January 31, 2012

Too long for a comment so let's have an old fashioned Fisking

Our favorite DE Leftist is KAVIPS (Pipe down Don Viti, you're a populist above all else).   I like him because I know there's a reasonable guy in there somewhere he just loses the script more often than he should.  Here's on recent post that exemplifies his ramblings:

The Way Out! A Tale Of Two Chinas And Two Americas « kavips

Here is the rough outline. A) We elect no Republicans in 2012.

No.  Even you don't want that because any party that runs all three branches gets lazy, sloppy and even more corrupt than usual.

B) They pass labor laws determining a true-value wage. Two thirds of that person’s annual wage needs to be able to provide for living quarters, food, utilities, and medical insurance. After all required expenses have been met, 1/3 of each employees income should be left as discretionary income… This is pretty much what most US families had during the nineties. It is affordable because businesses prospered then too.

So no taxes for anyone then?  How exactly are these "necessities" calculated?  What is the proper amount for a mortgage?  How much food am I allowed to buy?  Is internet access a necessity or discretionary?  Where are the charts, graphs or facts that support your claim that this was the norm in the 90's?

C) Ugh. The math… (Skip this if math bores you) .. Which means that if a single person can barely make ends meet on $20,000, the standard should be $30,000 here in the US.. Likewise for families, if $40,000 is required, then $60,000 should be the average.. Of course New York and California would be higher paid than say North Dakota or Alaska.. That is the basic gist of it… This cost then becomes a cost of the manufactured product….

So you're in favor of wage controls.  Great.  Please explain how you prevent the cost of goods from changing in value along with the pay adjustments.  Are wage controls for all business or just manufacturing?  How do you delineate between one area and another?  Where does the NY salary wage area end?  White Plains or does it go all the way to Buffalo and beyond?  Someone in Oneonta would be quite a bit better off than somone in Manhattan.  Is it your plan to drive manufacturing out of NY and California or is that just a lucky benefit?

D) We hold all businesses doing business in the United States to this principal, no matter where their products get made… Of course we don’t use the same monetary figures, just the same principal… If in Egypt, one can live on $7,000, it is fair to pay them $10,000. Quite possibly, in parts of Africa, one could pay someone $5,000 a year and keep within the same principals. For companies who try to import products made by desperate people in desperate situations, we impose the old custom’s duty, to make them equally as expensive as those made elsewhere, thereby negating any economic advantage to undercut the system.

So you want a trade war?  Import duties are usually met with in kind reprisals making US goods much more expensive.  Oh, and the cost of everything you buy just doubled.  That $500 iPad is not $1000.  And your wage earning making $40,000 has just had his purchasing power cut in half.  So now we have to double his wages to keep pace with the cost of living.  Which then means more import duty which raises the cost of goods which means we have to raise his wages again.  I'm sensing a pattern here.

E) I know the word tariff sends up a red flag to Free Trade-ists. It means that we no longer worrying ourselves about how much a company can maximize its profit; that concern has become secondary. instead, we are concerned about the welfare of those human beings actually working in that country’s manufacturing industry.

You are free to start your own company to do that.  Otherwise you have to fundamentally change the charter of every business you're talking about.  There are entities that are focused on the people and not the corporation.  They're called unions.  When they're in charge you get what we had in the 1970's.  Bloated lazy luddite workforce churning out crappy and expensive products that nobody wants.

F) And for the Free Trade-ists, we are invoking the Free Trade Principals in just a different way. As always, we have said a corporation should have the right to sell and cross borders to trade at a spot that gives them a lower cost… That is what free trade is. We are now, invoking the same rational, but instead of using “cost” as our measuring stick we are attempting to do that with something called the “quality of life”… We are stating: for free trade to occur, “quality of life” must be equal or monetary penalties will be placed raising the cost of that product so they will be…

So now you're an isolationist.  One might go so far as to say racist.  After all very very few people in Africa or South Asia have the quality of life you do.  There's a reason workers are lining up to work at Foxconn.  The alternative is worse.  Your policies would ensure they never had a chance to join the industrialization revolution.

G) This will be good for China. China needs to raise their cost on which they compete or they will implode. Historically that always happens; the peasants revolt. The best prevention is to fix the problem beforehand. Reading the article above, the one about Foxcomm, one can see that without changes, probably within ten years, China will go down in a massive internal turmoil, UNLESS those in its manufacturing sector are given better working conditions. They need a union movement of their own. Ha, ha: they could look to their own founding Communist philosophy on this one…. if they wanted to see what the future will bring if you run government at the whims of large corporations…

Now you're deciding what's best for China.  Wow.  Is this part of that "smart diplomacy" your team was talking about?  China has a great many problems and workers wages is but a small one.

H) Obviously, things will not be as cheap from China, if this goes through. The increased cost of labor to the manufacturer, will be shared in half by a price increase to the final consumer, and the other half by a loss in corporate profit.

So you've analyzed the balance sheets of all these companies and have determined they have the ability to absorb a 50% loss in revenue?  What's to prevent these businesses from simply deciding it's not worth it and quitting.  Or just leaving to produce their product overseas where they aren't bound by our regulations.  You could argue they'd lose the US market but that still leaves the whole rest of the world.  Then you'd see the voters turn on you and you're out of office and now it's too late to bring them back.  See also; textiles industry, American.

But the balance of that cost to our economy is: more people will be working in this country. The loss of corporate profits to the labor movement did not create the Depression! It worked us out of it!… The higher the wages, the more money spent. The more money spent, the more things manufactured. The more things manufactured the more people employed. The more people employed the higher the wages. The higher the wages…. the more money spent…

Actually no. Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt. After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years. "Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies." In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

We begin the cycle pulling us out …. So through the juxtapositioning of these two articles, the light has been shown from the end of the tunnel… The way back to prosperity is to pay American workers more. The way to do that is to negate the advantage of paying the Chinese less. The way to do that, is to pass an import tax that raises foreign manufactured items to a rate that allows foreign workers to live with the same amount of discretionary income left over after their necessary expenses, as we would wish upon ourselves. That is the silver bullet, and it surely won’t happen as long as Republicans can block it. Which is why, we need to remove enough corporate sponsored politicians from office, both Democratic and Republican, so We, The People once again, can have a free hand.

You also fail to understand that protectionism leads not only to tarrif wars but to a decline in product quality.  The protected industries just cut their cost of production to increase the gap between cost and tarrif.  That cost reduction comes in the form of either fewer jobs or cheaper products.  Cars in the 70's sucked.  They got better in the 80's and now they're amazing.  Why?  American cars now have to compete with the rest of the world.  

Posted by Duffy at January 31, 2012 09:56 AM | TrackBack

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