China To Blame For American Workers Layoff?
 

I have looked at the American trade deficit with China with last year swelling to $200 billion. I have friends who were laid off because their jobs were outsourced to India, China, or somewhere overseas. This article from today's New York Times open my eyes a bit that the real profits are made by the companies here. Quote "While China gets the wage benefits of globalization, it does not get to keep the profits of globalization."
There are many heated discussions on this issue on this forum, and others, but it is important not to wholly lay the blame on China. Read the article, and tell me what you think. Is this a bias article towards China? Thanks.

Sorry, Here Is the Link
 

Why? We are a nation of blame. We never take time to look at our problems, but quick to blame our problems on others.

While we said jobs are outsorced, just exactly who are doing the outsourcing? Our own corporate Fatcats. But of course.

true say.
It's the corporations who want earnings GROWTH quarter after quarter and year after year to please their sharesholders and those alike. Blaming China is just a dumb a ridiculous thing to say. Products made in China is what keeps inflation low in the USA.

So everybody should buy shares in these companies that are profiting from Chinese labor. Who are the big players?

If you play the market, then it's me and you. So why the blame? You pocket the money, right?

So what is the alternative? Oursource and live or keep it local and die. Look at what is happening to the Big Two. Lets face it. Manufacturing is dead. We cannot compete. No sense in beating a dead horse. Our era of great manufacturing is over. When it takes $1500 more to make a car here than it does in a Japanese factory across the road, you know the business is dead and on life support. So lets let it die with dignity and find something else we can do. If we can't manufacture, lets concentrate on say inventing. Gear our students towards that. Cut out all the crap in their school and make the 3 Rs 80% of their academic load.

Wait a minute here!! I am neutral in this issue. I merely stated that if people are to point fingers to China or India or what have you about our job lost, they should take a hard look at the root cause.

You are shooting the messenger.

Response to :

"So what is the alternative? Oursource and live or keep it local and die. Look at what is happening to the Big Two. Lets face it. Manufacturing is dead. We cannot compete. No sense in beating a dead horse. Our era of great manufacturing is over. When it takes $1500 more to make a car here than it does in a Japanese factory across the road, you know the business is dead and on life support."

This is quite a poorly reasoned statement. Manufacturing is dead because
GM and Ford have a problem competing! Yet, the Japanese factory across the street employing American workers, and paying similar wages, can compete. The poster might at least try to think through his apparent contradiction. After all, he is in Madison, Wisconsin. Big university town you know.

If it takes $1500 more than the Japanese plant across the road, why might that be the case? There are many reasons. Here are three that are well known.

Retirement health care costs and employee health care costs. Companies gave away the farm to the unions, and now can't take the benefits away. You've got to scratch your head to understand the logic of unions that price the company to it's demise.

Reason number two factories that can't produce different vehicles on the same line with rapid shift from model to model. Translates to inefficient production.

Finally, they have to produce something that consumers want to buy.
Think, Chrysler 300, for instance.

I'm not saying that we don't have a problem with plant closures. We do, and it directly affects my clients. I just had to react to this silly post.

Steve

Try quoting. It makes the response easier to read. Thanx.

I could care less why at this point. Bottom line is that we cannot compete and it is doubtful that things can change. I think it is time we moved on instead of flogging the dead horse. You have excellent reasons but are things going to go back to the glory days? I doubt it is even possible so why bother?

And why would you want to "go back" and not forward?

I guess I meant that we could reattain our status to the time where US manufacturing was king.

It is simple really labor costs to much in this country. Thats it.

If you had two pairs of sneakers sitting side by side. Pair A was made in China and costs $80 and pair b was made in Alabama and costs $150. Now consider both are pretty much identical as far as you can tell.

I know the answer 90% of the American public would buy and demand the cheaper shoe.

Supply and demand we demand cheap products (ala Walmart) and the market supplies them.

It also comes down to tax's and regulations. This country is highly taxed and regulated problems you don't have in other countries.

Gov't Budget Surplus Hits $21B for Jan.
Feb 10 2:20 PM US/Eastern
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By MARTIN CRUTSINGER
AP Economics Writer


WASHINGTON


The federal government ran a $21 billion budget surplus last month, the best January showing in four years, as both spending and tax receipts set records for the month.

The Treasury Department said the government spent $209 billion last month, a record amount for January and up 7.9 percent from January Government tax receipts, however, also set a record for the month of $230 billion, up 13.7 percent from January 2005.

The faster growth in receipts than in spending pushed the suplus for the month to $21 billion, more than double the $8.6 billion surplus the government recorded in January 2005. It was the biggest January surplus since $43.7 billion in 2002.

For the first four months of the budget year that began on Oct. 1, the deficit totals $98.3 billion, an improvement of 10.2 percent from last year's pace when the deficit totaled $319 billion.

The Bush administration on Monday estimated that the deficit for this year will hit a record in dollar terms of $423 billion, surpassing the old mark of $413 billion set in 2004. The administration blamed increased spending for hurricane relief and the costs of wars in Iraq and Afghanistan for the increase.

However, private economists believe the deficit, while up from last year, will be smaller than the administration's forecasts. Many forecasters are pegging this year's deficit at around $360 billion.

They note that the administration for the past two years has estimated a deficit for the current budget year that is significantly higher than other forecasts, allowing them to claim improvement at the end of the budget year.

President Bush has promised to cut the deficit in half by 2009, the year he will leave office. But that pledge is linked to a projected deficit of $521 billion for 2004 that never materialized.

Hold there!! How do we know the money is still there? I bet you Bush had already spent it in Iraq. He wanted to cut Medicade and Education spending just yesterday, and asked for more money for the war effort. What make you think we have any surplus?

Oops, I forget Uncle Sam also is in printing money business. My bad.

U.S. Trade Deficit Hits All-Time High
http://apnews1.iwon.com//article/20060210/D8FMDGA07.html?PG=home&SEC=news

Here are the highlights:

If it were due to printing presses running then there would be significant inflation like the Smartest President did until Reagan invited him to retire to a peanut plantation.

Bot.

Actually with respect to the sneaker example, if the sneaker made in Alabama was made better and lasted twice as long I would buy the one made in Alabama. The real problem is that not only are the ones made in Alabama a lot more money, chances are they will last HALF as long. You see, somebody forgot to tell a lot of the fat lazy people that think they SHOULD be making $30 an hour to sew sneakers that if they want to make $30 an hour to do so, they might want to try doing it well!!!!!!

This model is the same for a lot of other American things. You can buy a shirt made in Vietnam for $3.99 and it lasts a year if you're very lucky. Wouldn't you pay $7.99 for one made in the US if it laster 3 years? I would.

Face it, we're (for the most part) a lazy bunch. Once we become as motivated and industrious as our Chinese friends (never happen) -- then we will see the changes. There will always be the stupid ones that would still pay $3.99 and buy the shirt each year. Same people that buy their knives at the dollar store and need to re-buy them every month. Should have just spend $10 and had a knife for 20 years no? That would make it half the price!

Oh well.

Take care.

I see the inevitable happening - a practically borderless world where business is conducted globally, and a firm's location is only determined by where its customers are. We are in the painful beginnings of it now.

But I have a feeling its going to get worse for the average American before it gets better. Living standards might drop, in order to meet the developing world half way. A lot of people are bracing for salary cuts just to hold on to their jobs, or moving to lower paying positions. I still think tariffs would help smooth the transition, but most people say they don't work.

The bright side is maybe it means an end to some of our wasteful ways as we try new things to become more efficient and practical.

If folks believe they get value for a premium price then they'll pay the premium price. ie, Mercedes for 60 years.

But if people are asked to pay a premium price but there is no significant difference in quality, then they'll buy the cheaper product. ie, Mercedes for the past decade has lost considerable market share to Infinit, Lexus, Acura, etc.

I think you're trying to say that we agree.

Tariffs in the SHORT TERM do work. And they work well. For example, say you tell the US Automakers. For 5 years we will charge a xx% tariff on foreign autos. After that 5 years it will be reduced, or eliminated. This gives the US time to compete and protect the US interests (jobs). Problem is the US automakers don't do their part and build cars that people want so the customers go to people who DO... the Japanese, etc.

On the other hand, think about pick-up trucks. That tariff has been in place for ever... and as a result the US makers still have that market.

Odd world, economics, ain't it!

I'm not too sure about that. Seems to me like Mercedes used to be built to last forever but today, I can't seem to help feeling like they are still good but moving towards the disposable car. Take a look at the Bic lighter. Keep using it and you will end up paying more than a zippo which is refillable but why do so many smokers go for a bic?

Isn't that pretty much what Bot was saying?

Bot thinks people will pay premium prices for premium products. I don't believe that would be the way most of the population goes. We seem to be more into the "here and now" rather than keeping something for long term.

I think you shortened my attempt at description such that it becomes almost without meaning. Let me have another go at it and see if I can make it more clear.

People who value a premium product and can afford it will usually choose it. They at least of the freedom to make the choice, whichever they choose.

Folks who don't have the wherewithal to make the choice, don't.

In between are a wide spectrum of people who have varying degrees of ability to make the choice.

Mercedes and other premium marques make their profit by returning value to the consumer that cannot be had for a lesser price. So long as that contract between buyer and seller is valid there will be a market for Mercedes products. However, if another product comes along that offers equal or greater value then the person who would have chosen the Mercedes without question is suddenly faced with a reasonable choice.

The two things that kept Mercedes customers returning, at least in the USA, was a far greater value in terms of two factors that everybody prizes in every product we buy: Safety and reliability. No domestic product came close. Historically, Mercedes engineered for those factors and essentially veneered luxury over the world-class, and world-envied German engineering.

However, the past ten years or so has seen a decline in the fundamental engineering and an increase in luxury and complexity. Concomitantly, the Japanese have gone full-bore into competition on the very things that Mercedes owners have always invested pride and satisfaction: Engineering excellence. The result has been an erosion of confidence in Mercedes and a move from Mercedes to Japanese marques.

From what I read recently, Mercedes has improved quality and basic engineering in the past few years. They have gotten a handle on managing complexity.

Golly I hope so. I look forward to buying another one of these cars and I want one in which I will feel as much pride of ownership as I do for my W124. What a fine old car it is!

B