Thank you for the feedback. My argument is really a broad generalization, so your point about case by case issues is well taken. Historically, the rule of thumb was to allow geographically-limited and luxury goods into the country. Of course, there is no obvious theoretical basis for this. My general thinking on "exceptions" at this point remains a work in progress, but the rule of thumb I've set myself is to allow anything which increases the productivity of the industrial sector (e.g. energy products), along with geographically based goods (I don't importing coffee will ruins us). This is based on the idea that the real measure of wealth is in the diversity of industries you have, because the greater the productivity gains (the cheaper the output) the more sectors are generated. So as the number of sectors grow, the richer the country will be (measuring wealth is something Ricardo said was not possible; I agree with him). For example, if it wasn't for the prod gains of the industrial revolution we'd still all be subsistence farmers so to speak (that's one sector instead of 1000s).
I have no objection to exporting knowledge, because protectionism would protect you from any negative wage consequences. For example, if say a cellphone company wants to build a factory in every nation, then all the nation's workers gain from the company's knowledge, while at the same time earning enough to purchase the phones they produce. The only exception that immediately comes to mind are those for national security.
As for market forces resolving trade imbalances, I would argue that it only leads to pointless destruction. An example I have used in my previous writing is a very simple one. Say there are two identical nations side by side, with the exact same national output (standard of living). They are identical in every respect (culture, taste, production). The only difference is the quantity of gold each country posses. Thus they have different price levels, say 10 to 1. If they open to free trade, one nation will be decimated by imports, and the other exports its wealth (cannot fully consume what it produced) resulting in nothing more than inflation. Chaos ensues. The result is destructive for both. Notice gold, like under the Articles of the Confederation, did not prevent ruin, because no one recognizes that gold, like paper money can be nothing more than an "arbitrary scale." Instead, the classical economists made the mistake of treating gold, not as domestic measure, but as supply and demand good (QTM). Economics never recovered from this error in my view.
Thank you for giving me a chance to post. I think your site is exactly what America needs. This is no longer about theoretical musings, but national survival in my opinion. Nor is it any longer about Left and Right, who both ironically share free trade as a philosophical foundation. In short, fixing America will require us to pull together and recognize my neighbor's prosperity in turn is my own. Several years ago a national reporter took interest in my interpretation of another field of science which sent shock waves through the industry after the story broke (hoping to revive this story again in a much broader scope). Without him, my analysis would have amounted to nothing. So in a like wise manner, without your site, I would not be able to move forward with this discussion. Thank you
Since we've been down it seems the powers that be want to make it seem like all is good, the economy has recovered and people are fine. Hardly the truth. Now the evidence is pouring in offshore outsourcing does what it implies, it ruins lives. Jobs are shipped abroad and we import poverty.
"Conservatives believe the economy functions better if the rich have more money and everyone else has less. But they’re wrong. It’s just the opposite. The real job creators are not CEOs or corporations or wealthy investors. The job creators are members of America’s vast middle class and the poor, whose purchases cause businesses to expand and invest. America’s wealthy are richer than they’ve ever been. Big corporations are sitting on more cash they know what to do with. Corporate profits are at record levels. CEO pay continues to soar. Corporations aren’t expanding production or investing in research and development. Instead, they’re using their money to buy back their shares of stock. Consumers don’t have enough money to buy. The median household’s income continues to drop. Adjusted for inflation, it’s 11 percent below its level in 2000. One factor here has been a sharp decline in union membership. Another structural change is the drop in the minimum wage. Today it’s well below where it was in 1979."
(1979 was also when unionization peaked in the U.S.)
You covered a lot of territory, any one paragraph is easily worth its own blog. :-)
I have some thoughts on free trade but haven't had time to organize them. Certainly as a practical matter free trade has done the American middle class no favors. Here are a few random thoughts on free trade:
-- agree with MMT that it is foolish to export scarce natural resources in return for little pieces of paper. Better to be an importer of scarce natural resources than an exporter.
-- but -- and here I am in disagreement with MMT -- I see no harm in exporting knowledge products. When you export a knowledge product, you don't lose any knowledge. To the contrary, the more knowledge product you make, the more knowledge you gain. Better to be an exporter of knowledge products than an importer.
-- if you outsource the production of knowledge products, you lose knowledge and the other country gains knowledge.
-- free trade creates a "race to the bottom" where any business that can relocate, has an incentive to relocate to 3rd world countries with cheap labor and few regulations. Effectively, we surrender our national power to regulate commerce.
-- free trade has pretty much killed unions except for public sector and service sector unions that don't have to compete with 3rd world countries.
-- in the long run, market forces may indeed tend to resolve trade imbalances, but in the long run we're all dead. In the short run people get laid off and it's difficult for older workers especially to find new careers.
-- in general, I think trade should be evaluated on a case by case basis, based on whether importing a particular item is in our best interest. I'm inclined to protect our knowledge industries. I wouldn't mind a tariff on manufactured goods. But if some other country wants to give us their scare natural resources in return for our little pieces of paper, I'm probably OK with that.
China has captured so much of U.S. manufacturing one has to wonder if it is even possible to come back. Great article and very glad you shared it with us. So few realize the founding fathers and America itself used tariffs and various measures to gain a trade advantage, which in turn built up America.
i've been trying to get over here with coverage when i can, but this summer has been one major project after another...just finished a bathroom remodel, now i have to get a new barn built before winter...i should be able to contribute weekly come November...
The fact prices are very uneven depending on states seems odious. Thanks for writing this up! I am back and am just starting to work on the site. I have a family thing that took up all of my time, on top of the "cannot rely on the Fed" disaster.
Is there actually any reason or law that foreign earned profits of multi national companies cannot be distributed as dividends? I am not aware of any. The stock holders can be people and entities from all over the world.
MS products are used and purchased all over the world. US population is about 5% of the world population. PCs are eubiquitous arround the world.
I checked an income statement of Microsoft and it showed 30% taxes paid on profit. US corperate tax is about 35%. MS income is mostly for IP. So there! Ha! What are you talking about?
Yes, they are needed and no, capitalism is not the problem. What you are witnessing in the US today is corporatism, or economic fascism. This is a precise term and I do not use it as a slur. We need the rule of law, just government and a stable economic system built on capitalism if we are to survive as an enlightened, democratic country. The only way to dispose of these systems is to embrace anarchy, which is an every man for himself proposition. Sure, an individual can go totally off the grid, in the wild, living on a steal or barter system - but your life will be brutish and short. This is not a possible way of life for a society. You speaks here of the wonders of communism, but I and many others who have lived under it will tell you differently.
I believe that you mean the corporatists - the fascists, not the capitalists. Capitalism is a system which exchanges commodities or services of equal value. This entire article has been an outline of corporatism, the unhealthy enmeshment of private industry with government regulation and control. It is euphemistically sanitized as crony capitalism.
Surprised you didn't anticipate the ineptitude and meanness of the current administration from the start. Just look in his eyes.
Can't agree with you on global warming/climate change.
97% of climate scientists do, but 95% of real estate agents agree now is the best time to buy a house.
The same financial basis for solidarity exists, plus the entire pride issue. They won't admit to themselves it is hooey, let alone the rest of us.
Careful review of available information has persuaded me that if human activity is causing glimate change, it is not due to the so-called greenhouse effect, as that actually doesn't work. The analogy is ill chosen, as the atmosphere does not contain the crucial aspect required to construct a greenhouse, which is a reflective layer which preferentially reflects lower energy light (infra red). The science around why that happens gets pretty intricate, but it clearly cannot happen in the atmosphere, as the atmosphere is essentially homogenous in its chemistry, at least as regards carbon dioxide.
So lacking a reflective layer, the atmospheric concentration of carbon dioxide can only cause an increase in surface temperature if it first causes more heat absorption by the atmosphere, and causes a corresponding (but larger) increase in atmospheric temperature, particularly in the upper atmosphere.
Since carmbon dioxide has increased, but atmospheric temperatures have not, this is clearly not happening.
This is not to say that the increase in carbon dioxide is a good or even neutral thing.
This is not to say that the surface temperatures are not warming.
It is simply to say that the idea that atmospheric increase in carbon dioxide is causing an increase in surface temperature as the result of the hypothetical mechanism referred to as the greenhouse effect is easily shown to be incorrect.
This is why those who make their living from AGW funding always point to anecdotal evidence and the "concensus", and never talk about the main effects predicted by the theory.
Let's face, money is power. And power can make us all crazy. All my life I lived within my means. I had a decent job and tried to do the right thing. When I retired, I sold my real estate positions and resettled in a tax friendly green state. My pension is adequate and I really want for nothing. I find this enough. Most people I run with agree with me on this point. I never met one of those super rich people outlined above. You talk about progressively taxing them, maybe you're right. Remember, money is power. I think changing their mind set would improve their "hoarding" tendencies. If Congress makes the laws and their corupt, how then can their laws help? Our President does his best as well as every president before, to make policies (laws) on his own if Congress doesn't co-operate quik enough. That scares me. We need a strong leader with a plan to harness the power out there and turn it around for the good of us all. And the only way a powerful wealthy man wil respond positively to that kind of leadership is if a fair and decent logical plan is laid out for them. No one and I mean NO ONE, knowingly likes to throw good money away. It is wasteful in their eyes and mine as well
July 30, 1998
hoover digest » 1998 no. 3 » asia
The Hong Kong Experiment
by Milton Friedman.
Cowperthwaite was a Scotsman and very much a disciple of Adam Smith. At the time, while Britain was moving to a socialist and welfare state, Cowperthwaite insisted that Hong Kong practice laissez-faire. He refused to impose any tariffs. He insisted on keeping taxes down."
"I met Cowperthwaite in 1963 on my next visit to Hong Kong. I remember asking him about the paucity of statistics. He answered, “If I let them compute those statistics, they’ll want to use them for planning.’’ How wise!"
The ssa data includes all wage earners, this is very different than full time workers. The ssa data includes even people who work for only a day or a few weeks. The bls data is clear, full time, full year workers average about 41k (45k for men, 37k for women).
I got kicked out too. My mistake was getting a job in OLD technology. No demand for it anymore. Now I am back in school getting a CS in the new technology. I had plenty of interviews based on what I learned in the NEW tech (prior to going back to school).
I had zero interviews for old tech. That is more important than age - unless you are trying to get a manual labor job.
Bottom LIne: WE get the govt that WE vote for - socialism is the only solution...
what is happening now is -- capitalism as capitalism was meant to be - only for the rich
I loved this article, but I do not like when labor goes agains labor - labor must stick together and fight management - and labor MUST VOTE FOR LABOR in elections...
OR, we get more republicans - and more republicans means that people die
Mtngun
Thank you for the feedback. My argument is really a broad generalization, so your point about case by case issues is well taken. Historically, the rule of thumb was to allow geographically-limited and luxury goods into the country. Of course, there is no obvious theoretical basis for this. My general thinking on "exceptions" at this point remains a work in progress, but the rule of thumb I've set myself is to allow anything which increases the productivity of the industrial sector (e.g. energy products), along with geographically based goods (I don't importing coffee will ruins us). This is based on the idea that the real measure of wealth is in the diversity of industries you have, because the greater the productivity gains (the cheaper the output) the more sectors are generated. So as the number of sectors grow, the richer the country will be (measuring wealth is something Ricardo said was not possible; I agree with him). For example, if it wasn't for the prod gains of the industrial revolution we'd still all be subsistence farmers so to speak (that's one sector instead of 1000s).
I have no objection to exporting knowledge, because protectionism would protect you from any negative wage consequences. For example, if say a cellphone company wants to build a factory in every nation, then all the nation's workers gain from the company's knowledge, while at the same time earning enough to purchase the phones they produce. The only exception that immediately comes to mind are those for national security.
As for market forces resolving trade imbalances, I would argue that it only leads to pointless destruction. An example I have used in my previous writing is a very simple one. Say there are two identical nations side by side, with the exact same national output (standard of living). They are identical in every respect (culture, taste, production). The only difference is the quantity of gold each country posses. Thus they have different price levels, say 10 to 1. If they open to free trade, one nation will be decimated by imports, and the other exports its wealth (cannot fully consume what it produced) resulting in nothing more than inflation. Chaos ensues. The result is destructive for both. Notice gold, like under the Articles of the Confederation, did not prevent ruin, because no one recognizes that gold, like paper money can be nothing more than an "arbitrary scale." Instead, the classical economists made the mistake of treating gold, not as domestic measure, but as supply and demand good (QTM). Economics never recovered from this error in my view.
By MMT, did you mean Modern Monetary Theory?
best regards
Robert
Thank you for giving me a chance to post. I think your site is exactly what America needs. This is no longer about theoretical musings, but national survival in my opinion. Nor is it any longer about Left and Right, who both ironically share free trade as a philosophical foundation. In short, fixing America will require us to pull together and recognize my neighbor's prosperity in turn is my own. Several years ago a national reporter took interest in my interpretation of another field of science which sent shock waves through the industry after the story broke (hoping to revive this story again in a much broader scope). Without him, my analysis would have amounted to nothing. So in a like wise manner, without your site, I would not be able to move forward with this discussion. Thank you
Since we've been down it seems the powers that be want to make it seem like all is good, the economy has recovered and people are fine. Hardly the truth. Now the evidence is pouring in offshore outsourcing does what it implies, it ruins lives. Jobs are shipped abroad and we import poverty.
"Conservatives believe the economy functions better if the rich have more money and everyone else has less. But they’re wrong. It’s just the opposite. The real job creators are not CEOs or corporations or wealthy investors. The job creators are members of America’s vast middle class and the poor, whose purchases cause businesses to expand and invest. America’s wealthy are richer than they’ve ever been. Big corporations are sitting on more cash they know what to do with. Corporate profits are at record levels. CEO pay continues to soar. Corporations aren’t expanding production or investing in research and development. Instead, they’re using their money to buy back their shares of stock. Consumers don’t have enough money to buy. The median household’s income continues to drop. Adjusted for inflation, it’s 11 percent below its level in 2000. One factor here has been a sharp decline in union membership. Another structural change is the drop in the minimum wage. Today it’s well below where it was in 1979."
(1979 was also when unionization peaked in the U.S.)
http://robertreich.org/post/98668011635
You covered a lot of territory, any one paragraph is easily worth its own blog. :-)
I have some thoughts on free trade but haven't had time to organize them. Certainly as a practical matter free trade has done the American middle class no favors. Here are a few random thoughts on free trade:
-- agree with MMT that it is foolish to export scarce natural resources in return for little pieces of paper. Better to be an importer of scarce natural resources than an exporter.
-- but -- and here I am in disagreement with MMT -- I see no harm in exporting knowledge products. When you export a knowledge product, you don't lose any knowledge. To the contrary, the more knowledge product you make, the more knowledge you gain. Better to be an exporter of knowledge products than an importer.
-- if you outsource the production of knowledge products, you lose knowledge and the other country gains knowledge.
-- free trade creates a "race to the bottom" where any business that can relocate, has an incentive to relocate to 3rd world countries with cheap labor and few regulations. Effectively, we surrender our national power to regulate commerce.
-- free trade has pretty much killed unions except for public sector and service sector unions that don't have to compete with 3rd world countries.
-- in the long run, market forces may indeed tend to resolve trade imbalances, but in the long run we're all dead. In the short run people get laid off and it's difficult for older workers especially to find new careers.
-- in general, I think trade should be evaluated on a case by case basis, based on whether importing a particular item is in our best interest. I'm inclined to protect our knowledge industries. I wouldn't mind a tariff on manufactured goods. But if some other country wants to give us their scare natural resources in return for our little pieces of paper, I'm probably OK with that.
China has captured so much of U.S. manufacturing one has to wonder if it is even possible to come back. Great article and very glad you shared it with us. So few realize the founding fathers and America itself used tariffs and various measures to gain a trade advantage, which in turn built up America.
i've been trying to get over here with coverage when i can, but this summer has been one major project after another...just finished a bathroom remodel, now i have to get a new barn built before winter...i should be able to contribute weekly come November...
The fact prices are very uneven depending on states seems odious. Thanks for writing this up! I am back and am just starting to work on the site. I have a family thing that took up all of my time, on top of the "cannot rely on the Fed" disaster.
Is there actually any reason or law that foreign earned profits of multi national companies cannot be distributed as dividends? I am not aware of any. The stock holders can be people and entities from all over the world.
MS products are used and purchased all over the world. US population is about 5% of the world population. PCs are eubiquitous arround the world.
I checked an income statement of Microsoft and it showed 30% taxes paid on profit. US corperate tax is about 35%. MS income is mostly for IP. So there! Ha! What are you talking about?
Yes, they are needed and no, capitalism is not the problem. What you are witnessing in the US today is corporatism, or economic fascism. This is a precise term and I do not use it as a slur. We need the rule of law, just government and a stable economic system built on capitalism if we are to survive as an enlightened, democratic country. The only way to dispose of these systems is to embrace anarchy, which is an every man for himself proposition. Sure, an individual can go totally off the grid, in the wild, living on a steal or barter system - but your life will be brutish and short. This is not a possible way of life for a society. You speaks here of the wonders of communism, but I and many others who have lived under it will tell you differently.
I believe that you mean the corporatists - the fascists, not the capitalists. Capitalism is a system which exchanges commodities or services of equal value. This entire article has been an outline of corporatism, the unhealthy enmeshment of private industry with government regulation and control. It is euphemistically sanitized as crony capitalism.
Surprised you didn't anticipate the ineptitude and meanness of the current administration from the start. Just look in his eyes.
Can't agree with you on global warming/climate change.
97% of climate scientists do, but 95% of real estate agents agree now is the best time to buy a house.
The same financial basis for solidarity exists, plus the entire pride issue. They won't admit to themselves it is hooey, let alone the rest of us.
Careful review of available information has persuaded me that if human activity is causing glimate change, it is not due to the so-called greenhouse effect, as that actually doesn't work. The analogy is ill chosen, as the atmosphere does not contain the crucial aspect required to construct a greenhouse, which is a reflective layer which preferentially reflects lower energy light (infra red). The science around why that happens gets pretty intricate, but it clearly cannot happen in the atmosphere, as the atmosphere is essentially homogenous in its chemistry, at least as regards carbon dioxide.
So lacking a reflective layer, the atmospheric concentration of carbon dioxide can only cause an increase in surface temperature if it first causes more heat absorption by the atmosphere, and causes a corresponding (but larger) increase in atmospheric temperature, particularly in the upper atmosphere.
Since carmbon dioxide has increased, but atmospheric temperatures have not, this is clearly not happening.
This is not to say that the increase in carbon dioxide is a good or even neutral thing.
This is not to say that the surface temperatures are not warming.
It is simply to say that the idea that atmospheric increase in carbon dioxide is causing an increase in surface temperature as the result of the hypothetical mechanism referred to as the greenhouse effect is easily shown to be incorrect.
This is why those who make their living from AGW funding always point to anecdotal evidence and the "concensus", and never talk about the main effects predicted by the theory.
America is a Republic, not a Democracy. Read, understand and know the difference.
Let's face, money is power. And power can make us all crazy. All my life I lived within my means. I had a decent job and tried to do the right thing. When I retired, I sold my real estate positions and resettled in a tax friendly green state. My pension is adequate and I really want for nothing. I find this enough. Most people I run with agree with me on this point. I never met one of those super rich people outlined above. You talk about progressively taxing them, maybe you're right. Remember, money is power. I think changing their mind set would improve their "hoarding" tendencies. If Congress makes the laws and their corupt, how then can their laws help? Our President does his best as well as every president before, to make policies (laws) on his own if Congress doesn't co-operate quik enough. That scares me. We need a strong leader with a plan to harness the power out there and turn it around for the good of us all. And the only way a powerful wealthy man wil respond positively to that kind of leadership is if a fair and decent logical plan is laid out for them. No one and I mean NO ONE, knowingly likes to throw good money away. It is wasteful in their eyes and mine as well
July 30, 1998
hoover digest » 1998 no. 3 » asia
The Hong Kong Experiment
by Milton Friedman.
Cowperthwaite was a Scotsman and very much a disciple of Adam Smith. At the time, while Britain was moving to a socialist and welfare state, Cowperthwaite insisted that Hong Kong practice laissez-faire. He refused to impose any tariffs. He insisted on keeping taxes down."
"I met Cowperthwaite in 1963 on my next visit to Hong Kong. I remember asking him about the paucity of statistics. He answered, “If I let them compute those statistics, they’ll want to use them for planning.’’ How wise!"
The St. Louis Fed is technically illiterate and you may be surprised just how callous toward the idea of public service and customer service.
I believe that nitwit was a republican. I lived in California when he was governor. The worst ever!
http://kronstantinople.blogspot.com/2013/09/our-future-everything-in-mod...
The ssa data includes all wage earners, this is very different than full time workers. The ssa data includes even people who work for only a day or a few weeks. The bls data is clear, full time, full year workers average about 41k (45k for men, 37k for women).
I got kicked out too. My mistake was getting a job in OLD technology. No demand for it anymore. Now I am back in school getting a CS in the new technology. I had plenty of interviews based on what I learned in the NEW tech (prior to going back to school).
I had zero interviews for old tech. That is more important than age - unless you are trying to get a manual labor job.
Bottom LIne: WE get the govt that WE vote for - socialism is the only solution...
what is happening now is -- capitalism as capitalism was meant to be - only for the rich
I loved this article, but I do not like when labor goes agains labor - labor must stick together and fight management - and labor MUST VOTE FOR LABOR in elections...
OR, we get more republicans - and more republicans means that people die
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