to death". Society should decide what is pollution and make standards to prevent that from happening. The argument against cap and trade because it affects profitability is empty. Government should not care about profit. Government should care about third parties being damaged by pollution ( passive involvement in a transaction where you have not been involved in the decision


First of all lets get one thing straight – CO2 is not pollution. And I don’t give a damn what the EPA says either.

Beyond that I agree with you regarding regulation. Government should regulate and corporations should follow – simple. But, and it’s a big but, there needs to be a “level playing field”. So that one company is not working with different rules that effects cost while another is free of it. Typically when this happens the company with the lower costs puts the other out of business.

In this case its countries. We say we want to keep jobs here. Great idea, but raising companies costs while companies in China for example don’t have the same costs just makes our companies uncompetitive.

They can either go under or move out of the country taking the jobs with them.

So needless to say high corporate taxes and costly regulations will not save American jobs – just the opposite.

QUOTE
The drilling ban is to protect third parties. You may make an argument that the ban does not protect them as intended but the argument that "there is money to be made so who cares about affecting third parties" is one which is anti-freedom.



The drilling ban is ridiculous. And in some cases if we don’t drill offshore China will and in the same place. Offshore drilling is safe and productive. To not do it is to continue our energy dependence and divert funds to others we could use here. It is a big part of out balance of payments issue.

And when the price of gasoline hits $4/gallon again democrats that have stopped the drilling are going to pay the price – politically.

Count o it.
Gray Seal
Ted, you have echoed much of what I intended to communicate. Regulations do need to be fair and not create artificial competitive favoritism between countries.

I also agree with you about taxes, and the government which uses them, being too large. Regulations which do not protect freedom and fair competition in the marketplace are friction without benefits overall ( advantage for some ).

We disagree about increasing CO2 levels in our atmosphere to have any effect.

------------------------------------

I question this idea:
QUOTE(Ted)
We say we want to keep jobs here. Great idea, but ...
It is not a great idea. We should not want our government to keep jobs here. This is an argument which places government as the planner for our society. Governments are terrible planners as they are run by politicians. We need to get away from the idea that government is the benevolent provider and recognize it should never be involved with such planning. If we provide a freedom based market with fair standards to protect competition the jobs will take care of themselves for those of us who are able to be productive.

------------------------------------

What are the locations where China will be placing oil drills where we are banning them?

------------------------------------

I hope our society can address the problems of pollution and energy without resorting to the failed partisan Democratic-this or Republican-that charade.
Ted
QUOTE
GS
Ted, you have echoed much of what I intended to communicate. Regulations do need to be fair and not create artificial competitive favoritism between countries
.


G Seal -Well then over an above having one of the highest corporate tax rates in the world the C&T Tax will be added on top. Making all of our companies less competitive or driving them out of the country.

And yes some industries that use lots of power will get credits but everyone pays this tax – directly or indirectly – making it a net loser in the world in international competition.

This will hurt our economy and jobs.


QUOTE
It is not a great idea. We should not want our government to keep jobs here. This is an argument which places government as the planner for our society. Governments are terrible planners as they are run by politicians


This is not what I am referring to. Government has the duty to NOT Tax our companies into a position that is non competitive. That is all I mean by this.

So lets say it this way – we don’t want Government to drive jobs out of the country – as the current administration and Congress are planning on doing – soon.

http://www.sfgate.com/cgi-bin/article.cgi?.../MNQ717FNUG.DTL

Dingo
QUOTE
GS. The economy is a mess because of government intervention and finagling of the dollar.

Government intervention on whose behalf? On behalf of Wall Street. We need a government free of those kind of pressures.

QUOTE
So you like long term planning by politicians? Politicians plan for the short run worse than anyone.

Politicians are short term players because they are bought. Politics should be completely separated from big wealth. Futhermore the licensing of radio and TV stations should require public service spots for discussing issues and hearing different points of view. We should be pro-active about democracy.

QUOTE
Sk. America can make things. But, we're not going to be able to make everything that we want to have.

We can make or produce everything we NEED to have which is my point. We should be self-sufficient in the area of our needs so we can’t be blackmailed or in anyway manipulated at an economic level.

QUOTE
Ledpac. If you think our problems can be solved by ceding control to some all-powerful central body, then I cannot convince you otherwise.

I never said that. Making laws against murder does not cede all power to the police. A greater bias toward “made in America” simply means we modify the American standard of competition. Government formally, on whatever level, always determines the rules of the game. It always has and always will. It’s a question of good rules or bad rules plus honest unbought enforcement.

QUOTE
Well what is in the public interest? Who should decide?

Assuming now we are talking about the collective interest as opposed to strictly individual matters, the elected officials free of money pressure should decide. A more independent deliberative body to my mind would then go out and find the wisest people in an area of concern and have them come together to blue print a plan for the future, which would then become the guideline for future law.

Guess what, that’s kind of how we ended up with our Constitution.

QUOTE
Why should we force upon people expensive and complex energy technologies when we have cheap and abundant energy resources ready to be consumed?

Well we have relatively cheap energy in Saudi Arabia which is screwing up our balance of payments, screwing up the environment, not providing jobs at home and financing Muslim terrorism. Seems like that’s a good argument right there to start getting into home grown green energy technology. Right off the bat you are killing at least four wicked birds with one stone.

QUOTE
If you don't like the actions of a certain corporation, you can harm them by not buying their product.

And if I don’t like a politician I can harm him by not voting for him. Doesn’t seem like you’ve made much of a point.

QUOTE
Is the public interest served by making cars more expensive?

Well it serves the public interest to make cars smaller and more fuel efficient, quite obviously.

QUOTE
Ted. And as far as “corporate profit” goes the rule is you cannot punish a corporation by beating their profits to death and expect them to then compete in the world marketplace.

Your idea that corporations can’t make profits without the necessity of destroying the country they live in would even make a Marxist blush. rolleyes.gif

QUOTE
GS. We should not want our government to keep jobs here. This is an argument which places government as the planner for our society.

And just who do you propose to do the planning? You want things unplanned?

Welcome to anarchy. ph34r.gif

lederuvdapac
QUOTE(Dingo)
A greater bias toward “made in America” simply means we modify the American standard of competition. Government formally, on whatever level, always determines the rules of the game. It always has and always will. It’s a question of good rules or bad rules plus honest unbought enforcement.


Well then this goes down as one of the worst rules. Even the most liberal economists will tell you that Smoot-hawley which placed a tariff on imports was an absolute disaster in the 1930s leading to a collapse in world trade and contributed to the longevity of the Great Depression. You have no facts, not even any cedible theoretical backing for your position.

QUOTE(Dingo)
Assuming now we are talking about the collective interest as opposed to strictly individual matters, the elected officials free of money pressure should decide. A more independent deliberative body to my mind would then go out and find the wisest people in an area of concern and have them come together to blue print a plan for the future, which would then become the guideline for future law.



lolz. Someone stayed awake during civics class. The myth of wise and all-knowing elders who can rationally plan our futures is patently absurd. You assign so much disdain for capitalists and label them greedy and corrupt. Yet you think we can find angels who will stop at nothing to pursue the public interest. Laughable idealism. Such a situation can never happen nor will it ever happen. When you focus more power in the government, the only kind of power that matters is political power. People lose their individual liberty and the government is free to do whatever it wants as long as it has special interests in its pocket.

QUOTE(Dingo)
Well we have relatively cheap energy in Saudi Arabia which is screwing up our balance of payments, screwing up the environment, not providing jobs at home and financing Muslim terrorism. Seems like that’s a good argument right there to start getting into home grown green energy technology. Right off the bat you are killing at least four wicked birds with one stone.


1) There is nothing wrong with our balance of payments. The idea that we need to watch it is false. 2) "Clean" energies that are more expensive to produce inherently mean they require more resources to produce. More resources = worse for the environment. 3) There is no proof that jobs abroad deprive domestic jobs. In fact, the opposite is true. Investments abroad assist jobs on the domestic front by giving corporations income and they provide purchasing power for foreign workers. 4) I'll let Dilbert handle this one.

QUOTE(Dingo)
And if I don’t like a politician I can harm him by not voting for him. Doesn’t seem like you’ve made much of a point.


If you don't want a corporate product, you don't have to purchase the product and it affects no one. If you don't want a politician, other people's decisions affect you and if you fail to comply you go to jail.

QUOTE(Dingo)
Well it serves the public interest to make cars smaller and more fuel efficient, quite obviously.


Why? What if thats not what people want to buy? If that was truly the public interest, would you need a government decree?

Dingo
QUOTE(lederuvdapac @ Jun 9 2009, 07:12 PM) *
QUOTE(Dingo)
Assuming now we are talking about the collective interest as opposed to strictly individual matters, the elected officials free of money pressure should decide. A more independent deliberative body to my mind would then go out and find the wisest people in an area of concern and have them come together to blue print a plan for the future, which would then become the guideline for future law.


lolz. Someone stayed awake during civics class. The myth of wise and all-knowing elders who can rationally plan our futures is patently absurd. You assign so much disdain for capitalists and label them greedy and corrupt. Yet you think we can find angels who will stop at nothing to pursue the public interest. Laughable idealism. Such a situation can never happen nor will it ever happen. When you focus more power in the government, the only kind of power that matters is political power. People lose their individual liberty and the government is free to do whatever it wants as long as it has special interests in its pocket.


QUOTE
QUOTE(Dingo)
Well we have relatively cheap energy in Saudi Arabia which is screwing up our balance of payments, screwing up the environment, not providing jobs at home and financing Muslim terrorism. Seems like that’s a good argument right there to start getting into home grown green energy technology. Right off the bat you are killing at least four wicked birds with one stone.


1) There is nothing wrong with our balance of payments. The idea that we need to watch it is false. 2) "Clean" energies that are more expensive to produce inherently mean they require more resources to produce. More resources = worse for the environment. 3) There is no proof that jobs abroad deprive domestic jobs. In fact, the opposite is true. Investments abroad assist jobs on the domestic front by giving corporations income and they provide purchasing power for foreign workers.


QUOTE
QUOTE(Dingo)
And if I don’t like a politician I can harm him by not voting for him. Doesn’t seem like you’ve made much of a point.


If you don't want a corporate product, you don't have to purchase the product and it affects no one. If you don't want a politician, other people's decisions affect you and if you fail to comply you go to jail.


QUOTE
QUOTE(Dingo)
Well it serves the public interest to make cars smaller and more fuel efficient, quite obviously.


Why? What if thats not what people want to buy? If that was truly the public interest, would you need a government decree?

Ledpac, I'm going to let your parade of ideological mantras, faith statements, illogic and straw men stand on their own. If anybody thinks your responses constitute cogent argumentation, well be my guest.

I would say on the Smoot-Hawley tariff there is at least a legitimate argument. However tariffs have been around in many countries including ours for a long time and they didn't all result in economic tailspins. As I recall from my HS history a Jefferson ban of British goods gave a terrific boost to American industry in its early stages.
lederuvdapac
QUOTE(Dingo)
As I recall from my HS history a Jefferson ban of British goods gave a terrific boost to American industry in its early stages.


If by "boost," you mean horrible disaster that plunged most of New England into economic depression and almost into secession. American trade declined by up to 75 percent for exports and 50 percent for imports (source). You may need to upgrade from the HS history books.
quick
QUOTE(skeeterses @ May 22 2009, 10:49 PM) *
http://www.msnbc.msn.com/id/30848643/
QUOTE
Warren Mayor Jim Fouts tells the Detroit Free Press and The Detroit News that he wants municipal and school officials in the region to require their staffers to buy Detroit Three vehicles.

To help rescue the Big 3, a Michigan mayor wants to compel government employees to purchase cars made in the USA.
Just as with the Chinese mandatory smoking idea, this one is equally silly. On the Newsvine discussion thread, people were bashing the Detroit cars themselves, but I'm not going to do that.

This reasoning behind such a proposal is similar to the myth of how Henry Ford built his market by paying his workers enough money to buy model-Ts. The fallacy in that is that while the workers did buy model-Ts out of loyalty, it was actually the bigger market that brought money into the company. The same thing still applies today. While the Detroit automakers pay taxes to the different cities in Michigan, the automakers depend on the rest of the nation to buy their cars. If the rest of the nation doesn't buy the Big 3 cars, Michigan by itself does not have a big enough market to keep all the auto factories open. America still buys American cars of course. But just not enough of them to keep all the auto factories open.

Question for debate,
1. Should any Government official have the authority to compel his employees to purchase an American product for the economic good of America?
2. Would such a move be of any significant help to the economy or would it merely be symbolic like a worker buying his own products?




1) The govt does have such authority, at least indirectly. A tariff (which until the 16th am was the primary tax for funding the US government) would effectively compel not only govt employees but all Americans to "buy American".

2) There are two major arguments against buying American to the exclusion of other products for no reason other than their point of origin (regardless of the means used, be it an embargo, a tariff, or just a "feel good" social move):

First, politicians argue it will cause a backlash against our exports in retaliation; obviously, an official "buy American" policy would more likely cause this than an informal social or business policy (South Koreans generally won't buy many American-made products but we generally do not retailiate: http://techdirt.com/articles/20050302/0248200_F.shtml; http://yaleglobal.yale.edu/display.article?id=8600 )

I address exports below. Exports are nice, but I would not want to be dependent upon them as a major component of my economy anyway.

Second, economists argue that the theory of comparative advantage means more total goods and services will exist in the world if a free trade policy is followed. http://iang.org/free_banking/david.html

What is not discussed much is what heirarchy of values will be followed? For example, Americans for some time have put personal consumption ahead of any other values. Such a person would believe it is more important to get the best product at the best price (being a good consumer) than to buy so as to preserve the American consumer electronics business. This priority isn't discussed much--it is assumed being the best consumer and having the best consumer market is a good thing.

Comparative advantage also means nothing unless one is worried about the total availability of goods in the world. For example, if US-based car production is sufficient to supply the entire US market without shortage, then why should an American care if that means there will not be enough global car production to supply the Indian market without shortage? One could argue that US companies would reduce supply in the US market to sell cars in India, but that could, of course, be regulated and would not happen at all if India were not sufficiently wealthy to pay a competitive price for the cars. India wasn't that wealthy until we moved so much business there and lifted their economic fortunes, i.e. until we globalized.

Ultimately, for me, having globally-preeminent political and economic power is what is most important. I would want my nation to be fully supplied locally to the extent possible, to avoid being dependent on any other nation for any strategically necessary goods and services. I would want my nation's technological expertise to be first rate. I would want to export some, but not so much that my nation becomes dependent upon another nation to buy my goods, like China and Japan; China and Japan are forced to buy US debt instruments to keep US currency values strong against their currencies so they can continue to export successfully to our market; I would not want to be so dependent.

To keep your nation on top, you would need to work a significant brain drain from foreign nations, putting in place policies to draw the best and brightest in the world and then keep them. As we learn in Guns Germs and Steel , the nation or culture with the best and most advanced technology usually will overwhelm its rivals; I do not want to be overwhelmed. To me, as a US national, having such power would be much more important than having the best DVR from Consumer Reports. Also, wealth is generally a prerequisite to having the best technonlogy, so I would want my nation to be wealthy (i.e. not to have net outflows of capital that do not return in a manner beneficial to us and that allow us to control our future) enough to afford and sustain the best technology.

I do not believe the world can live together in peace, so globalism as a concept to me is hopelessly flawed. Mankind I believe is by nature contentious and warlike, and therefore I want to be in a position at all times to dominate my rivals. I'd rather have to ask for forgiveness from time to time for abusing my power than to beg for mercy from time-to-time from a more powerful rival. As the poem says, you should "prepare for ill and not for good."
lederuvdapac
QUOTE(quick)
What is not discussed much is what heirarchy of values will be followed? For example, Americans for some time have put personal consumption ahead of any other values. Such a person would believe it is more important to get the best product at the best price (being a good consumer) than to buy so as to preserve the American consumer electronics business. This priority isn't discussed much--it is assumed being the best consumer and having the best consumer market is a good thing.


The priority is discussed, but it is thoroughly debunked. Protectionists are completely arbitrary in application of their principle. They only apply it to foreigners who make better products. But what about domestic innovators? The invention and commercialization of the lightbulb was a major blow to candlemakers. The refrigerator made the use of ice boxes obsolete and hurt that industry. The television hurt the radio industry. You can point to countless innovations over the past 200 years that made like better but also harmed a certain industry. What we know is that we are all better off with lightbulbs, refrigerators, and televisions than we would be if we preserved the candlemakers, iceman, and radio stations. We were provided a higher quality product at a lower price and we all benefit. The same principle applies. Just because we have devised certain social constructions as "nations" shouldn't prevent one man from peacefully trading with another. If the Japanese provide a better car or electronic, then it is a violation of my right to contract and association to disallow me to trade with this person. If an American producer cannot provide a service or product of equal quality and price, then I should have no obligation to purchase his goods. Buying the better product for a lower price frees up more income for me to purchase other goods and spur other industry. That is a universal benefit.

QUOTE(quick)
Ultimately, for me, having globally-preeminent political and economic power is what is most important. I would want my nation to be fully supplied locally to the extent possible, to avoid being dependent on any other nation for any strategically necessary goods and services. I would want my nation's technological expertise to be first rate. I would want to export some, but not so much that my nation becomes dependent upon another nation to buy my goods, like China and Japan; China and Japan are forced to buy US debt instruments to keep US currency values strong against their currencies so they can continue to export successfully to our market; I would not want to be so dependent.


You have the dynamics confused. We borrow so that we can consume. That is the fundamental problem with our economy. We do not produce enough goods to fuel our consumption so we borrow from China and Japan so that we can buy their products. It is perverse. Eventually these countries will stop buying our debt once they realize we can never pay it back and they will allow their citizens to keep their cash which will then be spent on domestic consumption. Consumption is not the driver of economic growth, it is the consequence.

QUOTE(quick)
To keep your nation on top, you would need to work a significant brain drain from foreign nations, putting in place policies to draw the best and brightest in the world and then keep them. As we learn in Guns Germs and Steel , the nation or culture with the best and most advanced technology usually will overwhelm its rivals; I do not want to be overwhelmed. To me, as a US national, having such power would be much more important than having the best DVR from Consumer Reports. Also, wealth is generally a prerequisite to having the best technonlogy, so I would want my nation to be wealthy (i.e. not to have net outflows of capital that do not return in a manner beneficial to us and that allow us to control our future) enough to afford and sustain the best technology.


But we derive our wealth and power from the very principles that you feel need to be limited. Our technology is best because we have to compete with firms both domestic and foreign. Competition is the driver of innovation. If you restrict imports in order to boost domestic growth and innovation, the opposite affect will occur.

QUOTE(quick)
I do not believe the world can live together in peace, so globalism as a concept to me is hopelessly flawed. Mankind I believe is by nature contentious and warlike, and therefore I want to be in a position at all times to dominate my rivals. I'd rather have to ask for forgiveness from time to time for abusing my power than to beg for mercy from time-to-time from a more powerful rival. As the poem says, you should "prepare for ill and not for good."


Isn't this a self-fulfilling prophecy? Your solution to the warlike nature of humanity is to sever (or atleast limit) any peaceful and commercial ties. Doesn't sound right to me. If you are making a historical observation, than yes human civilization has been riddled with war and devastation. But I reject that such tendencies are human nature. We have shown that cooperation and trade are contributors to a peaceful coexistence. Trade is not a zero-sum game where the wealthier nation only benefits. Both parties benefit and beyond even them the benefits are universal. As Frederic Bastiat noticed over 150 years ago, "When goods do not cross borders, soldiers will."
quick
QUOTE(lederuvdapac @ Jun 10 2009, 11:45 AM) *
QUOTE(quick)
What is not discussed much is what heirarchy of values will be followed? For example, Americans for some time have put personal consumption ahead of any other values. Such a person would believe it is more important to get the best product at the best price (being a good consumer) than to buy so as to preserve the American consumer electronics business. This priority isn't discussed much--it is assumed being the best consumer and having the best consumer market is a good thing.



You can point to countless innovations over the past 200 years that made like better but also harmed a certain industry.


That is not the point; protecting obsolete industries is foolish; protecting strategic industries is not. Look at aircraft production. I do not care if we can make a competitive aircraft at a competitive price. This nation needs to make the best aircaft possible even if it cannot do so at a competitive price because a nation without an aircraft industry (comml, light av and pivate, miltiary, and robotic) is doomed. Air tech is key to both military victory and support, as well as prompt global travel in peacetime. So, if our govt had to subsidize, say, Boeing to make sure they stayed ahead of Airbus, so be it. As many large industries have almost insurmountable barriers to entry, to allow such an industry to die is to beg for dependence.

QUOTE
Just because we have devised certain social constructions as "nations" shouldn't prevent one man from peacefully trading with another. If the Japanese provide a better car or electronic, then it is a violation of my right to contract and association to disallow me to trade with this person. If an American producer cannot provide a service or product of equal quality and price, then I should have no obligation to purchase his goods. Buying the better product for a lower price frees up more income for me to purchase other goods and spur other industry. That is a universal benefit.


Devised certain social constructs? This isn't really an anthropology thread, but all indications are man is tribal--always has been, always will be. We are hard wired that way.

You functionally have no right to contract beyond what the applicable jurisdiction says you have; contracts do not exist outside of a jurisdiction needed to enforce them. As I surely do not want to be part of some world jurisdiction where I as an American will be outnumbered 6.7 billion to 305 million, I'd say your right to contract ends where jurisdiction ends. As far as spurring other industry, that of course assumes all industries have the same value. I can assure you preserving one's aircraft industry is more important than preserving one's popsicle sales industry.

QUOTE(quick)
Ultimately, for me, having globally-preeminent political and economic power is what is most important. I would want my nation to be fully supplied locally to the extent possible, to avoid being dependent on any other nation for any strategically necessary goods and services. I would want my nation's technological expertise to be first rate. I would want to export some, but not so much that my nation becomes dependent upon another nation to buy my goods, like China and Japan; China and Japan are forced to buy US debt instruments to keep US currency values strong against their currencies so they can continue to export successfully to our market; I would not want to be so dependent.


QUOTE
You have the dynamics confused. We borrow so that we can consume. That is the fundamental problem with our economy. We do not produce enough goods to fuel our consumption so we borrow from China and Japan so that we can buy their products. It is perverse. Eventually these countries will stop buying our debt once they realize we can never pay it back and they will allow their citizens to keep their cash which will then be spent on domestic consumption. Consumption is not the driver of economic growth, it is the consequence.


I certainly understand that we borrow to consume. But, if our currency is printed in great gobs (and it is) and therefore goes down in value vis-a-vis the yen, then Japanese exports to the US will go down as they will become more expensive. Therefore, Japan funds our deficit (both govt budget and current account) at below market rates to make sure what I described does not happen and they can continue to export successfully to us. I would not want to be in Japan's position; indeed, I do not like our position as the world's largest debtor nation. I would like to be a net creditor nation, if at all possible, as to current accounts, but not so much so that I cannot afford to walk away from the credit.



QUOTE(quick)
To keep your nation on top, you would need to work a significant brain drain from foreign nations, putting in place policies to draw the best and brightest in the world and then keep them. As we learn in Guns Germs and Steel , the nation or culture with the best and most advanced technology usually will overwhelm its rivals; I do not want to be overwhelmed. To me, as a US national, having such power would be much more important than having the best DVR from Consumer Reports. Also, wealth is generally a prerequisite to having the best technonlogy, so I would want my nation to be wealthy (i.e. not to have net outflows of capital that do not return in a manner beneficial to us and that allow us to control our future) enough to afford and sustain the best technology.


QUOTE
But we derive our wealth and power from the very principles that you feel need to be limited. Our technology is best because we have to compete with firms both domestic and foreign. Competition is the driver of innovation. If you restrict imports in order to boost domestic growth and innovation, the opposite affect will occur.


As John D. Rockefeller said, competition is ruinous. Ultimately, someone must win in a competiton, the losing industry goes away, and if it is of strategic value, you as a nation are badly hurt. A nation must from time to time for certain periods protect key industries and get them back on top because of their strategic value. We even have in place a military supply act to insure we can still make our own tanks, planes, etc.

The best way to stay on top is to actively solicit and pay for the best foreign talent to come here, become American citizens, and thereby pollinate our system. Brain drain. It has worked for years and with out relatively open and accessable culture, it should continue. Of course, we need to make sure we make citizens of these people, which in the last few decades we have decided isn't appropriate. Build a better team.


QUOTE(quick)
I do not believe the world can live together in peace, so globalism as a concept to me is hopelessly flawed. Mankind I believe is by nature contentious and warlike, and therefore I want to be in a position at all times to dominate my rivals. I'd rather have to ask for forgiveness from time to time for abusing my power than to beg for mercy from time-to-time from a more powerful rival. As the poem says, you should "prepare for ill and not for good."


QUOTE
Isn't this a self-fulfilling prophecy? Your solution to the warlike nature of humanity is to sever (or atleast limit) any peaceful and commercial ties. Doesn't sound right to me. If you are making a historical observation, than yes human civilization has been riddled with war and devastation. But I reject that such tendencies are human nature. We have shown that cooperation and trade are contributors to a peaceful coexistence. Trade is not a zero-sum game where the wealthier nation only benefits. Both parties benefit and beyond even them the benefits are universal. As Frederic Bastiat noticed over 150 years ago, "When goods do not cross borders, soldiers will."


With all due respect to M. Bastiat, whom I enjoy reading, he is wrong. You are as well. We will always have war. There has been no time in our world that war was not prevalent. We have become exhausted for extended periods, usually while under the boot of a powerful empire, but when the empire begins to fade, the "Pax [whatever]" goes with it. As America fades (if we continue to let it) and the Pax Americana ends, we will have a big war. Of course, we had almost constant smaller wars since WWII. During the Pax Romana, many smaller wars and insurrections occurred with regularity. Man is tribal, and man fights. I see no reason to believe this will change. This has been an historic constant.

As far as the benefits of trade, I already addressed the comparative advantage theory and no doubt it works; but, I would much rather pursue trade in areas that are of not much strategic importance. I will be happy to buy lots of T-shirts from Malaysia; I do not want to be buying business jets from Brazil. We need to protect at least while resurrecting strategic industries and we need to do everything we can to insure a current account surplus or at least a balance, IMHO. Consumption for consumtion's sake with borrowed funds is ruinous.
skeeterses
Quick, I understand the argument about strategic importance of certain industries. For example, if we get in a war with another country, we don't want to be in a position where we have to import tanks and bullets from Israel or China. And so we certainly should definitely protect our technological base so that if we ever have to, we can make cars, computers, tanks or whatever we may actually need down the road.

But we have to be careful about how we go about protecting this technological base. Everything the Government does must be for a public good like national defense, law and order, or public health. If for some reason, Americans lost their ability to purchase a car or some other luxury like a computer, it would be irresponsible for the Government to try changing that situation through bailing out a company or providing government-backed loans for purchasing the product in question. Basically, if Americans cannot afford or don't want to purchase new cars under a free market, the Government has to accept people's decision and should not pressure them into purchasing a new car. And if the living standards of Americans drop under a free market because of things like a market crash or oil depletion, no edict of Government can change the reality.
Dingo
QUOTE(lederuvdapac @ Jun 10 2009, 06:18 AM) *
QUOTE(Dingo)
As I recall from my HS history a Jefferson ban of British goods gave a terrific boost to American industry in its early stages.


If by "boost," you mean horrible disaster that plunged most of New England into economic depression and almost into secession. American trade declined by up to 75 percent for exports and 50 percent for imports (source). You may need to upgrade from the HS history books.

Although initially, as one might expect, the economic effects of lowered trade were negative a lowering of imports was helpful to domestic manufacturing which has longer term economic implications. For instance textile manufacturing got a boost locally due to the lack of textile goods available from England etc. It's kind of dumb obvious that if a product is made less available from a foreign source then you boost the incentive to produce it locally.

http://www.accessmylibrary.com/coms2/summary_0193-13624_ITM

QUOTE
new, larger textile mills and factories sprang up all over the Northeast to replace unavailable foreign goods.


QUOTE(skeeterses @ Jun 10 2009, 05:22 PM) *
Everything the Government does must be for a public good like national defense, law and order, or public health.

So the broader public good takes precedence over customer preference. I'm inclined to agree. So the question is what constitutes the broader public good.

Government control of manufacturing that relates to a degradation of the environment constitutes a broader public good in my book. Since there is no one else to step in it seems clear that the government should determine industry practices in so far as they effect that broader public good. That would include, for instance, dictating CAFE standards on auto companies.

Nothing unfeasible about that. When the government wanted GM to produce tanks for the 2nd world war GM retooled to make tanks. The history of the public sector setting the standards for private industry and that industry responding successfully to the challenge has many examples. It's when private special interests through their lobbies become preeminent in the making of public policy that we start having problems.

QUOTE(quick @ Jun 10 2009, 08:03 AM) *
I do not believe the world can live together in peace, so globalism as a concept to me is hopelessly flawed. Mankind I believe is by nature contentious and warlike, and therefore I want to be in a position at all times to dominate my rivals.

In a world of increasing WMDs that view constitutes an absolute guarantee of human extinction.
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