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The Hidden Cost Of Free Trade  
User currently offlineCasInterest From United States of America, joined Feb 2005, 4792 posts, RR: 3
Posted (5 years 10 months 2 weeks 5 days 10 hours ago) and read 3368 times:

http://www.thebigmoney.com/articles/.../free-trades-hidden-cost?page=full

In other threads it has been discussed how to get the Economy Stimulated. I have been arguing that one of the underlying issues is Offshoring and "Free Trade"
The above article poses an interesting commentary on Free Trade and it's downsides, especially for the US.





Quote:
"When the United States trades semiconductors for Asian T-shirts, that is trade in the old-fashioned sense, in which both countries plainly benefit. "But when U.S. companies build semiconductor plants and R&D facilities in Asia rather than in the U.S.," Gomory and Baumol write, "then that is a change in productive capacities ... and there is nothing in either common sense or economic theory which says that improvement in the productive capabilities of other countries is necessarily good for your country."
........
.......
Trade economists acknowledge that Gomory and Baumol's framework is correct; it actually builds on theories that have been quietly kicked around since at least the 1980s. But they're skeptical as to whether governments are competent enough to do anything about it. Gomory and Baumol's research suggests that the net impact of trade with developing countries tips to negative when the average wage of the country we're trading with rises to one-fourth or one-third of the average U.S. wage. The size of the trading partner also matters, they say; we get into losing territory earlier when the partner has a large population. Sound like any countries you know?



Since I am in the software industry and telecommunication industry I have a keen sense of Software jobs being offshored. The Average Salary for a Senior Indian Software developer is 500,000 Rupees . At an exchange rate of 1 dollar =48.63 Rupees, this means that the average Senior Indian Software Designers work for ~10,000 dollar US per year.
http://www.payscale.com/research/IN/Degree=SOFTWARE_ENGINEER/Salary


In China, the average manufacturing wage was $.57 per hour worked in 2002, probably not much more now for about $1000 a year in salary based on 2000 hours per year worked.
http://www.bls.gov/opub/mlr/2005/08/art3full.pdf

The US Minumum wage is $6.55 per hour. Higher in some locals due to state/city laws.
Based on 2000 hours of work per year this is equal to 13,110 dollar anually.

The above suggests the question how do we keep the USA and other "developed" countries growing and stimulated when Free Trade and the Communications industry allow for the Offshoring of leading edge economic drivers and skilled staff, along with manufacturing to countries whose workers earn less than the minnimum wage in the US.

I have argued that the US needs to either devalue the dollar or impose Protectionist policies to preserve US workers. Otherwise, the US is going to continue to lose jobs at a catastrophic pace. Gradually these policies could be rolled back to allow for a more streamed free trade implementation.

The US cannot compete with other countries and workers whose value makes it attractive to multinational companies to dump higher cost workers in the US for equally trained workers in developed countries. Executives such as Steve Balmer and IBM's CEO have argued that we need more math and science skills for training US employess, but how does incurring extra costs and going to college help a US worker that is going to get beaten out by a person in a developing country that works for less than a burger flipper at McDonald's?


Older than I just was ,and younger than I will soo be.
41 replies: All unread, showing first 25:
 
User currently offlineLH423 From Canada, joined Jul 1999, 6501 posts, RR: 54
Reply 1, posted (5 years 10 months 2 weeks 5 days 9 hours ago) and read 3355 times:

I think the government (on all levels) should offer incentives to companies who keep manufacturing on the continent. We can't compete with the emerging economies in Asia and Latin America on a cost basis, but if we sweeten the deal for companies who agree to keep at least a certain percentage of manufacturing in the country, you might see some work move back from China, et al.

LH423



« On ne voit bien qu'avec le cœur. L'essentiel est invisible pour les yeux » Antoine de Saint-Exupéry
User currently offlineBlackbird From , joined Dec 1969, posts, RR:
Reply 2, posted (5 years 10 months 2 weeks 5 days 9 hours ago) and read 3344 times:

CasInterest,

I agree that the US needs to impose some protectionist policies in order to preserve the jobs of our workers.


LH423,

I agree as well about offering incentives to keep companies manufacturing on this continent.

But what exactly would these incentives be?


Blackbird


User currently offlineVictrola From United States of America, joined Apr 2008, 536 posts, RR: 1
Reply 3, posted (5 years 10 months 2 weeks 5 days 9 hours ago) and read 3333 times:

The effects of free trade are constantly overstated when it comes to job losses in the U.S. economy. First of all, only about 15% of jobs in the U.S. face foreign competition and 100% of Americans are beneficiaries of lower prices and wider product choises due to free trade. As for the 15% of jobs exposed to free trade, the bulk of them are still around, and up until this current crisis, which was not caused by free trade, the unemployment rate in this country was rather low.

While they make good points about the losers in free trade being neglected. They also neglect to take into account the benefits of giving foreign countries the opportunity to sell their products in the world market. Would we be better off if countries like Japan, South Korea, and Taiwan were not allowed to sell in our markets and thus achieve prosperity and stability? Would we be better off if China and India, both nuclear powers were unable to trade and thus grow their economies? Contrary to popular belief, it is in our interest that other countries have an opportunity to prosper. The less prosperous a country is, the higher propensity it has to become an international troublemaker.

As far as taking protective measures to try to save American jobs, you would only provoke a world wide trade war that would devastate everyone's economies. Remember Hawley Smoot in the 1930's. Now is not the time for protectionist measures.


User currently offlineCasInterest From United States of America, joined Feb 2005, 4792 posts, RR: 3
Reply 4, posted (5 years 10 months 2 weeks 5 days 9 hours ago) and read 3326 times:



Quoting Victrola (Reply 3):
As far as taking protective measures to try to save American jobs, you would only provoke a world wide trade war that would devastate everyone's economies. Remember Hawley Smoot in the 1930's. Now is not the time for protectionist measures.

So you would rather see the US economy destroyed?

the US has far more than %15 of it's jobs exposed to Offshoring.

I would argue that the current crisis is going to get much worse since the service jobs and government jobs that depend on the US's Manufacturing and Technical income tax base are getting devistated by the jobs being lost.


Also how does the US convince students to go to school for an education as a lawyer, businessman, scientist, doctor, or otherwise, when a person in India can do most of the data portion of the jobs from a desk in Mumbai for less than Minimum wage?

The US won't recover from this crisis without protectionism because Corporations have no incentive to create jobs in the USA, especially when consumption is going down.



Older than I just was ,and younger than I will soo be.
User currently offlineVictrola From United States of America, joined Apr 2008, 536 posts, RR: 1
Reply 5, posted (5 years 10 months 2 weeks 5 days 9 hours ago) and read 3305 times:



Quoting CasInterest (Reply 4):
So you would rather see the US economy destroyed?



Quoting CasInterest (Reply 4):
The US won't recover from this crisis without protectionism because Corporations have no incentive to create jobs in the USA, especially when consumption is going down.

It was tried in the 1930's to try to save U.S. jobs. Please go and take a look at Smoot Hawley. Protectionism. Smoot Hawley led to a massive trade war and severely aggrivated the depression.

The U.S. economy can't be destroyed by free trade. People still don't understand that the only reason countries sell products and services to us is to obtain U.S. dollars. The U.S. dollar is good for only the following things:

To purchase U.S. goods and services
To invest in the U.S. economy

I suppose you could also use them to wallpaper your house.

In fact, it is probably the foreign countries that are getting the worse deal as they have sold their goods and services for potentially worthless pieces of paper. Remember, the dollar only has value as long as there is a demand for U.S. goods and services or a desire to invest in the U.S. economy. It will eventually adjust its value if downwards if that demand diminishes thereby bringing an eventual equilibrium to our trade balance. If this does not happen, than we can continue to freely purchase foreign goods and services for overvalued pieces of paper. We would be getting the better deal.

Your comment that corporations have no incentive to create jobs in the USA is sheer nonsense. Do you have any idea of how many billions of dollars have been invested in the United States by foreign corporations? This creates jobs.


User currently offlinePPVRA From Brazil, joined Nov 2004, 8974 posts, RR: 39
Reply 6, posted (5 years 10 months 2 weeks 5 days 9 hours ago) and read 3306 times:

Free Trade is NOT the problem. Keep in mind that a lot of manufacturing jobs went overseas BEFORE "free trade" was around-- want to get into the Brazilian, Chinese, Indian markets and sell your GM and Ford cars? You will need to build a factory in the country, and perhaps even make for exports. This is the requirement many countries did before and still do under no free trade. Offshoring has been happening for a while.

Devaluing the dollar will seriously hurt people with fixed incomes, like all the baby boomers. It'll increase prices.

Quoting LH423 (Reply 1):
should offer incentives to companies who keep manufacturing on the continent.

Don't tax them! No more employee/employer taxes either. Zilch, not a tax cut, a tax elimination. You need to create an environment conductive to profits and reduce non-salary/wage labor costs.

Protectionism is a false hope. It's been a disaster for the rest of the world. You might get some benefits in the short term, but that's it. Americans are cutting back expenses, and that's hurting China, and now this money will hopefully be invested and not spent again. No more incentives to buy non-productive assets (like homes, cars).



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineCasInterest From United States of America, joined Feb 2005, 4792 posts, RR: 3
Reply 7, posted (5 years 10 months 2 weeks 5 days 8 hours ago) and read 3287 times:



Quoting Victrola (Reply 5):
was tried in the 1930's to try to save U.S. jobs. Please go and take a look at Smoot Hawley. Protectionism. Smoot Hawley led to a massive trade war and severely aggrivated the depression.

Smoot Hawley and the 1930's didn't involve US Science and Technology jobs being sent oversees.

We are selling out our innovative and technological advantage.

Quoting Victrola (Reply 5):
It will eventually adjust its value if downwards if that demand diminishes thereby bringing an eventual equilibrium to our trade balance. If this does not happen, than we can continue to freely purchase foreign goods and services for overvalued pieces of paper.

This is the exact reason free trade is not good for the US, because until that downward equilibrium is reached the US Economy is going to crash.

We are entering the downward phase now. We need protectionism in order to smooth out the landing. The otherwise rapid crash (Please reference housing and oil) is going to destroy the world economy.



Older than I just was ,and younger than I will soo be.
User currently offlineFlighty From United States of America, joined Apr 2007, 8765 posts, RR: 3
Reply 8, posted (5 years 10 months 2 weeks 5 days 7 hours ago) and read 3261 times:

Well, it really depends. Multinationals could ultimately end up moving to China, if it turns out China is a better country with better employees than the USA. Our only defense against that is to train our employees to do good, high wage work.

Quoting CasInterest (Reply 7):
We need protectionism in order to smooth out the landing.

Really? What if the city of Sacramento, CA decided not to trade with other cities? Would they "smooth out their landing"? I think you'd have to build a high wall to contain the people in Sacramento against their will, if Sacramento decided to stop trading. They would have pitchforks and would be burning and looting the mayor's house within days. The USA is not dissimilar, except the USA has a floating currency, while Sacramento is fixed on the US Dollar. Otherwise, Sacramento is exactly like a miniature USA. It needs to trade to survive, as we do.

95% of the world's people do not live in the USA. Can we really get by without their talents? Why would we want to?

Interestingly, the USSR always engaged in trade because (although they hated the idea) they recognized they could not actually survive without certain things.

Every person has the option to refuse to buy attractive, value priced imported goods. Every person ALSO has the right to refuse lucrative, high paying export jobs. To force them not to trade, you have to actually put people in jail. It would be both sad and unjust.


User currently offlineVictrola From United States of America, joined Apr 2008, 536 posts, RR: 1
Reply 9, posted (5 years 10 months 2 weeks 5 days 7 hours ago) and read 3259 times:



Quoting CasInterest (Reply 7):
This is the exact reason free trade is not good for the US, because until that downward equilibrium is reached the US Economy is going to crash.

We are entering the downward phase now. We need protectionism in order to smooth out the landing. The otherwise rapid crash (Please reference housing and oil) is going to destroy the world economy.

This is precisely the same argument Smoot and Hawley made in the 1930s when the Smoot Hawley tariff was enacted.

Your suggestion has been done before and it had disasterous results. Therefore it is a dumb idea.

Imposing protectionist measures would have the following results:

The cost of living in the U.S. would skyrocket. If the cost of living skyrockets, we all will have less purchasing power and will have to cut back somewhere, thus throwing more Americans out of work. The cost of oil would skyrocket, thereby further weakening our economy. Other countries would retaliate, and international trade would collapse. You may not know it, but there are millions of Americans who make their living in the field of international trade. Furthermore millions of people all over the world would be thrown out of work thereby destroying demand throughout the world.

You would turn a world wide recession into a world wide depression.


User currently offlineArrow From Canada, joined Jun 2002, 2676 posts, RR: 2
Reply 10, posted (5 years 10 months 2 weeks 5 days 7 hours ago) and read 3250 times:



Quoting Victrola (Reply 3):
As far as taking protective measures to try to save American jobs, you would only provoke a world wide trade war that would devastate everyone's economies. Remember Hawley Smoot in the 1930's. Now is not the time for protectionist measures.

 checkmark 

And the biggest loser, in the long term, would be the U.S. When the Smoot-Hawley tariffs were imposed in the 30s, it took a world war to end the depression, and out of all that the US emerged as the world's economic superpower. If a similar approach is taken now, the US will emerge as an economic has-been.

Quoting CasInterest (Reply 4):
So you would rather see the US economy destroyed?

The future health and prosperity of the US economy is inextricably linked to the health and prosperity of everyone else's economy -- and vice-versa. Build up the tariff walls, and you'll wither behind them. You want to understand how absurd this idea is? The "Buy America" provisions of the stimulus package are (at least in the House version) aimed at ensuring that all the steel used for US infrastructure projects is sourced in the U.S. Canada exports about $6 billion worth of steel annually to the US. If that gets cutoff, it will actually cost American jobs because - surprise, surprise -- Canada also imports $7 billion worth of steel from the US. What do you think will happen to that?

Quoting CasInterest (Reply 4):
The US won't recover from this crisis without protectionism because Corporations have no incentive to create jobs in the USA, especially when consumption is going down.



Quoting CasInterest (Reply 7):
We are entering the downward phase now. We need protectionism in order to smooth out the landing. The otherwise rapid crash (Please reference housing and oil) is going to destroy the world economy.

The world economy is already on the brink because of the "made in the USA" subprime crisis, combined with all the other financial shenanigans that have been exposed in the last few months. If the US goes the protectionist route, how do you think your trading partners will react? How many more Boeings will get sold outside the US? And in the worst case scenario, how will you react if your crude oil suppliers decide to get even with an export tax on all that stuff that you can't live without?

Don't go there. We're all in this mess together, and we need to get out of it together. Protectionism is a "beggar thy neighbour" approach that will be mimicked by every one of your trading partners if you go down that road. Obama appears to appreciate that even if many of your Congressmen and Senators don't.



Never let the facts get in the way of a good story.
User currently offlineYWG From Canada, joined Feb 2001, 1147 posts, RR: 2
Reply 11, posted (5 years 10 months 2 weeks 5 days 7 hours ago) and read 3242 times:

I'm all about the free market. But don't get me started on Chap. 11 of NAFTA.....


Contact Winnipeg center now on 134.4, good day.
User currently offlineCasInterest From United States of America, joined Feb 2005, 4792 posts, RR: 3
Reply 12, posted (5 years 10 months 2 weeks 5 days 6 hours ago) and read 3222 times:



Quoting Flighty (Reply 8):
Really? What if the city of Sacramento, CA decided not to trade with other cities? Would they "smooth out their landing"? I think you'd have to build a high wall to contain the people in Sacramento against their will, if Sacramento decided to stop trading. They would have pitchforks and would be burning and looting the mayor's house within days. The USA is not dissimilar, except the USA has a floating currency, while Sacramento is fixed on the US Dollar. Otherwise, Sacramento is exactly like a miniature USA. It needs to trade to survive, as we do.

Wrong argument.
Sacramento has equal labor laws and currencies as the rest of the USA.


The US worker is getting screwed by the 10 year old working in China for 30 cents an hour, and the US engineer is getting screwed by the below minimum wage engineer in India.

Quoting Victrola (Reply 9):
is is precisely the same argument Smoot and Hawley made in the 1930s when the Smoot Hawley tariff was enacted.

Smoot Hawley was enacted after the crash of 1929. It was also enacted in a word without Internet and a fiat based currency.

Remember Smoot Hawley was enacted in a time of the Gold standard.

Your suggestion has been done before and it had disasterous results. Therefore it is a dumb idea



Quoting Victrola (Reply 9):
The cost of living in the U.S. would skyrocket. If the cost of living skyrockets, we all will have less purchasing power and will have to cut back somewhere, thus throwing more Americans out of work

We are already there. Please note Mortgage Crisis, Housing buble.

Quoting Victrola (Reply 9):
You may not know it, but there are millions of Americans who make their living in the field of international trade.

I do know it, but I am not against trade. I am against free trade. I think there should be "fair trade" laws and more balanced currencies. Trading with companies on an equal playing field, where companies and individuals compete based on productivity and talents is fine. However when the CONGRESSIONALLY SET MINIMUM WAGE in the USA is more than someone in a foreign country can make, and the US worker has to compete with them, then the US will lose. There is no point in being and Engineer, Doctor, Scientist in the US anymore for kids going to school. They are going to get beaten out by cheaper foriegners. Instead they will be expected to take jobs as Cocal Cola Vendors, Hotel workers, and other non skilled service jobs. Because currrently skilled workers are too expensive in the US.

Quoting Arrow (Reply 10):
The future health and prosperity of the US economy is inextricably linked to the health and prosperity of everyone else's economy -- and vice-versa. Build up the tariff walls, and you'll wither behind them

Everyone like to deal in absolutes. I am not suggesting it. Protectionism needs to be employed smartly in order to ensure a smooth landing where the Best US workers in a field can compete in it without getting their socks blown off because of Unstable Currencies that aren't based on any standard other than "Government backing" Those types of valuations tend to fall easily. Ask the folks in Stockton California who recently bought overpriced homes.

Quoting Arrow (Reply 10):
How many more Boeings will get sold outside the US?

Again wrong argument. Boeing competes with Airbus. They are Corporations who take advantage of world workers and are part of the problem.

Quoting Arrow (Reply 10):
And in the worst case scenario, how will you react if your crude oil suppliers decide to get even with an export tax on all that stuff that you can't live without?

Then they would sell less oil. Take a look at how well controlling supply has worked out for them already.


The free market is fine if there is a level playing field. But currently the field is far from level, and Protectionist agreements need to be put in place for all concerned.


Free Trade has only worked since the 90's in the US because of the Tech bubble and Housing bubble ,which were created by illogical valuations , created phantom jobs in the US.



Older than I just was ,and younger than I will soo be.
User currently offlineMoo From Falkland Islands, joined May 2007, 4089 posts, RR: 4
Reply 13, posted (5 years 10 months 2 weeks 5 days 6 hours ago) and read 3222 times:

*shrug* normal every day people have never complained about getting the latest greatest thing cheaper than ever before - how exactly did they think companies managed to continually lower costs over the past few decades?

If you yourself cannot honestly say you would be willing to pay up to 50% more for anything you buy, you cannot honestly have an opinion on companies offshoring jobs and work. Someone has to eat the added cost of keeping those jobs local, and that someone is you. The company can't eat it, they are not in it for altruistic reasons.


User currently offlineFlighty From United States of America, joined Apr 2007, 8765 posts, RR: 3
Reply 14, posted (5 years 10 months 2 weeks 5 days 6 hours ago) and read 3207 times:



Quoting CasInterest (Reply 12):
Wrong argument.
Sacramento has equal labor laws and currencies as the rest of the USA.


The US worker is getting screwed by the 10 year old working in China for 30 cents an hour, and the US engineer is getting screwed by the below minimum wage engineer in India.

How are we getting screwed by them? I missed that part. Would you speak up?

If they are willing to do our work for us, we should be glad. If someone washes my car for $1.00, should I get mad at them?

Sacramento is indeed just like the USA. It imports goods from the USA and exports goods to the USA. Since we have a "country" called USA and "state" called California, we take it for granted that the USA is a free trade zone.

You point out that wages have equalized in the USA between Sacramento and everywhere else. This is very astute of you. The same does happen in world trade. But is it a bad thing? No. Every person has the freedom to choose his/her actions. All I am saying is, we should not prohibit trade. Trade is about freedom. Trade between rich and poor countries is highly beneficial to both sides. It is consensual human activity in the most basic sense. Starting 300 years ago, economists realized that markets emerge from this consensual human bargaining across the world. This is why we do not all work in farm fields today.


User currently offlineCasInterest From United States of America, joined Feb 2005, 4792 posts, RR: 3
Reply 15, posted (5 years 10 months 2 weeks 5 days 5 hours ago) and read 3201 times:



Quoting Flighty (Reply 14):
All I am saying is, we should not prohibit trade.

I am just saying fair trade.


The current market balance does not have a balanced playing field.

It makes no sense in the USA to send people to get Engineering degress, if they are going to loose those jobs to someone in India who has just as much training, but a lower cost of living.

Also if we are going to do the above, then the US housing industry is in for some serious problems, because it won't make sense to build a house in the US since no one will be able to afford the mortgage 10 years from now.



Older than I just was ,and younger than I will soo be.
User currently offlineCasInterest From United States of America, joined Feb 2005, 4792 posts, RR: 3
Reply 16, posted (5 years 10 months 2 weeks 5 days 5 hours ago) and read 3200 times:



Quoting Flighty (Reply 14):
How are we getting screwed by them? I missed that part. Would you speak up?

Free trade is fine when you assume that the job being lost is a low level job such as manufacturing shovels or brooms. However when the jobs being lost are also the Highly skilled and jobs, then where is the economy of the US to go in order to create jobs and wealth?



Older than I just was ,and younger than I will soo be.
User currently offlineVictrola From United States of America, joined Apr 2008, 536 posts, RR: 1
Reply 17, posted (5 years 10 months 2 weeks 5 days 4 hours ago) and read 3176 times:



Quoting CasInterest (Reply 12):
However when the CONGRESSIONALLY SET MINIMUM WAGE in the USA is more than someone in a foreign country can make, and the US worker has to compete with them, then the US will lose. There is no point in being and Engineer, Doctor, Scientist in the US anymore for kids going to school. They

You fail to understand why people in countries make lower wages than in the United States. You also fail to understand why the United States is a rich country and these other countries are poor.

Wages are only one of thousands of variables that determine where products or service are produced.

The United States is rich because on a whole, it produces more value per worker than poorer countries. In some sectors, cheaper labor is a factor. However it is almost never the only factor. Have you ever tried to get anything done in some of these third world countries? The ineficiencies, lack of good infrastructure, difficulties of transportation, and banking and credit, very often completely negate any advantage from wages. If wages were the deciding factor of everything, then A380s would be designed and manufactured in Zimbwabe.

Your comments about there not being any point anymore to being an engineer, doctor, or scientist in the U.S. are silly. You may notice that due to shortages we are an actual importer of doctors, engineers, and scientists in this country. One of our main problems is that we don't have enough people enrolled in engineering and sciences in our universities.


User currently offlineAaron747 From Japan, joined Aug 2003, 8289 posts, RR: 26
Reply 18, posted (5 years 10 months 2 weeks 5 days 4 hours ago) and read 3173 times:



Quoting Victrola (Reply 3):
As far as taking protective measures to try to save American jobs, you would only provoke a world wide trade war that would devastate everyone's economies.

Got that right. American companies can save American jobs by continuing to improve productivity and efficiency in areas where American products and services are well beyond the competition.

Quoting CasInterest (Reply 4):
So you would rather see the US economy destroyed?

What are you talking about man? The only thing that will destroy the US economy is a substantial further meddling in the value of the dollar, which you seem to suggest.

Quoting CasInterest (Reply 7):
The otherwise rapid crash (Please reference housing and oil) is going to destroy the world economy.

Source? Figures? Data? Do you base that sweeping extrapolation on anything concrete at all?

Quoting Moo (Reply 13):

If you yourself cannot honestly say you would be willing to pay up to 50% more for anything you buy, you cannot honestly have an opinion on companies offshoring jobs and work.

Thank you.  checkmark 



If you need someone to blame / throw a rock in the air / you'll hit someone guilty
User currently offlineCharles79 From Puerto Rico, joined Mar 2007, 1331 posts, RR: 6
Reply 19, posted (5 years 10 months 2 weeks 5 days 2 hours ago) and read 3156 times:



Quoting Moo (Reply 13):
If you yourself cannot honestly say you would be willing to pay up to 50% more for anything you buy, you cannot honestly have an opinion on companies offshoring jobs and work. Someone has to eat the added cost of keeping those jobs local, and that someone is you. The company can't eat it, they are not in it for altruistic reasons.

To add to this, I wonder if there are statistics somewhere about the number of jobs which have been lost due to technological progress. Whether production stays locally or goes abroad you bet that companies are always looking for ways to do more with less, in other words increase productivity. This is why airlines fly with the minimum number of F/As required by law sometimes, why GM invests $$Millions on automation at their plants, why supermarkets have those self-checkout lanes, why banks let you do 70% of your banking at the ATM machine or through the Internet...get the point? All those jobs lost at airlines, GM, supermarkets, and banks didn't go "away" to India or China, they simply were replaced by technology and/or better management. With that said, should companies then not invest in new technology or manage their workforce better? Should companies then retain their old and costly practices, meaning they won't be able to compete globally?


User currently offlineBlackbird From , joined Dec 1969, posts, RR:
Reply 20, posted (5 years 10 months 2 weeks 5 days 2 hours ago) and read 3151 times:

YWG,

Quote:
I'm all about the free market. But don't get me started on Chap. 11 of NAFTA.....

Agreed


CasInterest,

I agree that there should be Fair Trade


User currently offlineFlighty From United States of America, joined Apr 2007, 8765 posts, RR: 3
Reply 21, posted (5 years 10 months 2 weeks 5 days 1 hour ago) and read 3129 times:



Quoting CasInterest (Reply 16):
However when the jobs being lost are also the Highly skilled and jobs, then where is the economy of the US to go in order to create jobs and wealth?

I am sure it is hard to accept the picture of developing countries. I cant blame you for your world view; it is a tempting one. But has too many dead ends (and fatalism).

You are right that engineering salaries are going down.... that is a natural process and it could have been predicted. Is it "bad," well for some people. It's also true that PhD physicists often have to take jobs paying as little as $45,000. That's less than a well paid secretary or administrative assistant makes. And these people have physics PhDs. It is just the way this crazy world is!

Quoting Aaron747 (Reply 18):
Source? Figures? Data? Do you base that sweeping extrapolation on anything concrete at all?

In terms of that, I would suggest the USA is the richest country in the history of the world, has police officers who make over $100,000 per year, teachers too (NY State 30 yr seniority = $100,000). This is unimaginable wealth. We take it for granted but this kind of prosperity just does not exist elsewhere (except some parts of Europe).

People are often nostalgic for the 1960s-70s when America (and Europe) were more into manufacturing. That lifestyle can be had today... in China!

We are much wealther now. Americans live in much bigger houses, drive nicer cars, travel more often than they did then.

We could also be nostalgic for the 1870s, when the Wild West was open and most people lived on farms. That kind of lifestyle can be had today... in Cambodia, Vietnam, Ukraine! If people want to have an older lifestyle, go ahead! The past is alive today in 3rd world countries.


User currently offlineLTBEWR From United States of America, joined Jan 2004, 13197 posts, RR: 15
Reply 22, posted (5 years 10 months 2 weeks 5 days 1 hour ago) and read 3128 times:

Several more hidden costs of free trade as to certain countries include:

1) Losing a base of important industries to cover basic demand if something occurs physically or politically that interupts the abilty to make or ship in or out products or the materials needed from a single or dominate source (like the PRC is now);

2) As we have seen with the contaminated human and pet food components or lead paint on toys crises, the inability to make sure products are made in a country that has high and well enforced standards of safety. While in the USA is far from perfect, as with the meat and peanut products problems, it is much easier to limit such risks from in the USA, EC countries, Japan or like countries with well established standards;

3) That some countries do not respect copyright, trademark, intellectual property rights, selling those products within their countries or for export hurting the rightful owners such of those rights as well as damaging reputations by those illegal products. Also such products could be dangerous, like with fake aircraft parts (to use something connected with this site);

4) Long lead times from creation of he product, to retail buyers. This can be as long as 6-9 months for USA and EC markets dealing with the PRC, South Asia manufacturing sources. You may under buy or over buy, business circumstances can change (as we have seen in the last 4-5 months), style can change quickly changing drastically demand. If a product in made in the USA, Canada or Mexico for the NA market, those lead times, like for clothing may be weeks, not months.

5) Corruption and extortion issues. In some countries you may have to payoff a factory boss to assure timely production, a favorable production slot, labor peace, that your goods don't run into delays in customs or at the dock/airport and so on.

6) The lack of worker safety, worker rights or enviromental laws or reasonable enforcement of them puts our fellow humans at risk. If we wouldn't accept such practices or standards here, like with exposure to hazardous chemicals, or no safety guards on machines, the use of child labor, workers having to payoff bosses to get hired, then we shouldn't encourage it there either.


User currently offlineFlybyguy From United States of America, joined Jun 2004, 1801 posts, RR: 1
Reply 23, posted (5 years 10 months 2 weeks 4 days 23 hours ago) and read 3118 times:



Quoting Victrola (Reply 3):
First of all, only about 15% of jobs in the U.S. face foreign competition and 100% of Americans are beneficiaries of lower prices and wider product choises due to free trade.

I would wager as the worlds population gets more educated, that 15% will rise sharply as white collar jobs go overseas, engineering, technical services, R&D, etc. The trouble with free trade is inherently unfair to the developed world because we are competing against entire nations where the cost of living is profoundly lower. The thread starter here quoted $10,000 for a senior technical worker in India... but $10,000 will get you a lot farther in Bangalore than it would in LA or New York City. At the moment globablization will be a giant off shore vaccuum sucking jobs right out of the country. I think things will get better eventually when there is a level set of wealth across the world and costs of living rise in the developing nations along with wages. In the meanwhile I think the only people who truly benefit are the investors of companies who significantly slashed manufacturing costs by setting up shop in the developing world paying the low salaries that the local market dictates while taking advantage of the fact that many of these developing nations have some form of socialized, government sponsored health care.



"Are you a pretender... or a thoroughbred?!" - Professor Matt Miller
User currently offlineDocpepz From Singapore, joined May 2001, 1971 posts, RR: 3
Reply 24, posted (5 years 10 months 2 weeks 4 days 21 hours ago) and read 3109 times:

I don't really believe that the high US dollar or high wages makes the US uncompetitive per se. Where I come from, Singapore, has 4 million people surrounded by 22 million Malaysians to the north and 220 million Indonesians to the South. The average Singaporean earns three times more than the average Malaysian, probably eight times more than the average Indonesian and many times more than the average South East Asian. Bear in mind Malaysia is a 2 min drive from Singapore and the nearest Indonesian island is 30min away by ferry.

Through Singapore's development for the past 40 years from a third world to a first world nation, wages and the cost of doing business here definitely increased tremendously. Eg the Singapore and Malaysian currencies were on par in 1972 but today 1 Singapore Dollar buys 2.40 Malaysian Ringgit. In 1972 US$1 bought 6 Singapore dollars and today US$1 buys 1.50 Singapore Dollars. and 1 British Pound bought 8 Singapore dollars, today 1 british pound buys about 2 Singapore dollars etc.

As a result, skilled workers from Malaysia and other South East Asian nations flock to work here for our wages, and skilled worker wages haven't really been depressed.

The difference is Singapore can offer a skilled, English educated workforce, is efficient, corruption-free etc to multinational and homegrown companies, so foreign investors are willing to pay a premium to operate out of here as opposed to our neighbouring countries that are so so so much cheaper to operate out of. The same goes for Hong Kong which has 6.5 million inhabitants commanding much higher wages than 1.2 billion Chinese nationals at its doorstep.

Of course there is one segment of the population that loses out - the unskilled workers. An unskilled labourer anywhere in the world will probably have the same productivity, so an unskilled Singaporean is no less productive than the unskilled Bangladeshi or Indonesian. So Singapore has been flooded with unskilled foreign nationals that have depressed the wages of local unskilled workers. However, there are certain restrictions and quotas in hiring foreign nationals, but companies always find ways and means to get round that.

The best way for a country to gain competitiveness is not through protectionist measures or devaluation of its currency, but improving the productivity of its people.


25 CasInterest : Economists always like to look backwards. However why do you think the current stimulus in the US is mired in such muck? Based on Free Trade. The US
26 Victrola : [quote=Flybyguy,reply=23]I would wager as the worlds population gets more educated, that 15% will rise sharply as white collar jobs go overseas, engin
27 Dc-9-10 : Not only that, but the jobs we do "lose" are those that generally do not create any added value to the US economy. We export jobs that are mind numbi
28 CasInterest : If US workers are overqualified for Engineering and Financial Business jobs, then what the heck are they qualified for? Abusing Mortgage laws? Catchi
29 Flighty : Well no, we're not overqualified, but we need to trust that the world market will sort itself out. It is much better than USSR style government dicta
30 Victrola : Good points. It should also be pointed out that while other countries are learning these new technologies and taking some jobs away. The truly succes
31 CasInterest : Not necessarily. the fact that jobs can be done at all in other countries for less than what they can LEGALLY be performed here by law is an imbalanc
32 Victrola : A gross generalization and exageration.
33 Post contains links Victrola : Some interesting information: http://www.businessweek.com/technolo...r2007/tc20070424_967747_page_2.htm
34 Flybyguy : The trouble is that textbook econmics is not how the real world works. I agree, we do see an increase in the standard of living in developing countri
35 Tugger : Free Trade: No limits to trade between nations and without protective customs tariffs. Balanced Trade: An alternative economic model to free trade. Un
36 Arrow : Yeah, and who sets the rules and standards? "Fair trade" is one of those lovely euphemisms used by faltering industrial sectors which can't compete w
37 Post contains links CasInterest : Don't step forward so quickly on Canada's commitment to Free trade. http://www.canada.com/Business/story.html?id=1273904
38 Flighty : What if my grocery store told me I cannot maintain a trade deficit with them... that would make me really hungry and sad! I like grocery stores, keep
39 Arrow : Good story (the author is an old friend), but the airline industry is a bad choice for an example because no one has clean hands. Every nation in the
40 WarRI1 : Are you finding it a little frustrating dealing with the know it alls? while we go down the tubes economically. I wonder what the Jack Welsh Research
41 WarRI1 : I heard tonight that Intel. Corporation was investing 7 billion in manufacturing facilities in the United States and challenging other corporations to
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