Back in the days of the drachma, the real currency in Greece was the USD. Especially in Greece's huge underground economy. Of course, that was unpleasant and annoying to Europeans (who like to vacation in Greece) -- so one of the objectives of the Euro was to get Greece out of the $$$ zone. That was accomplished, but at some cost, as it now turns out.
So, the EU and all that, they have to defend the Euro against the USD. And, Anonymous Drive-by is correct -- that's good for the U.S. economy because it's good for exports. (Of course, it may not be so great if there are European products that you like to, or have to, buy.)
On the other hand, the whole IMF interlocking central-bank system (fractional reserve banking, etc.) is problematic. Metaphorically, it's all one great example of political sausage-making -- not pretty if you look at it very closely.
And then "on the third hand," it really seems like it will be a good thing if the Euro zone and the EU somehow come out of the current mess looking good within the next month or so -- which is 'THE PLAN'. That will be good for economic stability here in the USA and globally, furthering a sane investment environment without which there's little hope of going forward toward economic recovery.
Demand they pass it. I cannot believe ZeroHedge seemingly let some U.S. Chamber of Commerce troll post yesterday trying to claim their "fear" talking points. There is no way China is going to start a "trade war" and beyond that, we already lost it, they have been waging "trade war" against the United States for over 11 years. It's just ridiculous and you'll see almost every economist who looks at the numbers, stats, saying the U.S. needs to do this.
Clearly shows Boehner is the U.S. Chamber of Commerce puppet. I think the House version has a majority of representatives as co-sponsor of the bill.
The bipartisan bill to end China’s unfair trade practice of currency manipulation passed in the Senate tonight by a vote of 63 to 35, with 15 Republicans joining Democrats to support it.
The legislation, called the Currency Exchange Rate Oversight Act, provides tools to impose consequences on countries that manipulate their currency and consequently, cost us jobs.
We hope this common-sense, bipartisan bill will pass in the House. It’s time to put an end to this unfair trade practice, and put Americans back to work.
That's very nearly 65% of senators who voted. Can Boehner stop this? Maybe, but if so, it will likely cost him his job.
Senator Harry Reid's statement --
Washington, D.C. — Nevada Senator Harry Reid issued the following statement after the Senate approved a bipartisan bill that will pressure China to stop manipulating its currency:
“For too long China has been using underhanded tactics to manipulate its currency at the expense of American workers and businesses. They deserve a level playing field. This bipartisan bill levels that playing field, and could support up to 1.6 million American jobs.
“I commend my Republican colleagues who joined with Democrats to pass this important bill. I join my colleague, Senator Graham, in calling on the House to take up this bill and pass it quickly.”
but if you're a professional, somehow you're too old at the age of 35. Considering how NCG's now cannot get a job, it's clearly discriminatory against any American looking for a job in STEM in many places these days.
What's worse is the occupational employment statistics include foreign guest workers on any visa in their statistics. Then, we cannot get statistics on how many people are forced out of their careers either.
So, the over doubling of the unemployment rate actually is significantly lower than what the true rate for computer occupations is....for Americans.
Technology professionals are suffering from outsourcing the same way manufacturing has suffered for decades. But it's a double whammy for tech pros because even if the job remains in America it may go to a foreign "guest" worker instead of an American citizen.
How many highly talented Americans are out there that will never get a chance to show, improve, and hone their skills because the job has been sent to India or China or been filled by an H-1B visa holder instead?
Just like our manufacturing base, these skills take years to develop and once America loses them they will be hard if not impossible to get back.
In addition to the unemployment statistics you give, are there any statistics on just how many STEM pros have dropped out of their field out of despair? It would be interesting to compare the total number of STEM degrees earned over the past several decades to the number now employed in their field of study. What happened to all of those Americans that earned degrees but are not employed in their field?
Any student contemplating specializing in technology must be aware of multiple career risks such as (1) offshore outsourcing (2) being replaced by a cheaper "guest" worker (3) a higher probability of age discrimination (as opposed to, for example, business, sales, marketing, teaching, medical professions, ...).
I think u miss the problem of the economy. The Euro is artificially kept HIGH to give u the possibility to keep the dollar low, to cancel ur debts, and to EXPORT. The situation is at the opposite. Europe is HELPING u, not the opposite. And they are paying with the destruction of their economy. Better u study the fundamentals: u can inflationate ur money only because they are in the stranghold of a too strong currency that block their trade.
Surprise, surprise, one small piece for the middle class managed to pass. Of course the House plans on blocking it and then it doesn't slap tariffs, it opens up a path.
Since when did Boehner start standing up for Chinese over Americans? He owes his jobs to the donors and corporations that do business in China. China does not follow the rules of free trade. Tax goods coming from China (even if it's made in China by American companies) for one year and we will owe them no more debt, and also bring back manufacturing jobs here.
“What trade war? They make it, we buy it, we make it (if we make it) they don't buy it. That's what’s happening now, so I say again, what trade war?”
“hahaha trade war? We import more than 230 billion dollars more than they import from us. Bring on that trade war. The whole western world needs to stand up and say if they are going to play unfairly, then we are not going to play. Plain and simple. They are milking dry the whole free world. Which is counterproductive since we won’t be able to import from them when we are broke.”
"Sadly, many of these economic powerhouses [MNCs] have become threats to the national security of every nation they exist in." -- Heilager
I am an admirer of Paul Craig Roberts, but there is one point that should be clarified, concerning his use of the term 'US corporations'.
"US politicians, such as Buddy Roemer, blame the collapse of US manufacturing on Chinese competition and 'unfair trade practices.' However, it is US corporations that move their factories abroad, thus replacing domestic production with imports. Half of US imports from China consist of the off-shored production of US corporations." -- Paul Craig Roberts
The question is "What is meant by a US corporation?" I think that "US corporations" have seen that they could maximize their profits and avoid stagnation by shifting resource exploitation, production, sales, R&D and even management out of the USA. Shifts such as out-sourcing to increase profits have been a trend for a very long time -- at least since World War II. But is a corporation that has made such shifts still a "US corporation"?
One example is California-Arabian Standard Oil Company, which evolved half a century ago into the Arabian American Oil Company (Aramco or Saudi Aramco). Other examples are Halliburton, General Electric and Apple. Halliburton notoriously moved even its HQ to the Persian Gulf just a few years ago. GE, which was operating in Germany (as A.E.G., a major financial backer of Hitler's rise to power) since shortly after World War I and into the Nazi era, appears to maintain its stance as a US corporation today only for the sake of the negative income tax that it receives from Congress. (GE or AEG is still a major corporation operating in Germany.) As for Apple, it develops products for a global market and it manufactures those products through suppliers in China. (There is currently a scandal about factories in China where Apple suppliers -- Chinese companies that build Apple products -- have been identified as polluters adversely affecting public health in the vicinity of their operations.)
I do not mean to criticize or condemn any of these companies. I am just pointing out that at some point they are no longer what we used to think of as "US Corporations," and we are silly to think of them in that way. It may be that we have been silly ever to think in terms of "US corporations" except during World War II, when the entire country was organized for the war effort. Certainly, in the current WTO world system, the concept of "US corporations" is fuzzy, at best.
Having said that, it is counter-productive to blame China rather than to focus on what the USA can do for ourselves, that is, on the necessity for some form of national economic protectionism.
In short, we need national borders, we need national integrity, for the sake of world peace. It's like supertankers -- they must be constructed with chambers and baffles, or they are unstable and likely to capsize.
A return to nationalism won't, in and of itself, solve all our problems. However, there is no solution to our global problems without restoring nationalism. Because of the history of the USA, we are not a country that can restore our nation without restoring our democracy.
"It seem like this jobless issue is because of the decision of multinational companies to decide where to build their factory based on the cost issue." -- Anon. Drive-by
A lot of what goes on has to do with what we might call externalities. That is, a country decides to move somewhere, set up offices somewhere, make all kinds of decisions -- all based on tax law, labor law, politico-social stability (or instability) and other factors that are "external" to a pure economic model. So, IMO, MNCs do not so much pursue the lowest "cost" as they do the highest "profit" -- and pure economic models that equate lowest cost to highest profit are problematic in application.
There's also (or should be) consideration of accepting a lower profit for the sake of factors that lower investment risk, and there's also the matter of how far out are the projections. If you plan for profits in a three year framework, and you believe the world is so unstable that to plan any farther out is insane ... your decisions will be very different than if you plan out to 5, 10 or 20 years. We have already seen, for example, manufacturing moving first to Mexico and then out of Mexico in short order. There's inefficiency there that should be examined.
I can spend a lot of time and money in pursuit of the absolute cheapest product that is to be found, but it might be much more efficient and satisfying for me in the long run to establish good relations with a supplier who can get me something good-enough and cheap-enough without my having to thrash around like a mad man. At some point you need to settle in to an ecology and a reality that is local. You can go too far in that direction, but you can also go too far in the opposite direction.
"I don't want [Congress] to link up anything, that's the problem, they link up amendments and so on so we get a shit sandwich." -- Robert Oak
Tying the FTAs and the currency bill together, or not, is a matter of legislative strategy. I would not attempt to second-guess someone like Senator Reid, even though I am suspicious of (not to say cynical about) anything that happens in Congress.
I agree on the principle that bills should be clean, without unrelated amendments, and issues voted on separately.
That was the problem with the 2010 medical insurance bill ("Obamacare") -- and with all such 'omnibus' legislation. I think that 'omnibus' legislation is necessary for budget and revenue bills or for what are necessarily systemic reforms such as the Judiciary Reorganization Act of 1980. The medical insurance issues would have been better dealt with piecemeal, taking a modular approach.
Issues should have been voted on separately, beginning with repeal of the anti-trust exemption, public (Federal) funding of abortion, expansion of MediCare to age 60, repeal of the Medicare Payroll tax, allowing direct bargaining to MediCare as is already allowed for the VA and DoD, and other matters such as were actually proposed in amendments early in 2009, that were all ignored in the big push to do something even if it's wrong, unconstitutional and unworkable. It was inane, for example, to have the omnibus monstrosity held up at the last minute by the abortion issue -- that should be dealt with separately with votes of all members of Congress clearly recorded.
The worst of it is when the final version of a law is written by a reconciliation committee (sometimes with no more than 3 members and often doing their dirty work in secret). The SuperCongress idea is also an abomination. Either we have a Constitution or we don't. I think we do, and we should endeavor to work within that framework at all times.
Congress "should do this to all currency manipulators who are doing so for an unfair trade advantage." -- Robert Oak
My understanding of the currency bill is that it would establish an objective measure for currency manipulation in the context of what I call neo-mercantilism (the WTO system).
I agree we should avoid legislation that would 'punish' China or any other country by act of Congress. (The proposal is called the "China currency bill" but there is, I believe, no mention of China in the bill.) We should set the rules in place, put China and all others on notice, and then apply the law equitably. To have a system of preferences as the foundation of an equitable system of global international trade is an anomaly.
The approach that is needed is transparent application of the rule of law. The idea that we will ever fix the broken system by hoping that the USTR will work everything out in secret negotiations is a guarantee of continuing neo-mercantilist policy by 'trade czars' -- a guarantee of continued legitimizing of an essentially corrupt system. Such policy is set in secret, insulated from popular discussion and from public view ... but at its core, entirely a matter of bought-and-paid-for political pressure.
The point is that business decisions, if only for the sake of efficiency in a free enterprise system, should not be subject to continual political interference. The neo-mercantilist system may work for an autocratic country like China or like Singapore, but it's a bad idea for democracy and for the USA. By establishing a system of protectionism under law, we can influence the WTO system in a direction that is good for the USA and for the world.
"It's hard enough to get the currency bill passed and I suspect Reid isn't tying the two together because there are probably a whole lot of Senators, Reps. who will not vote for those FTAs, at least one of them." -- Robert Oak
I'll celebrate whatever we can get, meaning if one or more of the FTAs is or are rejected, and/or if S. 1619 is enacted. Anything along those lines is good news compared to what we have had for years now.
Hopefully, we won't see all three FTAs enacted and, later, a watered-down gutless wonder of a currency bill.
Mr. Roberts, you have taken the most complicated economic disaster this nation and the world have ever seen and drilled down to the core of the matter and presented it here for everyone to read in a couple of minutes. Thank you. Maybe some of the conservatives who worship at the altar of the Holy Reagan will wake up and smell the failure of their ideas when the co-founder of Reaganomics puts these words to pen.
From an economists perspective I cannot agree with everything you have supported in the past thirty years but you are very correct in identifying the underlying factors and actors that allowed this economic mess to build into the ticking time bomb that it has become. Now it is time that you pen the solution to this mess even as right wing ideologically charged economists demonize you for your candor.
Capitalism may not be the problem, but deregulated business that demands no government intervention or regulation is the result of a capitalism that has not been restrained and shaped by the government of the people so that it serves the good of the people at least as much as it serves its own good. Some regulations probably need to be overhauled and I am certain that the tax code needs to be revised so that companies do not benefit from their trans-nationalism at the expense of society and differing political climates. In moving to China and India, big business has shown that it prefers a government that has little interest in performing its only real duty which is to protect its people from threats. Sadly, many of these economic powerhouses have become threats to the national security of every nation they exist in. This must change or the end result will be full blown class welfare on the streets in not only America, but around the world.
The Occupy Wall Street has become the protest heard around the world much the same as that infamous shot heard around the world 400 years became. Right now people who are protesting are still hopeful that change will occur but the longer our political leaders ignore and scorn them the more restless they will become and then things will turn nasty. A significant number of people will side with the establishment and call them terrorists at that point however an almost as large and equally significant number will see the establishment as the root cause of the beginning of hostilities and growing sentiment will put even more pressure on leaders to enact meaningful legislation to meet the demands of we the people. By not doing so the establishment could face a situation similar to what happened in the Civil War of America which was as much about about welfare inequality much as the growing protests of today are.
It's true to some degree. While the focus is on China, the bill itself allows for any country who is manipulating their currency to get eventually slapped with tariffs for doing so.
Other countries, take Vietnam as an example, have other issues. Vietnam has problems with inflation and varying costs.
Manufacturing, esp. advanced manufacturing has a lot more costs than just labor. Building the plant, cheap raw materials needed for the manufacturing process also come into play. So while Vietnam's labor is cheap, these other variables and the variance are why Vietnam isn't destination #1 to offshore outsource manufacturing.
China, on the other hand, has the China PNTR trade treaty, which is a huge part of the problem additionally. That's why they have dominated our trade deficit.
I think the U.S. could impose a "cheap labor" tax. We mention India all the time on this site. Something like 7% of their GDP is all because they took our jobs. That's their BPO industry. offshore outsourcing.
That's the point, the original trade theory had the means of production statistic, in other words not mobile.
Now we have a "race to the bottom" where MNCs hunt the globe for the cheapest costs, including labor. That's not what an economy is supposed to be about in Democracies, i.e. how close industrialists can get to cheap, free labor for more profits.
somebody said American jobless is because of China, but i wonder after imposing the tariff to China imported good to United State, would these multinational company start to find others alternative cheap labor manufacturing based in Asia country like India, Vietnam, which still cant help American to create the job eventually. Any one have idea?Even though there are no China today, but there are still a lot of others Asian cheap labor countries, should USA imposed duty tax to all cheap labor countries in the earth? and make the multinational companies no way to build factories except United State?
From my statement above, It seem like this jobless issue is because of the decision of multinational companies to decide where to build their factory based on the cost issue. The dominant paradigm on this page" China currency manipulation cause American jobless" cannot hold it stand.
i hope someone can beat my mind on this issue with stating why you are not agree with me based on what i was saying above.
Frankly don't do it. It's hard enough to get the currency bill passed and I suspect Reid isn't tying the two together because there are probably a whole lot of Senators, Reps. who will not vote for those FTAs, at least one of them.
We'll see, it's absurd to me in one minute trying to pass a China currency manipulation bill and the next passing FTAs which they know will lose more jobs and increase the overall trade deficit.
That said, China is the largest trade deficit and if they actually enacted even a slight tariff on China, it could really help bring back jobs here. (but they should do this to all currency manipulators who are doing so for an unfair trade advantage).
Anyway, I don't want them to link up anything, that's the problem, they link up amendments and so on so we get a shit sandwich, which you point out.
In response at Stumo's post at TradeReform.org, 'Julian Martin' provides an analysis that "Senator Reid is handing Speaker Boehner a huge shit sandwich, which he’ll eventually have to eat." I wish that were true, but it seems doubtful to me.
Boehner and his gang are planning a weakened gutless wonder of a currency bill, to emerge from committee later this year. That is supposed to set things up for the big election year (2012) so that Boehner's GOP congress critturs will be able to say that they voted for a currency bill, so as to deflect criticism that they also voted for the three FTAs.
As for Senator Reid, we have to remember that he doesn't run the Senate the way Boehner has been able to run the House. Most likely, Reid figures he can only do what he can do, and he feels that this is the time to get S. 1619 through the Senate. After that, he needs to put the FTAs to a vote, so he might as well dump it all onto the House in one big delivery -- maximizing the potential for a real discussion of trade issues in the media and among the people.
After all, S. 1619 appears to be very well-drafted legislation, something to be proud of. Not that real, informed discussion is likely to happen ... but let's give it a chance!
I'm calling my senators, but as soon as anything leaves the Senate headed for the House -- it's time for maximum pressure on your congress crittur in the House. We have to convince them that we know what's going on, we're mad as hell, we won't accept any watered-down substitutes, and, we will remember in November 2012.
We fair traders and economic/trade/financial/monetary reformers are weak politically, although we are growing stronger every day. Therefor, we take the advice of Sun Tzu. "When weak, appear strong." Give 'em hell. It's fun.
We've got some momentum going here!
I love it.
Give 'em hell! It's fun!
Back in the days of the drachma, the real currency in Greece was the USD. Especially in Greece's huge underground economy. Of course, that was unpleasant and annoying to Europeans (who like to vacation in Greece) -- so one of the objectives of the Euro was to get Greece out of the $$$ zone. That was accomplished, but at some cost, as it now turns out.
So, the EU and all that, they have to defend the Euro against the USD. And, Anonymous Drive-by is correct -- that's good for the U.S. economy because it's good for exports. (Of course, it may not be so great if there are European products that you like to, or have to, buy.)
On the other hand, the whole IMF interlocking central-bank system (fractional reserve banking, etc.) is problematic. Metaphorically, it's all one great example of political sausage-making -- not pretty if you look at it very closely.
And then "on the third hand," it really seems like it will be a good thing if the Euro zone and the EU somehow come out of the current mess looking good within the next month or so -- which is 'THE PLAN'. That will be good for economic stability here in the USA and globally, furthering a sane investment environment without which there's little hope of going forward toward economic recovery.
Demand they pass it. I cannot believe ZeroHedge seemingly let some U.S. Chamber of Commerce troll post yesterday trying to claim their "fear" talking points. There is no way China is going to start a "trade war" and beyond that, we already lost it, they have been waging "trade war" against the United States for over 11 years. It's just ridiculous and you'll see almost every economist who looks at the numbers, stats, saying the U.S. needs to do this.
Clearly shows Boehner is the U.S. Chamber of Commerce puppet. I think the House version has a majority of representatives as co-sponsor of the bill.
Official record of roll call not yet available at senate.gov or at thomas.loc.gov (Library of Congress), but the results have been posted at democrats.senate.gov webpage (11 October 2011, 7:02 PM), Senate Passes Bipartisan Bill to End Currency Manipulation, Save American Jobs --
That's very nearly 65% of senators who voted. Can Boehner stop this? Maybe, but if so, it will likely cost him his job.
Senator Harry Reid's statement --
but if you're a professional, somehow you're too old at the age of 35. Considering how NCG's now cannot get a job, it's clearly discriminatory against any American looking for a job in STEM in many places these days.
What's worse is the occupational employment statistics include foreign guest workers on any visa in their statistics. Then, we cannot get statistics on how many people are forced out of their careers either.
So, the over doubling of the unemployment rate actually is significantly lower than what the true rate for computer occupations is....for Americans.
Technology professionals are suffering from outsourcing the same way manufacturing has suffered for decades. But it's a double whammy for tech pros because even if the job remains in America it may go to a foreign "guest" worker instead of an American citizen.
How many highly talented Americans are out there that will never get a chance to show, improve, and hone their skills because the job has been sent to India or China or been filled by an H-1B visa holder instead?
Just like our manufacturing base, these skills take years to develop and once America loses them they will be hard if not impossible to get back.
In addition to the unemployment statistics you give, are there any statistics on just how many STEM pros have dropped out of their field out of despair? It would be interesting to compare the total number of STEM degrees earned over the past several decades to the number now employed in their field of study. What happened to all of those Americans that earned degrees but are not employed in their field?
Any student contemplating specializing in technology must be aware of multiple career risks such as (1) offshore outsourcing (2) being replaced by a cheaper "guest" worker (3) a higher probability of age discrimination (as opposed to, for example, business, sales, marketing, teaching, medical professions, ...).
I think u miss the problem of the economy. The Euro is artificially kept HIGH to give u the possibility to keep the dollar low, to cancel ur debts, and to EXPORT. The situation is at the opposite. Europe is HELPING u, not the opposite. And they are paying with the destruction of their economy. Better u study the fundamentals: u can inflationate ur money only because they are in the stranghold of a too strong currency that block their trade.
Surprise, surprise, one small piece for the middle class managed to pass. Of course the House plans on blocking it and then it doesn't slap tariffs, it opens up a path.
Since when did Boehner start standing up for Chinese over Americans? He owes his jobs to the donors and corporations that do business in China. China does not follow the rules of free trade. Tax goods coming from China (even if it's made in China by American companies) for one year and we will owe them no more debt, and also bring back manufacturing jobs here.
“What trade war? They make it, we buy it, we make it (if we make it) they don't buy it. That's what’s happening now, so I say again, what trade war?”
“hahaha trade war? We import more than 230 billion dollars more than they import from us. Bring on that trade war. The whole western world needs to stand up and say if they are going to play unfairly, then we are not going to play. Plain and simple. They are milking dry the whole free world. Which is counterproductive since we won’t be able to import from them when we are broke.”
"Sadly, many of these economic powerhouses [MNCs] have become threats to the national security of every nation they exist in." -- Heilager
I am an admirer of Paul Craig Roberts, but there is one point that should be clarified, concerning his use of the term 'US corporations'.
"US politicians, such as Buddy Roemer, blame the collapse of US manufacturing on Chinese competition and 'unfair trade practices.' However, it is US corporations that move their factories abroad, thus replacing domestic production with imports. Half of US imports from China consist of the off-shored production of US corporations." -- Paul Craig Roberts
The question is "What is meant by a US corporation?" I think that "US corporations" have seen that they could maximize their profits and avoid stagnation by shifting resource exploitation, production, sales, R&D and even management out of the USA. Shifts such as out-sourcing to increase profits have been a trend for a very long time -- at least since World War II. But is a corporation that has made such shifts still a "US corporation"?
One example is California-Arabian Standard Oil Company, which evolved half a century ago into the Arabian American Oil Company (Aramco or Saudi Aramco). Other examples are Halliburton, General Electric and Apple. Halliburton notoriously moved even its HQ to the Persian Gulf just a few years ago. GE, which was operating in Germany (as A.E.G., a major financial backer of Hitler's rise to power) since shortly after World War I and into the Nazi era, appears to maintain its stance as a US corporation today only for the sake of the negative income tax that it receives from Congress. (GE or AEG is still a major corporation operating in Germany.) As for Apple, it develops products for a global market and it manufactures those products through suppliers in China. (There is currently a scandal about factories in China where Apple suppliers -- Chinese companies that build Apple products -- have been identified as polluters adversely affecting public health in the vicinity of their operations.)
I do not mean to criticize or condemn any of these companies. I am just pointing out that at some point they are no longer what we used to think of as "US Corporations," and we are silly to think of them in that way. It may be that we have been silly ever to think in terms of "US corporations" except during World War II, when the entire country was organized for the war effort. Certainly, in the current WTO world system, the concept of "US corporations" is fuzzy, at best.
Having said that, it is counter-productive to blame China rather than to focus on what the USA can do for ourselves, that is, on the necessity for some form of national economic protectionism.
In short, we need national borders, we need national integrity, for the sake of world peace. It's like supertankers -- they must be constructed with chambers and baffles, or they are unstable and likely to capsize.
A return to nationalism won't, in and of itself, solve all our problems. However, there is no solution to our global problems without restoring nationalism. Because of the history of the USA, we are not a country that can restore our nation without restoring our democracy.
"It seem like this jobless issue is because of the decision of multinational companies to decide where to build their factory based on the cost issue." -- Anon. Drive-by
A lot of what goes on has to do with what we might call externalities. That is, a country decides to move somewhere, set up offices somewhere, make all kinds of decisions -- all based on tax law, labor law, politico-social stability (or instability) and other factors that are "external" to a pure economic model. So, IMO, MNCs do not so much pursue the lowest "cost" as they do the highest "profit" -- and pure economic models that equate lowest cost to highest profit are problematic in application.
There's also (or should be) consideration of accepting a lower profit for the sake of factors that lower investment risk, and there's also the matter of how far out are the projections. If you plan for profits in a three year framework, and you believe the world is so unstable that to plan any farther out is insane ... your decisions will be very different than if you plan out to 5, 10 or 20 years. We have already seen, for example, manufacturing moving first to Mexico and then out of Mexico in short order. There's inefficiency there that should be examined.
I can spend a lot of time and money in pursuit of the absolute cheapest product that is to be found, but it might be much more efficient and satisfying for me in the long run to establish good relations with a supplier who can get me something good-enough and cheap-enough without my having to thrash around like a mad man. At some point you need to settle in to an ecology and a reality that is local. You can go too far in that direction, but you can also go too far in the opposite direction.
A typo that may be confusing to some readers, and that's the only reason I mention it.
"That's the point, the original trade theory had the means of production statistic, in other words not mobile."
I am not sure, but I think probably that should read "means of production static"
"I don't want [Congress] to link up anything, that's the problem, they link up amendments and so on so we get a shit sandwich." -- Robert Oak
Tying the FTAs and the currency bill together, or not, is a matter of legislative strategy. I would not attempt to second-guess someone like Senator Reid, even though I am suspicious of (not to say cynical about) anything that happens in Congress.
I agree on the principle that bills should be clean, without unrelated amendments, and issues voted on separately.
That was the problem with the 2010 medical insurance bill ("Obamacare") -- and with all such 'omnibus' legislation. I think that 'omnibus' legislation is necessary for budget and revenue bills or for what are necessarily systemic reforms such as the Judiciary Reorganization Act of 1980. The medical insurance issues would have been better dealt with piecemeal, taking a modular approach.
Issues should have been voted on separately, beginning with repeal of the anti-trust exemption, public (Federal) funding of abortion, expansion of MediCare to age 60, repeal of the Medicare Payroll tax, allowing direct bargaining to MediCare as is already allowed for the VA and DoD, and other matters such as were actually proposed in amendments early in 2009, that were all ignored in the big push to do something even if it's wrong, unconstitutional and unworkable. It was inane, for example, to have the omnibus monstrosity held up at the last minute by the abortion issue -- that should be dealt with separately with votes of all members of Congress clearly recorded.
The worst of it is when the final version of a law is written by a reconciliation committee (sometimes with no more than 3 members and often doing their dirty work in secret). The SuperCongress idea is also an abomination. Either we have a Constitution or we don't. I think we do, and we should endeavor to work within that framework at all times.
Congress "should do this to all currency manipulators who are doing so for an unfair trade advantage." -- Robert Oak
My understanding of the currency bill is that it would establish an objective measure for currency manipulation in the context of what I call neo-mercantilism (the WTO system).
I agree we should avoid legislation that would 'punish' China or any other country by act of Congress. (The proposal is called the "China currency bill" but there is, I believe, no mention of China in the bill.) We should set the rules in place, put China and all others on notice, and then apply the law equitably. To have a system of preferences as the foundation of an equitable system of global international trade is an anomaly.
The approach that is needed is transparent application of the rule of law. The idea that we will ever fix the broken system by hoping that the USTR will work everything out in secret negotiations is a guarantee of continuing neo-mercantilist policy by 'trade czars' -- a guarantee of continued legitimizing of an essentially corrupt system. Such policy is set in secret, insulated from popular discussion and from public view ... but at its core, entirely a matter of bought-and-paid-for political pressure.
The point is that business decisions, if only for the sake of efficiency in a free enterprise system, should not be subject to continual political interference. The neo-mercantilist system may work for an autocratic country like China or like Singapore, but it's a bad idea for democracy and for the USA. By establishing a system of protectionism under law, we can influence the WTO system in a direction that is good for the USA and for the world.
"It's hard enough to get the currency bill passed and I suspect Reid isn't tying the two together because there are probably a whole lot of Senators, Reps. who will not vote for those FTAs, at least one of them." -- Robert Oak
I'll celebrate whatever we can get, meaning if one or more of the FTAs is or are rejected, and/or if S. 1619 is enacted. Anything along those lines is good news compared to what we have had for years now.
Hopefully, we won't see all three FTAs enacted and, later, a watered-down gutless wonder of a currency bill.
@Paul Craig Roberts
Mr. Roberts, you have taken the most complicated economic disaster this nation and the world have ever seen and drilled down to the core of the matter and presented it here for everyone to read in a couple of minutes. Thank you. Maybe some of the conservatives who worship at the altar of the Holy Reagan will wake up and smell the failure of their ideas when the co-founder of Reaganomics puts these words to pen.
From an economists perspective I cannot agree with everything you have supported in the past thirty years but you are very correct in identifying the underlying factors and actors that allowed this economic mess to build into the ticking time bomb that it has become. Now it is time that you pen the solution to this mess even as right wing ideologically charged economists demonize you for your candor.
Capitalism may not be the problem, but deregulated business that demands no government intervention or regulation is the result of a capitalism that has not been restrained and shaped by the government of the people so that it serves the good of the people at least as much as it serves its own good. Some regulations probably need to be overhauled and I am certain that the tax code needs to be revised so that companies do not benefit from their trans-nationalism at the expense of society and differing political climates. In moving to China and India, big business has shown that it prefers a government that has little interest in performing its only real duty which is to protect its people from threats. Sadly, many of these economic powerhouses have become threats to the national security of every nation they exist in. This must change or the end result will be full blown class welfare on the streets in not only America, but around the world.
The Occupy Wall Street has become the protest heard around the world much the same as that infamous shot heard around the world 400 years became. Right now people who are protesting are still hopeful that change will occur but the longer our political leaders ignore and scorn them the more restless they will become and then things will turn nasty. A significant number of people will side with the establishment and call them terrorists at that point however an almost as large and equally significant number will see the establishment as the root cause of the beginning of hostilities and growing sentiment will put even more pressure on leaders to enact meaningful legislation to meet the demands of we the people. By not doing so the establishment could face a situation similar to what happened in the Civil War of America which was as much about about welfare inequality much as the growing protests of today are.
It's true to some degree. While the focus is on China, the bill itself allows for any country who is manipulating their currency to get eventually slapped with tariffs for doing so.
Other countries, take Vietnam as an example, have other issues. Vietnam has problems with inflation and varying costs.
Manufacturing, esp. advanced manufacturing has a lot more costs than just labor. Building the plant, cheap raw materials needed for the manufacturing process also come into play. So while Vietnam's labor is cheap, these other variables and the variance are why Vietnam isn't destination #1 to offshore outsource manufacturing.
China, on the other hand, has the China PNTR trade treaty, which is a huge part of the problem additionally. That's why they have dominated our trade deficit.
I think the U.S. could impose a "cheap labor" tax. We mention India all the time on this site. Something like 7% of their GDP is all because they took our jobs. That's their BPO industry. offshore outsourcing.
That's the point, the original trade theory had the means of production statistic, in other words not mobile.
Now we have a "race to the bottom" where MNCs hunt the globe for the cheapest costs, including labor. That's not what an economy is supposed to be about in Democracies, i.e. how close industrialists can get to cheap, free labor for more profits.
somebody said American jobless is because of China, but i wonder after imposing the tariff to China imported good to United State, would these multinational company start to find others alternative cheap labor manufacturing based in Asia country like India, Vietnam, which still cant help American to create the job eventually. Any one have idea?Even though there are no China today, but there are still a lot of others Asian cheap labor countries, should USA imposed duty tax to all cheap labor countries in the earth? and make the multinational companies no way to build factories except United State?
From my statement above, It seem like this jobless issue is because of the decision of multinational companies to decide where to build their factory based on the cost issue. The dominant paradigm on this page" China currency manipulation cause American jobless" cannot hold it stand.
i hope someone can beat my mind on this issue with stating why you are not agree with me based on what i was saying above.
Frankly don't do it. It's hard enough to get the currency bill passed and I suspect Reid isn't tying the two together because there are probably a whole lot of Senators, Reps. who will not vote for those FTAs, at least one of them.
We'll see, it's absurd to me in one minute trying to pass a China currency manipulation bill and the next passing FTAs which they know will lose more jobs and increase the overall trade deficit.
That said, China is the largest trade deficit and if they actually enacted even a slight tariff on China, it could really help bring back jobs here. (but they should do this to all currency manipulators who are doing so for an unfair trade advantage).
Anyway, I don't want them to link up anything, that's the problem, they link up amendments and so on so we get a shit sandwich, which you point out.
In response at Stumo's post at TradeReform.org, 'Julian Martin' provides an analysis that "Senator Reid is handing Speaker Boehner a huge shit sandwich, which he’ll eventually have to eat." I wish that were true, but it seems doubtful to me.
Boehner and his gang are planning a weakened gutless wonder of a currency bill, to emerge from committee later this year. That is supposed to set things up for the big election year (2012) so that Boehner's GOP congress critturs will be able to say that they voted for a currency bill, so as to deflect criticism that they also voted for the three FTAs.
As for Senator Reid, we have to remember that he doesn't run the Senate the way Boehner has been able to run the House. Most likely, Reid figures he can only do what he can do, and he feels that this is the time to get S. 1619 through the Senate. After that, he needs to put the FTAs to a vote, so he might as well dump it all onto the House in one big delivery -- maximizing the potential for a real discussion of trade issues in the media and among the people.
After all, S. 1619 appears to be very well-drafted legislation, something to be proud of. Not that real, informed discussion is likely to happen ... but let's give it a chance!
I'm calling my senators, but as soon as anything leaves the Senate headed for the House -- it's time for maximum pressure on your congress crittur in the House. We have to convince them that we know what's going on, we're mad as hell, we won't accept any watered-down substitutes, and, we will remember in November 2012.
We fair traders and economic/trade/financial/monetary reformers are weak politically, although we are growing stronger every day. Therefor, we take the advice of Sun Tzu. "When weak, appear strong." Give 'em hell. It's fun.
OWS from the comfort of your home!
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