Giant Sucking Sound

[RobBob]

I was remembering Ross Perot's warning about the sound that we would hear, the sound of jobs moving overseas as a result of NAFTA, etc. A sharp, if quirky, entrepreneur, Perot was cast as a kook. But the he was right about this.

 

As long as we keep exporting every conceivable job abroad, as we have been doing recently, and increasing our imported goods, we are in effect shipping our net worth overseas at an increasing rate. We are spending the nation's equity.

 

I sure hope that a politician steps forward with the courage and communication skills to galvanize our country into doing something about this.

[scrambler]

Really, I don't see what we can do about this. Flight of capital and jobs (to decrease wage pressure) and maximization of profit go hand in hand.

[RobBob]

We moved to a "free trade" mentality that transcends good sense, and also what the rest of the world is prepared to offer in return. For instance, Vietnam is desperate for US$, and is willing to subsidize industries who in turn bring US import $ into the country. This is the same mode China was in years ago. Trouble is, we can't afford to be everybody's sea-daddy anymore.

[Al_Pine]

RobBob said:

I sure hope that a politician steps forward with the courage and communication skills to galvanize our country into doing something about this.

 

Me too. Perot oughta try again. That sure was great the last time he ran. He's singlehandedly responsible for removing the first Bush from office.

[willstrickland]

I think Perot would have actually WON that election, if he hadn't gone on those rants about the republicans "Spyin on ma daughter" and picked that nutjob ex-Admiral for a running mate. "Uhh I didn't hear you, let me turn up my hearing aid.." I just cringed watching that VP debate...it was like watching a ship sink.

 

That's where the "kook" seed got planted good. I really wish he'd not f'ed up, not because I would have voted for him, but because he would have made third party candidates viable again.

 

He was a trip, I got a kick out of watching his 30 minute commerical things. Ranting in that craszy voice "Lemme tell ya somethin' people..." but the dude brought the facts to the table. Seemed to have a very clear, detailed, and commanding understanding of the issues he addressed.

[RobBob]

nutjob ex-Admiral

 

He's no nut-job...Stockdale was an admiral, POW, religious scholar, etc. etc. That was Perot's fault entirely for putting him into the fray w/o grooming him at all. And it WAS painful to watch.

[scrambler]

These super rich bastards get off on fuckin' with people because they can. For instance, George Soros, who some have blamed for the 1997 Asian financial crisis, has pledged to use his money to defeat Bush. I don't believe Soros is doing it for the good of the nation or the world or whatever, it's because he enjoys the power play. Ultimately, these rich people are only interested in preserving their power even if that means improverishing a nation by doing so.

 

[RobBob]

Perot was different. Kookiness and all, he has spent a lot of personal bucks backing up his rhetoric. I was living in TX when he almost singlehandedly got the high school "no pass-no play" rule passed in Texas---very unpopular with most football-loving Texans. He funded a lot of smart-start type programs for underpriviledged kids. Over the years he has quietly arranged for high-tech prostheses for war vets, etc. etc. Weird and geeky but he believes in investing in "plain folks."

[scrambler]

Somehow it doesn't sound like pure altruism. There must be some angle, for instance, when Gates gave away computers to schools, well, he was pushing his operating system. He gets the PR for being a nice guy, all the while it's a shrewd marketing scheme. These guys don't get to millionaire/billionaire by being nice.

 

I heard that Perot encouraged fierce loyalty from his employees to the point where he suggested that unmarriaged employees contributed the most to his companies because they didn't have to divide their loyalty with family obligations.

[scrambler]

RobBob said:

Perot was different. Kookiness and all, he has spent a lot of personal bucks backing up his rhetoric. I was living in TX when he almost singlehandedly got the high school "no pass-no play" rule passed in Texas---very unpopular with most football-loving Texans. He funded a lot of smart-start type programs for underpriviledged kids. Over the years he has quietly arranged for high-tech prostheses for war vets, etc. etc. Weird and geeky but he believes in investing in "plain folks."

 

Yeah, I remember hearing that he was very involved with bringing back former POWs from Vietnam to the point where his companies would be involved in quasimilitary type extraction activities. Is this right or have I made this up?

[RobBob]

Well, he ran kind of his own USO pep rallies for Vietnam POWs, if I remember the story right. Then several years later he did hire one old POW friend, Bull Simons, to run the mission to extract those EDS guys from Iran. But Simons never worked for EDS...he had retired to farming hogs in Florida, I believe, and was excited to handle the Iran deal.

[scrambler]

Yeah that's it. EDS. Bull Simons.

 

There's a whole lot of strangeness surrounding the Iranian situation including the hostage deal and the 1980 elections.

Edited December 3, 2003 by scrambler

[scrambler]

RobBob said:

I was remembering Ross Perot's warning about the sound that we would hear, the sound of jobs moving overseas as a result of NAFTA, etc. A sharp, if quirky, entrepreneur, Perot was cast as a kook. But the he was right about this.

 

As long as we keep exporting every conceivable job abroad, as we have been doing recently, and increasing our imported goods, we are in effect shipping our net worth overseas at an increasing rate. We are spending the nation's equity.

 

I sure hope that a politician steps forward with the courage and communication skills to galvanize our country into doing something about this.

 

Yeah, I hear ya. But from the present pool of candidates, that would mean placing your money on someone like Gephardt who is well known for his protectionist position. Pat Buchanan was another one who advocated this stance but he was nixed for his standing on other issues.

 

I heard that one of the causes of the Great Depression was a breakdown in world trade precipitated by protectionism. So I'm leery of a solution that calls for something like steel tariffs.

[Dr_Flash_Amazing]

scrambler said:

Somehow it doesn't sound like pure altruism. There must be some angle, for instance, when Gates gave away computers to schools, well, he was pushing his operating system. He gets the PR for being a nice guy, all the while it's a shrewd marketing scheme. These guys don't get to millionaire/billionaire by being nice.

 

A) What do you expect; he's going to donate a bunch of iMacs running OSx? It's not like 99% of computers that get sold aren't gonna be running Windows anyway.

 

B) Gates Foundation gives out a LOT of money for a LOT of good causes, and, self-interested PR or not, they help out a lot of people who need it.

[fionaflaps]

i agree with you. the school i teach at has many computers donated by bill gates. for these, we're thankful. must there always be an ulterior motive to giving?

[mtn_mouse]

I spent a half hour the other day just trying to get a question emailed off to microsoft. No way. They have so many walls between them and us, it just did not happen

[allthumbs]

I call the fuckers on the phone and whine like a woman. Mostly they help me out to stop the insanity.

[Al_Pine]

Dr_Flash_Amazing said:

scrambler said:

Somehow it doesn't sound like pure altruism. There must be some angle, for instance, when Gates gave away computers to schools, well, he was pushing his operating system. He gets the PR for being a nice guy, all the while it's a shrewd marketing scheme. These guys don't get to millionaire/billionaire by being nice.

 

A) What do you expect; he's going to donate a bunch of iMacs running OSx? It's not like 99% of computers that get sold aren't gonna be running Windows anyway.

 

B) Gates Foundation gives out a LOT of money for a LOT of good causes, and, self-interested PR or not, they help out a lot of people who need it.

 

Perhaps Scrambler is referring to offer by Microsoft to have their penalty in the abusive monopoly verdict be that they give tons of computers to schools and such. Perhaps maybe Phillip-Morris could also pay off their civil penalties by providing cigs to school-children?

[JayB]

RobBob said:

I was remembering Ross Perot's warning about the sound that we would hear, the sound of jobs moving overseas as a result of NAFTA, etc. A sharp, if quirky, entrepreneur, Perot was cast as a kook. But the he was right about this.

 

As long as we keep exporting every conceivable job abroad, as we have been doing recently, and increasing our imported goods, we are in effect shipping our net worth overseas at an increasing rate. We are spending the nation's equity.

 

I sure hope that a politician steps forward with the courage and communication skills to galvanize our country into doing something about this.

 

Gotta disagree with you here. If a company can manufacture goods or generate services less expensively elsewhere, a couple of things happen that are good for this country.

 

The first is that the consumers of the said goods or services have to spend less money to aquire them, which leaves them with more resources to spend elsewhere on other products. When reducing manufacturing costs cuts the price of a given car from $25,000 to $20,000, the consumer can use the additional $5,000 in his pocket to remodel his house and provide work for contractors, business for the home improvement store, etc, etc, etc - the end result being that money that would have formerly been confined to those persons and companies involved in the production of a single automobile can now also generate effective demand (demand+the ability to put it to use with $) for a much broader range of goods and services. This is analogous to a farmer spending $5,000 to generate 20 tons of grain using antiquated equipment and dated production methods versus spending the same amount of money in conjunction with the most up-to-date equipment and production methods and producing 50 tons of grain. Which farmer is better off? Similarly - which country is better off - the one that generates goods and services worth 10 trillion dollars with a given input of capital and labor or the country that produces 15 trillion dollars with the same expenditure of both?

 

The other good thing that happens is rather than squandering resources in industries in which the US no longer enjoys a competitive advantage, lowering production costs increases profitability and liberates capital for reinvestment in sectors in which the US can still compete effectively. Successful companies expand operations in the divisions which generate the most profit, which ultimately translates to more workers employed in these fields, and these workers are far more secure than their counterparts working in fields where workers in other countries can do the same job at a lower cost.

 

The other factor to consider is that when measures are taken to protect workers in a given industry that is threatened by foreign competition, like certain kinds of steel production, the tarriff barriers enacted to help them end up doing more harm than good. In the case of the steel tariffs, the dwindling pool of steel workers benefitted, while the far greater number of workers in fields that consume steel and convert it into finished goods were harmed by an artificial increase in prices that rendered the goods that they produced less competitive by the exact percentage that the tarriffs inflated prices. In the end the result was a net loss of jobs in the US. Not to mention the damage done to consumers who paid higher prices, and all of the workers in other fields who suffered when consumers had less money available to buy their products or services.

 

Ultimately, tarriffs and other protectionist schemes end up protecting a narrow sliver of the workforce while compromising both the purchasing power and the competitiveness of other workers. The effects are subtle in most economies where such protections are both inconsistent and incomplete, but one only needs to look to North Korea, the former Soviet Union for an example of the consequences such economic policies in their full glory.

[klenke]

[Alan Greenspan will croak sooner than later. I nominate Jay Brazier as his replacement.]

 

Like anything else that occurs in this world, there are trade offs to doing one thing or another. Think of it as a spectrum of possible courses of action. In the case of shipping jobs abroad, one end of the spectrum is the ultimate benefit of the corporations at the expense of the employee. The other end of the spectrum benefits the employee but not necessarily the corporations. But even this is simplifying the spectrum into a linear model. Really the spectrum is two dimensional, maybe even three dimensional. It is essentially cause-and-effect analysis for a future that hasn't happened yet.

 

In the limit of a higher and higher percentage of white collar jobs or technical blue collar jobs moved overseas, more and more it would be that the only things that remain for our own country are low paying jobs to service the upper class (the highly-payed executives). The jobs being shipped overseas are the middle class jobs. It is the middle class (the bourgeoise) that drives any 1st World economy. The more you ship those jobs overseas, the more the economy suffers for the middle class, hence the country in general. Right now, the percentages of those transplanted jobs are small. I speak only of growing limits. In the limit, this overall mid-level intellect and resource pool would suffer.

 

Jay speaks of corporations but he neglects the country social perspective in his essay. He speaks of the benefit of the consumer as if there were no countries, no borders, only a global village. Unfortunately, even if you might think a global country (an 'earthy', if you will) is the way humanity is progressing, this is not where we are in the present. A country should not ignore itself--else it will one day find its foundation infested with mildew and rot.

 

The foregoing are philosophical theories for the economy. They are not based on a current economy (as we see it NOW).

 

[RobBob]

JayB gives a good, well-thought-out rebuttal, and I agree with him about the dangers of protectionist barriers sometimes fostering uncompetitive industries (steel is a good example). Also good consumer economics. This all works well in the theoretical setting of endless market volume and endless productive capacity.

 

Where it fails is when we must deal with the finiteness of one nation's resources as it imports such a high percentage of goods and services and exports such a high percentage of its wealth. Our trade imbalance (not to be confused with budget imbalance) has been negative and growing since the late 1970s. For a few years in the early '90s it stopped growing (still negative), but then has been on an acceleration track: Exceeding $200 Bn for the first time in 1999 and likely $400 Bn this year. This is net worth being exported to other nations, in the same way that you might buy goods and services from your neighbor, and pay him money out of your savings account. At some point, on this track, something big will happen---most likely, a big devaluation in the US$. In any event, regardless of the $, our collective US equity account is getting emptier and emptier. This is the effect, regardless of how you feel about the importance of a cheap plasma TV or your financial services job going to someone in Bombay.

 

It's a mess I think, and I used to be a free marketeer like JayB until I realized that the other "free marketeers" (China, India, etc.) are gaining more from access to our markets and $ than we are gaining in purchasing their lower-cost goods and services. Don't know what the solution is though.

[Peter_Puget]

"There is no clear evidence that the renminbi is substantially undervalued at this juncture....A currency revaluation would not by itself have a major impact on global current account imbalances--particularly given China's small share in world trade."

 

Although the U.S. trade deficit with China will likely be over $100 billion this year, China's overall trade surplus will only be about $30 billion, according to IMF calculations. This means that China is running a trade deficit excluding the U.S. This says a lot about the Chinese trade regime, which is not protectionist. The truth is that China's bilateral surplus has not come at the expense of domestic production, but at the expense of other Asian exporters. It is THEIR production which has shifted to China, not U.S. production.

 

IMF Link

 

PP

 

[RobBob]

China's exports to the US in excess of imports from us still represent $100 Bn. True enough that China is not as aggressively after US$, but they still maintain a steady flow of income from sales to the US in excess of purchases. I want a big fucking Christmas present from them in return for helping to increase their standard of living.

[Peter_Puget]

Haven't they already given you your present by providing cheaper goods? You're a greedy boy.

[RobBob]

Hey, seriously, in retrospect I'd rather pay a little more and keep the wealth here. But the genie's out of the bottle. Just remember what our greed has gotten us, next time you go into Walmart, Sam's, Costco, etc.

 

Unfortunately I've experienced the buying office for a couple of those fine institutions. That's a classic example of merchandise being "whored out for price." The places to go if you want to move millions of units...at the lowest price imaginable. And woe to you if they find a similar (tho not necessarily as high-quality) product from Asia next year. You'll be out in a minute.