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Subj: Re: questions
Posted: Fri Oct 17, 2008 at 06:21:46 am CDT (Viewed 653 times)
Reply Subj: Re: questions
Posted: Thu Oct 16, 2008 at 09:45:00 pm CDT (Viewed 620 times)
First, thank you again for your patience.
Now - here's what I think is an important point, but I may be off base. The worker and the consumer are the same person. If the labor market is global but the consumer market is local, this seems to enable damaging inequities, doesn't it? Here's what I mean. You've explained how the American worker and the Chinese worker are in the same labor market. But they're in different consumer markets, because consumer markets are local. A bag of rice in China costs far less than a bag of rice in America, and the American worker can't buy the Chinese bag of rice except by traveling to China, which would of course be prohibitive from both a cost and time perspective. This means that if I make six dollars an hour in America, I'm poor, but if I make that same amount in China, I think the sky is raining gold. Thus it isn't possible for the American worker to compete with the Chinese worker fairly. The Chinese worker must win, because the worker and the consumer are the same person, and the Chinese consumer faces far lower prices than the American consumer. This is a damaging inequity for the American worker, isn't it?
That word "good" is a funny one, as you've noted previously. If China takes actions that benefit China, one would likely consider that "good" from a Chinese perspective, and if I were Chinese, I would applaud my government. Would I be wrong?
Do my personal savings, or lack thereof, impact domestic investment? I guess the answer would be yes, because the banks use my money to invest.
Yet the main reason most people don't save is that their mortgage monthly payments are so high, devouring their paychecks, and the reason for that is the absurdly inflated housing market. Absent this inflation, discretionary income would be higher, enabling greater savings, at least theoretically. No?
That makes sense, because budget deficits causes much of our tax money to be spent repaying government debt, when that same money could instead be invested in America, either by the government or by citizens and businesses paying lower taxes and thus having more discretionary income.
That explains the high capital "inflow" from other nations, but doesn't explain our low domestic investment. Or did I miss something?
Doesn't that imply that the Chinese view their lending to us as somehow altruistic? Otherwise, if they view it as being in their own self-interest, wouldn't they keep on doing it regardless what we do? The exception would be if we attack them militarily, of course.
I would have figured the Chinese profit by lending to us and profit by us outsourcing to their country. No?
I don't see how. In the final analysis, our losses would exceed our gains, and we would end up with a net loss, no? I guess you're saying it isn't a zero sum game: Mexico's gain doesn't equal our loss. But it seems zero sum to me. If I buy a Mexican tomato instead of a New Jersey tomato, Mexico made money and New Jersey didn't. If a job goes to Mexico instead of Texas, then a Mexican got the job and a Texan didn't. I realize the arithmetic is much messier than that, since Mexican tomatoes and New Jersey tomatoes aren't equal monentarily, nor are Mexican jobs and Texan jobs. But if we simplify to speak in terms of units, tomato units and job units, we would say that every Mexican tomato unit that gets purchased in America equals one American tomato unit that didn't, and every Mexican job unit gained (if the employer is an American company) equals one American job unit lost. In terms of units, America has a net loss. No?
I think you're saying X investment will lead to Y job creation, regardless what form the investment takes, with X equaling the dollar amount invested and Y equaling the number of jobs. I think that would be true if our economy was primarily a job creation engine, as it should be, but our economy is primarily a business owner profit engine, and business owner profits experience negative pressure in direct proportion to the size of payroll, creating an incentive to keep payroll as small as possible. For this reason, I would think some investments are more job-conducive by their specific natures, in that some investments directly and unequivocally require the creation of jobs, for example the building of a new factory. No?
And productivity is measured ultimately in terms of profit for the business owner, right? And profit for the business owner is inversely proportional to the size of payroll, right? Doesn't this tell us that economic efficiency pushes in the direction of fewer jobs and lower wages?
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