The Economics Thread

[MadMike]

The article is talking about the poorest people in the world. People using food banks, being homeless and on welfare are actually in the ''middle''. Basically if all you've got is £10 in your pocket to live on than your doing better than the ''thriving'' poor.

I see. But the majority of those people I'd hazard a guess are in India/South East Asia and Africa. So why would the US subprime mortgage crisis of 2008 which hit mostly US and European banks with exposure to them (and was therefore mostly a Western crisis) be expected to have a strong correlation with the fortunes of the poorest people in the world?

Why would finding only a loose correlation be a surprise?

 

[MadMike]

Not sure about copying in a spoiler. Isn’t that against caf rules? Doesn’t anyone buy a copy of the Sunday Times any more? I thought that was part of a standard weekend routine!

I've no idea, maybe it is.

 

[Sweet Square]

I see. But the majority of those people I'd hazard a guess are in India/South East Asia and Africa. So why would the US subprime mortgage crisis of 2008 which hit mostly US and European banks with exposure to them (and was therefore mostly a Western crisis) be expected to have a strong correlation with the fortunes of the poorest people in the world?

Why would finding only a loose correlation be a surprise?

I think he's linking it in showing how globalisation has effected the poorest in the world. But really it's a pointless stat has you only have to change what UN consider absolute poverty by a few dollars and the results show a completely finding that says poverty is getting far worse.

The rest of article is quite good although it's nothing we haven't heard before(Mark Blyth has made similar arguments).

 

[Pogue Mahone]

I can't C&P the whole article but here's the bit about poverty (taken from the longer version, published in LRB).

In conclusion, it’s all doom and gloom. But wait! From another perspective, the story of the last ten years has been one of huge success. At the time of the crash, 19 per cent of the world’s population were living in what the UN defines as absolute poverty, meaning on less than $1.90 a day. Today, that number is below 9 per cent. In other words, the number of people living in absolute poverty has more than halved, while rich-world living standards have flatlined or declined. A defender of capitalism could point to that statistic and say it provides a full answer to the question of whether capitalism can still make moral claims. The last decade has seen hundreds of millions of people raised out of absolute poverty, continuing the global improvement for the very poor which, both as a proportion and as an absolute number, is an unprecedented economic achievement.

The economist who has done more in this field than anyone else, Branko Milanović, has a wonderful graph that illustrates the point about the relative outcomes for life in the developing and developed world. The graph is the centrepiece of his brilliant book Global Inequality: A New Approach for the Age of Globalisation.† It’s called the ‘elephant curve’ because it looks like an elephant, going up from left to right like the elephant’s back, then sloping down as it gets towards its face, then going sharply upwards again when it reaches the end of its trunk. Most of the people between points A and B are the working classes and middle classes of the developed world. In other words, the global poor have been getting consistently better off over the last decades whereas the previous global middle class, most of whom are in the developed world, have seen relative decline. The elite at the top have of course been doing better than ever.

 

[MadMike]

I can't C&P the whole article but here's the bit about poverty (taken from the longer version, published in LRB).

Thanks for that. I'm still a bit bemused at how he attempts to create a link/correlation between the Western banking system near collapse and the poorest people in the world. And then triumphantly declares it as a success story for capitalism when no strong correlation is found. Wut?

I mean, I'm a believer of capitalism myself but this seems a bit of a cheap argument for me.

 

[donkeyfish]

I can't C&P the whole article but here's the bit about poverty (taken from the longer version, published in LRB).

This is pretty well established actually, inequality between countries is shrinking despite it growing within western countries.

 

[711]

I can't C&P the whole article but here's the bit about pIoverty (taken from the longer version, published in LRB).

I see that's comparing income, but is the effect of QE and ludicrously low interest rates more marked on the value of existing assets? Anyone with substantial assets in property or investments has gained a lot in the last few years, compared to those whose income is used for day to day living.

 

[Pogue Mahone]

I see that's comparing income, but is the effect of QE and ludicrously low interest rates more marked on the value of existing assets? Anyone with substantial assets in property or investments has gained a lot in the last few years, compared to those whose income is used for day to day living.

He references Thomas Picketty a lot in the article so I’d say he’s in full agreement with you here.

 

[oneniltothearsenal]

"This week marks the tenth anniversary of the fall of Lehman Brothers, seen as the emblematic event of the financial crisis. And early in Obama’s first term, as he struggled to prevent further collapse, he faced similar insubordination from a key official: Treasury Secretary Timothy Geithner.

According to credible accounts, Geithner slow-walked a direct presidential order to prepare the breakup of Citigroup, instead undertaking other measures to nurse the insolvent bank back to health. This resistance to accountability for those who perpetrated the crisis, consistent with Geithner’s demonstrated worldview, had catastrophic effects—including the Trump presidency itself.

Geithner and his bank regulator colleagues made sure a breakup wouldn’t be needed by using Federal Reserve loans, guarantees, and a third bailout to save Citi. Little was asked from the company in return. Geithner had devised “stress tests” to judge how large banks would handle another downturn, and Citi’s initial test estimated that the bank would need $35 billion in additional capital to reassure markets that it was safe. But Citi haggled with regulators, dropping their capital requirement to $5.5 billion, about the same as what the bank paid out in bonuses that year."

https://newrepublic.com/article/151159/tim-geithner-resistance-inside-obama-administration

 

[Adisa]

Tim Geithner's role should not come as a surprise, considering his actions as governor of the Fed Reserve Bank of NY.

 

[Adisa]

Am I reading that right that US deficit in a single year is $895bn?
That is what it says, but I'm not sure I can believe it........

It's right. A jump of 33%.

 

[Adisa]

The last huge rise in US deficit happened under another Republican. The funny thing is that only two president's have overseen cuts in the deficit at certain periods in decades. They were both Democrat.

 

[The Purley King]

It's right. A jump of 33%.

That is incredible. I know a country's finances don't work like a bank account, but if you are spending ~$1tn more than you are earning every year, that doesn't strike me as particularly sustainable especially when this is the situation when things are generally ok with the economy.
I remember the quote that was used a few years ago in the UK was something like "They didn't repair the roof when the sun was shining"

Just googled that and it was originally said by JFK. Didn't know that! Every day is a school day

 

[Massive Spanner]

The last huge rise in US deficit happened under another Republican. The funny thing is that only two president's have overseen cuts in the deficit at certain periods in decades. They were both Democrat.

It's hardly a surprise. The right always spends, the left always makes the cuts when it goes tits up. Happens in just about every democracy everywhere. There are loads of good reads out there about why it therefore makes them a good combo (basically right tend to be money happy and left tend to be stingy, so without both it'd be highly unbalanced).

Obviously Trump is .. eh.. a slight extreme, to say the least. He's proper bankrupting them.

 

[Danny_]

Kicking off trade wars is “the right thing”?

Yep, the right thing for American workers

 

[Pogue Mahone]

Yep, the right thing for American workers

Seriously? They’re the one being laid off when the companies they work for face price hikes to import raw materials from overseas.

 

[Danny_]

The deficit is a result of a massive wealth giveaways to the wealthiest Americans, it's easy to fix through the lower classes rising up and killing the feckers. It's an artifice of corporate rule, not a natural result of government spending.

Actually, it's not. It is mostly down to massive govt spending on Healthcare caused by the baby boomers retiring and social security payments. This is going to be a problem that gets worse until around 2038 when it will peak.

US budget figures 2018

Mandatory spending is $2.739 trillion. Social Security (the pension you get when you retire) is by far the biggest expense at $1.046 trillion.
Medicare (the program that pays for people over 65's healthcare) is next at $625 billion, followed by Medicaid (pays for healthcare for the poor) at $412 billion. Interest on the U.S. debt is $363 billion. This is referred to as mandatory spending and altogether, it comes to around 62 percent of total spending. The remaining 38 percent is discretionary spending - $1.203 trillion. $886 billion of this goes to military spending. The rest is what you are referring to - the massive give-aways or whatever other bs the left feels like complaining about on any given day. So, your revolution will be to overthrow the current regime and take away healthcare from the old and poor along with their pensions.

 

[CA_vampire]

Actually, it's not. It is mostly down to massive govt spending on Healthcare caused by the baby boomers retiring and social security payments. This is going to be a problem that gets worse until around 2038 when it will peak.

US budget figures 2018

Mandatory spending is $2.739 trillion. Social Security (the pension you get when you retire) is by far the biggest expense at $1.046 trillion.
Medicare (the program that pays for people over 65's healthcare) is next at $625 billion, followed by Medicaid (pays for healthcare for the poor) at $412 billion. Interest on the U.S. debt is $363 billion. This is referred to as mandatory spending and altogether, it comes to around 62 percent of total spending. The remaining 38 percent is discretionary spending - $1.203 trillion. $886 billion of this goes to military spending. The rest is what you are referring to - the massive give-aways or whatever other bs the left feels like complaining about on any given day. So, your revolution will be to overthrow the current regime and take away healthcare from the old and poor along with their pensions.

You don't even understand the basics of the issue!

deficit = income - expenditure

The "massive wealth giveaways to the wealthiest Americans" is part of the "income", not part of the "expenditure"! The "giveaways" are taxes that the government does not get from the wealthiest Americans. Most Americans pay 35% taxes, but the very rich pay much less percentage, even down to 12%. There is a massive transfer of wealth from middle income citizens to the top 0.1% wealthiest Americans.

 

[Red Dreams]

You don't even understand the basics of the issue!

deficit = income - expenditure

The "massive wealth giveaways to the wealthiest Americans" is part of the "income", not part of the "expenditure"! The "giveaways" are taxes that the government does not get from the wealthiest Americans. Most Americans pay 35% taxes, but the very rich pay much less percentage, even down to 12%. There is a massive transfer of wealth from middle income citizens to the top 0.1% wealthiest Americans.

Libertarians don't understand the difference between expense and investments. Same way between Income and liability.

Health expenses via Health Insurance companies is an unneccesary expense. Its simply a way for paying back to their 'sponsors'. Plain ol bribery. Why we need single payer.
Social security is simply a return on investment. It is flawed because it is capped. Once that is lifted it pays for itself. It can be strengthened by capping payouts to top earners who do not need it. This will be a form of tax. In the not to distant future the retirement age needs to be reduced. This will encourage employment while also ensuring there is more spending money for retirees. Currently inadequate social security payments puts strain on local counties who have to bear the burden of making up the shortfalls via food stamps and heating for example. This is the true cost to the government.

This is just for starters.

 

[Danny_]

You don't even understand the basics of the issue!

deficit = income - expenditure

The "massive wealth giveaways to the wealthiest Americans" is part of the "income", not part of the "expenditure"! The "giveaways" are taxes that the government does not get from the wealthiest Americans. Most Americans pay 35% taxes, but the very rich pay much less percentage, even down to 12%. There is a massive transfer of wealth from middle income citizens to the top 0.1% wealthiest Americans.

From the govts point of view, income means income taxes. The govt takes in about $3.4 trillion a year mostly made up of people's taxes and we spend $4.3 trillion a year. So, we will have a deficit of $900 billion this year. The point is that most of the spending (62 percent of it) is mandatory spending on social programs. Most of what remains is spending on defense and then a very small sliver of that pie is discretionary spending that funds all the rest of the govt's activities. So, when you go on about a massive transfer of wealth, you are right. But it has nothing to do with govt spending. What it has to do with is globalization and the failure of the govt to protect American workers from having to compete with places like China where they will do a job that used to be paid $25 per hour in the US for $4 per hour. And so, companies have to move to stay competitive. That is what has created the current climate of anger towards the wealthy and the contraction of the middle class.

Trump is the first politician to actually try to do something about this - actually, he's doing exactly what Bernie Sanders might have done if he had gotten into office. Whether the tariffs work or not, at least he is trying to do the right thing. We need a solution to this problem or the current climate will never change.

 

[Danny_]

Libertarians don't understand the difference between expense and investments. Same way between Income and liability.

Health expenses via Health Insurance companies is an unneccesary expense. Its simply a way for paying back to their 'sponsors'. Plain ol bribery. Why we need single payer.
Social security is simply a return on investment. It is flawed because it is capped. Once that is lifted it pays for itself. It can be strengthened by capping payouts to top earners who do not need it. This will be a form of tax. In the not to distant future the retirement age needs to be reduced. This will encourage employment while also ensuring there is more spending money for retirees. Currently inadequate social security payments puts strain on local counties who have to bear the burden of making up the shortfalls via food stamps and heating for example. This is the true cost to the government.

This is just for starters.

And back in the real world... Seriously! The retirement age needs to be reduced??? We have more people retiring than we can afford to pay for currently and are funding this program by borrowing from China and other countries.

 

[langster]

Trump is the first politician to actually try to do something about this - actually, he's doing exactly what Bernie Sanders might have done if he had gotten into office. Whether the tariffs work or not, at least he is trying to do the right thing. We need a solution to this problem or the current climate will never change.

Come on now, you can't really believe that, can you? Read what you have written again.

Bernie would never have attacked the trade deficits the way Trump has. Trump doesn't understand even the most basic economics and thinks he (And the USA) can just bully everyone else in to submission. He thinks he and his country are the biggest and the best and everyone will bend to his will. He's wrong. VERY WRONG!

He doesn't understand trade or deficit and cannot understand that for instance Canada put tarrifs on imported US milk and dairy products to protect their own farmers and so they can sell competitively against the US imports that US farmers can produce far more cheaply. It's all one sided with Trump and all his bullshit rhetoric and arguments, insults and stupid tarrifs to other countries will do is upset them even more and just end up costing the US citizens and businesses far more money.

You are right things need to change but feck me, Trump isn't the man to fix it and he hasn't the first clue on what he's doing. Bernie 100% would not have started trade wars with pretty much the entire rest of the world. Nor would he have jeapordised US workers, the US economy and international relations with allies and foes alike with insane, clueless and arrogant policies and Tweets like Trump has.

 

[Abizzz]

From the govts point of view, income means income taxes. The govt takes in about $3.4 trillion a year mostly made up of people's taxes and we spend $4.3 trillion a year. So, we will have a deficit of $900 billion this year. The point is that most of the spending (62 percent of it) is mandatory spending on social programs. Most of what remains is spending on defense and then a very small sliver of that pie is discretionary spending that funds all the rest of the govt's activities. So, when you go on about a massive transfer of wealth, you are right. But it has nothing to do with govt spending. What it has to do with is globalization and the failure of the govt to protect American workers from having to compete with places like China where they will do a job that used to be paid $25 per hour in the US for $4 per hour. And so, companies have to move to stay competitive. That is what has created the current climate of anger towards the wealthy and the contraction of the middle class.

Trump is the first politician to actually try to do something about this - actually, he's doing exactly what Bernie Sanders might have done if he had gotten into office. Whether the tariffs work or not, at least he is trying to do the right thing. We need a solution to this problem or the current climate will never change.

I'm afraid either the American worker will need to be 6 times as productive as his Chinese counterpart doing the same job or the American consumer will need to get used to paying 6 times as much for the same goods if America wants to maintain that ratio. 25% Tariffs do nothing in the described scenario.

Also you're still missing @CA_vampire 's point: Trumps contribution to the current deficit is the reduction in tax revenue his tax cut caused.

I was listening to a biopic on Teddy recently and one quote stuck with me, about him being the most peculiar man to ever inhabit the White House. I thought ‘at least until now,’ when it struck me that the two men are similar. Trump is all the populism and bluster of Teddy, but completely unhinged from any hint of a moral center (and far less intelligent).

Like a weak, satanic version of Teddy, if you will.

From what I have read about him Teddy was eccentric, and breaking up the trusts must have been viewed as crazy by some, but he was also articulate and educated, capable of making sound logical arguments for his crazier ideas (finishing the Panama canal another). I get where you're coming from but I don't think they have much in common at all beyond their eccentricity and birth place.

 

[Danny_]

Come on now, you can't really believe that, can you? Read what you have written again.

Bernie would never have attacked the trade deficits the way Trump has. Trump doesn't understand even the most basic economics and thinks he (And the USA) can just bully everyone else in to submission. He thinks he and his country are the biggest and the best and everyone will bend to his will. He's wrong. VERY WRONG!

He doesn't understand trade or deficit and cannot understand that for instance Canada put tarrifs on imported US milk and dairy products to protect their own farmers and so they can sell competitively against the US imports that US farmers can produce far more cheaply. It's all one sided with Trump and all his bullshit rhetoric and arguments, insults and stupid tarrifs to other countries will do is upset them even more and just end up costing the US citizens and businesses far more money.

You are right things need to change but feck me, Trump isn't the man to fix it and he hasn't the first clue on what he's doing. Bernie 100% would not have started trade wars with pretty much the entire rest of the world. Nor would he have jeapordised US workers, the US economy and international relations with allies and foes alike with insane, clueless and arrogant policies and Tweets like Trump has.

But I don't see much economic data in your post. And he does understand trade deficits and that other countries are protecting their workers whereas the US is not. So, actually, everything you said except the opposite. And I do think Bernie might have done something similar but he would have also raised taxes, or tried to, on the wealthy. I agree that Trump is rude, arrogant and a bully. That might just be exactly what is needed at this moment in time. But, I do get why you don't like him.

 

[Danny_]

I'm afraid either the American worker will need to be 6 times as productive as his Chinese counterpart doing the same job or the American consumer will need to get used to paying 6 times as much for the same goods if America wants to maintain that ratio. 25% Tariffs do nothing in the described scenario.

Also you're still missing @CA_vampire 's point: Trumps contribution to the current deficit is the reduction in tax revenue his tax cut caused.



From what I have read about him Teddy was eccentric, and breaking up the trusts must have been viewed as crazy by some, but he was also articulate and educated, capable of making sound logical arguments for his crazier ideas (finishing the Panama canal another). I get where you're coming from but I don't think they have much in common at all beyond their eccentricity and birth place.

Not true. If we put a tariff on Japan, for example, on Sony televisions. We will have to buy an American made product that is a little bit more expensive than the Japanese import but we won't have to compete with Japanese workers for the job of making that television. So, we will have a good paying job for about $50k a year as opposed to no job, or a job that pays 30k. I'll take the extra 20k a year and the more expensive TV

 

[Silva]

Not true. If we put a tariff on Japan, for example, on Sony televisions. We will have to buy an American made product that is a little bit more expensive than the Japanese import but we won't have to compete with Japanese workers for the job of making that television. So, we will have a good paying job for about $50k a year as opposed to no job, or a job that pays 30k. I'll take the extra 20k a year and the more expensive TV

 

[langster]

But I don't see much economic data in your post. And he does understand trade deficits and that other countries are protecting their workers whereas the US is not. So, actually, everything you said except the opposite. And I do think Bernie might have done something similar but he would have also raised taxes, or tried to, on the wealthy. I agree that Trump is rude, arrogant and a bully. That might just be exactly what is needed at this moment in time. But, I do get why you don't like him.

Why do I need to post "economic data"? Much has been posted before and it just gets ignored.


It's not a question of if I like him or not. It's facts. Yes the USA has at times suffered from bad trade deals, but so has everywhere else in the world. He makes out the USA is getting ripped off left right and centre when that's not true, certainly not the way he thinks anyway.

Good that Bernie would have raised taxes on the wealthy. So they fecking should be. Certainly not giving them a massive cut like Trump has that has sent the deficit spiralling out of control and will eventually come back to cause another recession.

A bully is not needed at all. What is needed is sense, someone who can do what's right for everyone and explain it not just do what's right for the 1% and lie to everyone and pretend it's the right thing.

Are you seriously suggesting that upsetting Canada, Mexico, Russia, China, Japan and Europe is a good idea? Are you honestly suggesting starting trade wars with them is a good idea? And are you honestly suggesting he's doing it for the right reasons?

If so, I have an everlasting gobstopper to sell you.

 

[langster]

LMFAO!

 

[Abizzz]

Not true. If we put a tariff on Japan, for example, on Sony televisions. We will have to buy an American made product that is a little bit more expensive than the Japanese import but we won't have to compete with Japanese workers for the job of making that television. So, we will have a good paying job for about $50k a year as opposed to no job, or a job that pays 30k. I'll take the extra 20k a year and the more expensive TV

... But the Japanese aren't paid 4$/hour !?

Also you'll still be competing, and a 25% tariff only gives the US company a 20% edge (when competing at the same retail price)... But all the components in said TV will also be imported with 25% tariffs (in form of raw materials or finished chips, doesn't matter), hence the US company only has the 20% edge on the labor costs. Which will just lead to Americans becoming less competitive in a more competitive world. This would all be fine if it we're still the 1950's and the US still represented the vast majority of the global economy, but it's 2018 and we're 7 billion people and only some 350 million of them live in the US.

@Silva , worth watching twice

 

[Danny_]

... But the Japanese aren't paid 4$/hour !?

Also you'll still be competing, and a 25% tariff only gives the US company a 20% edge (when competing at the same retail price)... But all the components in said TV will also be imported with 25% tariffs (in form of raw materials or finished chips, doesn't matter), hence the US company only has the 20% edge on the labor costs. Which will just lead to Americans becoming less competitive in a more competitive world. This would all be fine if it we're still the 1950's and the US still represented the vast majority of the global economy, but it's 2018 and we're 7 billion people and only some 350 million of them live in the US.

@Silva , worth watching twice

Seriously. only 350million live in the US? I guess that means US markets must only be...lets see 350/7 billion percent of the world GDP. Oh wait, no it's actually over 15 percent. . We'll be just fine if we put up a few walls and depend more on our domestic market. That won't be the case for countries who depend massively on exports to the American market though!

 

[Sky1981]

Not true. If we put a tariff on Japan, for example, on Sony televisions. We will have to buy an American made product that is a little bit more expensive than the Japanese import but we won't have to compete with Japanese workers for the job of making that television. So, we will have a good paying job for about $50k a year as opposed to no job, or a job that pays 30k. I'll take the extra 20k a year and the more expensive TV

You take the extra 20k (if any)and buy a cheaper korean samsung tv.

Lol

 

[oneniltothearsenal]

Seriously. only 350million live in the US? I guess that means US markets must only be...lets see 350/7 billion percent of the world GDP. Oh wait, no it's actually over 15 percent. . We'll be just fine if we put up a few walls and depend more on our domestic market. That won't be the case for countries who depend massively on exports to the American market though!

Do you really believe this? On what basis?

 

[Danny_]

Do you really believe this? On what basis?

I don't know...history. Why did we have a booming economy in the 80s? It was partially because we had a manufacturing sector. It was easy to get a job - you could get out of high school and get a high paying job. All that is gone now. What happened? Well, it's quite obvious really - you wipe out a whole major sector of the economy and you have a lot of jobless people who have to find something else. Why does China always have crazy high economic growth? It's because the took our manufacturing sector. We want it back.

 

[Silva]

the 80s are when wage stagnation in America accelerated and wealth inequality skyrocketed, it was also based on open market reforms that fecked average workers, quoting it as a golden age and thinking isolationist policies will recreate the 80s economy is misguided in every possible way

 

[Raoul]

I don't know...history. Why did we have a booming economy in the 80s? It was partially because we had a manufacturing sector. It was easy to get a job - you could get out of high school and get a high paying job. All that is gone now. What happened? Well, it's quite obvious really - you wipe out a whole major sector of the economy and you have a lot of jobless people who have to find something else. Why does China always have crazy high economic growth? It's because the took our manufacturing sector. We want it back.

Hate to break it to you but the US is now a service economy and the manufacturing jobs aren't coming back. Labor is cheap in other areas of the world and many manufacturing jobs have been replaced by services ones and others are simply going away because of technology.

Below is a timeline of how we have gradually transitioned away from being a manufacturing economy.

 

[oneniltothearsenal]

I don't know...history. Why did we have a booming economy in the 80s? It was partially because we had a manufacturing sector. It was easy to get a job - you could get out of high school and get a high paying job. All that is gone now. What happened? Well, it's quite obvious really - you wipe out a whole major sector of the economy and you have a lot of jobless people who have to find something else. Why does China always have crazy high economic growth? It's because the took our manufacturing sector. We want it back.

There are a quite a few assumptions packed in here. But to keep it simple for now, there have been a lot of arguments similar to what you say in favor of protectionism that have been put forward, usually not by economists but layman, that have been disproven when we actually look at the numbers. By that I mean, yes its true that US has lost manufacturing jobs since the 1980s but you are oversimplifying everything to make huge assumptions in singling that out as the main reason the job market in 2018 is not as promising as 1978. Manufacturing jobs simply aren't coming back to the US in great numbers. Its just not how a global economy is going to work. You'd have to isolate the US North Korea style and that would be a disaster.

Now, if the issue is not enough jobs to live a decent life, that really isn't dependent on manufacturing but a dozen factors, not the least of which is that the US has the most inefficient health insurance system among all advanced countries that wastes a tonne of money and labor energy. As even the libertarian recent study showed, 2 trillion USD could be saved in the US economy by shifting to universal healthcare. Until that happens, the US companies are always going to be at a collective competitive disadvantage against Asia, Europe and Oceania. This doesn't matter for some industries, Silicon Valley's regional advantage in tech more than makes up for this but other sectors are trying to run a race with a crippled leg. Until inefficient private HMOs and maximization of pharmaceutical profits are curbed by a more logical, efficient solution this is the reality for now.

 

[Abizzz]

Seriously. only 350million live in the US? I guess that means US markets must only be...lets see 350/7 billion percent of the world GDP. Oh wait, no it's actually over 15 percent. . We'll be just fine if we put up a few walls and depend more on our domestic market. That won't be the case for countries who depend massively on exports to the American market though!

America depends on those imports just as much as the exporting countries do. What smartphones are Uber etc. going to run on? America doesn't have a Foxconn/Samsung with 10s of thousands well trained staff willing to do hard labor for 12h shifts. Most of the high value manufacturing done in the US is done within a global supply chain selling to a global customer base. There's parts from every major economy in every Boeing, and there's Boeing's in every major economy (Boeing being an example, it might as well be GE, IBM, HP, Caterpillar etc.) Could Boeing build a plane from parts only manufactured in the US? Probably, but you'd be looking at F35 prices (and all the knock on effects that would have on the aviation industry). The US wouldn't be "just fine" if they put up a few walls and solely depended on their domestic market, the now remaining parts of the manufacturing sector would be noncompetitive within less than a decade.

 

[sglowrider]

I don't know...history. Why did we have a booming economy in the 80s? It was partially because we had a manufacturing sector. It was easy to get a job - you could get out of high school and get a high paying job. All that is gone now. What happened? Well, it's quite obvious really - you wipe out a whole major sector of the economy and you have a lot of jobless people who have to find something else. Why does China always have crazy high economic growth? It's because the took our manufacturing sector. We want it back.

Man... where do we start?!! You have a very selective economic memory and want to cherry-pick stuff.
Plus the genie is out of the box. And as to China's growth rates, they have a much lower base. Every successful developing country has crazy growth rates incl the US back in the 1800s.
What you need or want is a time machine.

 

[sglowrider]

Hate to break it to you but the US is now a service economy and the manufacturing jobs aren't coming back. Labor is cheap in other areas of the world and many manufacturing jobs have been replaced by services ones and others are simply going away because of technology.

Below is a timeline of how we have gradually transitioned away from being a manufacturing economy.

Great gif.

 

[Danny_]

There are a quite a few assumptions packed in here. But to keep it simple for now, there have been a lot of arguments similar to what you say in favor of protectionism that have been put forward, usually not by economists but layman, that have been disproven when we actually look at the numbers. By that I mean, yes its true that US has lost manufacturing jobs since the 1980s but you are oversimplifying everything to make huge assumptions in singling that out as the main reason the job market in 2018 is not as promising as 1978. Manufacturing jobs simply aren't coming back to the US in great numbers. Its just not how a global economy is going to work. You'd have to isolate the US North Korea style and that would be a disaster.

Now, if the issue is not enough jobs to live a decent life, that really isn't dependent on manufacturing but a dozen factors, not the least of which is that the US has the most inefficient health insurance system among all advanced countries that wastes a tonne of money and labor energy. As even the libertarian recent study showed, 2 trillion USD could be saved in the US economy by shifting to universal healthcare. Until that happens, the US companies are always going to be at a collective competitive disadvantage against Asia, Europe and Oceania. This doesn't matter for some industries, Silicon Valley's regional advantage in tech more than makes up for this but other sectors are trying to run a race with a crippled leg. Until inefficient private HMOs and maximization of pharmaceutical profits are curbed by a more logical, efficient solution this is the reality for now.

No argument from me about the Healthcare. I think the only solution is Medicare for All but we will never get that (given that one sixth of the US economy is healthcare). So, I would start by getting rid of Medicaid and putting the people eligible for it into Medicare. But that's another discussion.

Regarding manufacturing jobs and protectionism, I think you are just wrong. I don't think the tariffs will be enough, for sure, to change things dramatically, but they are a good start.
And no, we wouldn't be North Korea if we shut up shop. North Korea is an extreme communist dictatorship with no capitalism so you aren't even comparing like with like. A more valid comparison would be China, except without all the BS their govt inflicts on the people. If we told companies that they had a choice - you can sell to the American market and locate your plants here or you can sell to the rest of the world and locate your plants elsewhere, I can almost guarantee you that most of them would chose America. We are the majority of their customers.

Would the CEOS of these companies make as much money? No. Would they have to employee more expensive workers. Yes, they would. Would the American worker become more valuable because of this and much better off - yes, of course they would. It might be a difficult short term transition but if the political will was there, we could role back the years and reboom our manufacturing sector. It's not like its impossible and you need a wizard to pull it off. All we need to do is exactly what China have done - they have taken advantage of our open markets while at the same time, closing their own markets to our companies. That's not fair and its really stupid by us to continue on this path when we get nothing but slightly cheaper goods because they were made in a country that bends over for business and has no labor or environmental laws comparable us or most other European countries.

I am not for closing our doors completely. We would of course, continue to trade with Europe and anywhere else where our companies are allowed to compete on an equal basis with the home nation. It's time that China got a bloody nose though!