“Thriving in a Global Economy: The Truth about US Manufacturing and Trade” by Daniel J. Ikenson (of the Cato Institute) was apparently written by another of those “statistical economists” who (1) haven’t noticed that every manufactured consumer good in the U.S.A. comes from China or another country; and (2) don’t realize that the manufacturing of consumer goods generates wealth that is, in effect, shared by the workers within the country the manufacturing takes place in; and (3) overlook the fact that low priced imported manufactured consumer goods do not, in any appreciable way, increase the wealth of the ex-manufacturing-workers and would-be-manufacturing workers in the U.S.A.; (4) all the while quoting stats on how well U.S. manufacturers are doing after 54 years of the progressive loss of manufactured consumer goods to first Japan , then Korea, now China while those U.S. manufacturers either teamed up with the overseas manufacturers or built their own factories overseas retaining only offices and possibly small assembly plants in the U.S.A. (5) Sure, those “manufacturers” are making terrific profits, but those profits are dependant on a U.S. marketplace where the consumers don’t have access to the degree of wealth generation (from manufacture) that they once had. (6) In the absence of stay-at-home manufacturing, a wartime economy does not make for a sustainable marketplace, and the only advantage (propaganda-wise) of a wartime economy is to trick those economists into thinking that the U.S. economy is thriving.
sorry if im misunderstanding you, to clarify;
are you saying that if the free market decides the USA should have less factories than before, then thats a bad thing?
are you also suggesting that cheap imports into the USA in some way hurt the USA ?
During this period of transition, (1) brought about by the rapid industrialization of Japan, Korea, China and India, (2) where zillions of Chinese peasants are competing for jobs with their kinsmen in the cities thereby keeping wage hikes in China to very low levels, (3) where Chinese and Indian labor / financial / environmental, regulations don’t impose near the impositions of U.S.A. regs., (4) a very long period will probably transpire before conditions in China match conditions in the U.S.A. to effectively equalize the advantages of manufacturing consumer goods between the U.S.A. and China,(5) but in the meantime Chinese prosperity will increase while worker prosperity in the U.S.A. will decrease because when previous loosers (Chinese coolies) as competitors in the labor market, become winners while the previous winners (U.S. manufacturing workers) as competitors in the labor market, become losers until the situations equalize.
The only reason US workers would be losers is if the government chokes off opportunity here for their reemployment. So yes, until opportunity is sufficiently stifled in other markets so that the US again becomes competitive, Us workers will suffer. That’s completely avoidable: stop stifling opportunity at home.
to gethky
im trying to improve my abilities as a classifier of economic thought.
is it true to say that you arent Austrian?
also that you arent neo-classical?
i dont see where you are coming from. your arguments arnt convincing. also your response to my two question didnt take the form of two answers, or even one answer. sort of a roundabout restatement of what you said before…
xahrx :
As more and more U.S. consumer manufactering workers have been (in effect) replaced by workers in China, the wealth-creation sector of the U.S. economy has diminished.
The typical libertarian stance on free trade is overly optimistic. I’m merely pointing out an obvious transitional glitch that is blithely ignored.
Words such as ‘bad’ and ‘hurt’ are terms I’d rather not use except to comment on my physical condition.
A nation can be quite prosperous without manufacturing. Take, for example, the Vatican, which specializes in religious services.
The typical libertarian stance on freee trade is overly optimistic.
Then what do you advocate? Unfree trade? You are certainly welcome to not purchase things from China, but why should I be denied free access to cheap Chinese imports? Maybe that’s too much freedom to be allowed in this country.
BTW, if an uneducated Chinese peasant is able to replace you, what does that say about you?
the only advantage (propaganda-wise) of a wartime economy is to trick those economists into thinking that the U.S. economy is thriving.
Imagine how the economy would thrive if the government didn’t confiscate public funds and spend them on goods that self-destruct.
Baxter:
Generating wealth may lead to prosperity, but prosperity is not necessarily caused by generating wealth.
To admit the transitional effects of free trade is not to disavow its long-range effectiveness.
I admit to being disgustingly plebian!
Imagine how the economy would thrive if the government didn’t confiscate.
So, are you proposing a specific intervention to mitigate the transitional effects? Do you want to establish a tariff on the foreign goods, so that the price I have to pay for them increases? Or do you want to confiscate property to help subsidize domestic manufacturing?
How can you calculate what opportunities are lost due to the artificially inflated prices, or the seized funds? What price are you fixing for the foriegn goods, or for the domestic labor? Which mechanism is better for calculating prices than the cumulative decisions of free market participants?
Are buggy whip manufacturers accounted for in the subsidies?
baxter:
All I’m proposing is that libertarians be honest about the effects of this particular transition.
Let’s not forget the crippling effects of unions on the manufacturing industry.
Catoites are not generally as thorough as Austrian scholars, so don’t expect miracles out of them.
libertyboom:
I have mentioned (above) labor regulations as being impositions.
Whats wrong with the manufacturing workers voluntarily joining a group and for that group and the manufacturer to voluntarily come to mutually satisfactory agreements without any governmental intervention?
Inquisitor:
My issue is also with Austrian scholars who apparently base their opinions on free-market rhetoric rather than the government statistics so loved by certain economists, or even the present-day facts that I try to base my non-expert opinions on.
…What is an Austrian? To me an Austrian is an economist that uses a praxeological approach in investigating economic activities and phenomena. Furthermore praxeology is used to make proposals for policy or predictions. Suggesting free market and opposing state intervention can be a conclusion from this. It is of course also possible that someone has a free market bias and uses a praxeological line of argument to support his ideas.
You can be an Austrian and a libertarian (classical liberal), but you don’t have to be a libertarian, just because you favour the Austrian approach and praxeology in economics. I for example consider my self an Austrian Institutionalist. I would use a praxeological line of thinking, but also consider cultural and instinctual traits of humans. For me the conflict is not between governmental and private agents, but rather between bureaucracy and informal institutions. To me the market isn’'t the answer to everything, but I would say that social action by the community is favoured over governmental management by a bureaucracy.
Your “issue” is a red-herring. Leaving aside the fact that government statistics are merely collections of data and thus cannot interpret themselves (all facts are theory laden), it is essential to have a notion of how a free market would contrast to the present, and then go on to analyze how the two differ. Many Austrians are painfully aware of the impediments to free trade currently extant, and are critical of institutions such as the WTO and IMF, and statist economists. If you’re going to make such assertions, be more specific which economists you mean. It is true that certain Austrians are a bit unrealistic about (unfree) trade, as is also the case with some neoclassical economists.
How well versed are you in writings on method? A lot of people, I have noticed, who take issue with the Austrian method have no clue of what it really consists in. Torsten’s response is also worth paying attention to.
Torsten & Inquisitor:
As to the rhetoric of Austrian scholars (vs “statistical/Catoite economists”) re the transition I’ve been discussing, here are a few random examples from Mises.com:
“What I look to do is to point out how Austrian Theory not only debunks the fallacies that the anti-outsourcing advocates have been spawning, but also points out why the process makes sense economically, and not just for the countries where the investment takes place, but also the nations where the final goods are sold.” - The Economics of Outsourcing By William L. Anderson Posted on 4/21/2004 at http://mises.org/daily/1488
“In fact, when it comes to overall U.S. living standards, there is nothing special about outsourcing software technology. All that matters in this case is whether the Chinese and Indians sell for less than what current American software producers could earn in their next most lucrative employment. If so, outsourcing enhances U.S. living standards.” - Perils of Outsourcing By T. Norman Van Cott and Cecil Bohanon Posted on 2/11/2004 at http://mises.org/daily/1443
“After all, why shouldn’t firms outsource? Why shouldn’t the worker who is willing to render the best services for the least pay be the one who gets the job? Instinctively, most of us recoil in disgust at the suggestion that wages should reflect nothing more than the cold calculus of supply and demand. Yet few of us realize just how essential this “cold calculus” is for the long-run welfare of laborers themselves.” - In Defense of Outsourcing By Steve Piraino Posted on 1/23/2002 at
http://mises.org/daily/877
Whats wrong with the manufacturing workers voluntarily joining a group and for that group and the manufacturer to voluntarily come to mutually satisfactory agreements without any governmental intervention?
IMHO, there is absolutely nothing wrong with this. Likewise, it’s also morally acceptable for the employer to fire all of the employees simultaneously and replace them with cheaper workers. Or to fire them and use workers from China. Or for multiple employers to get together and choose what wages the laborers shall work for.
Instinctively, most of us recoil in disgust at the suggestion that wages should reflect nothing more than the cold calculus of supply and demand.
That’s why I oppose minimum wage laws, which keep local people unemployed, harm the poor, encourage outsourcing and illegal immigration, and increase the costs of goods and services I need.
I don’t know why you oppose outsourcing. Apart from it being morally wrong to inflict your opinions on party A and keep them from hiring party B, is there a proof of outsourcing’s supposed overall damaging effect on the economy? What is the numerical value in dollars of the damage outsourcing does to our economy? Or is it a net benefit? Even if outsourcing were a net cost, I would still support it for moral reasons alone.
Do you wish to forbid other countries outsourcing their labor here? Or do you only want to stop it in one direction? Why should I be forced to pay more when I buy something at Walmart just so you can have food on your table instead of someone in China having it? Why should I care??
If outsourcing is so bad, should we forbid work from New York being outsourced to Maine? What about outsourcing from Seattle to Chicago? Exactly how many barriers do you want to errect?
baxter:
I don’t oppose free trade per se. What I do oppose are those free trade scholars/economists who ignore the vast difference between historic two-way trade and the present situation where Chinese manufacturing has become an ever-growing economic behemoth in such an incredibly short time to the point of worldwide ascendancy.
What this portends for the U.S. economy is (as I tried to explain above) an eventual lowering of the standard of living until a leveling/equilibrium is reached. Therefore the interim period (that I have tried to explain in the above posts) will be catastrophic, given the high standard of living enjoyed by the manufacturing workers only a few decades ago and the relatively low standard I expect at the point of the leveling/equilibrium.
The loss of wealth generation through manufacturing (that I predict) will lower the overall standard of living in the U.S.A.