Re: The Brilliance of Moving US Manufacturing Jobs to China

On Sat, 03 Dec 2005 17:19:00 +1000, Dr Zen <longhornster@xxxxxxxxx>
wrote:

>With no regard for personal safety or the comfort of others, the Great
>Josh Hill <usereplyto@xxxxxxxxx> blathered:
>
>>On Fri, 02 Dec 2005 10:29:39 +1000, Dr Zen <longhornster@xxxxxxxxx>
>>wrote:
>>
>>>With no regard for personal safety or the comfort of others, the Great
>>>Josh Hill <usereplyto@xxxxxxxxx> blathered:
>>>
>>>>On Thu, 01 Dec 2005 10:50:02 +1000, Dr Zen <longhornster@xxxxxxxxx>
>>>>wrote:
>>>>
>>>>>With no regard for personal safety or the comfort of others, the Great
>>>>>Josh Hill <usereplyto@xxxxxxxxx> blathered:
>>>>>
>>>>>>On Tue, 29 Nov 2005 20:15:58 -0800, "Phil Scott"
>>>>>><philscott@xxxxxxxxxxxxx> wrote:
>>>>>>
>>>>>>>
>>>>>>>"Josh Hill" <usereplyto@xxxxxxxxx> wrote in message
>>>>>>>
>>>>>>>>
>>>>>>>> So get tougher: the Chinese and Indians need us a hell of a
>>>>>>>> lot more
>>>>>>>> than we need them.
>>>>>>>
>>>>>>>Thats no longer true. The chinese only need us for a market
>>>>>>>to sell into. Not for anything else.
>>>>>>
>>>>>>But that's what I'm talking about. They get their surpluses from the
>>>>>>US and the EU; without us as a market, their economy would contract
>>>>>>severely. Ours would contract as well, but the contraction would not
>>>>>>be nearly as significant.
>>>>>
>>>>>Say I am a Chinese strategic planner. I ask myself, what are the
>>>>>chances of America's suddenly stopping trade with us next Wednesday. I
>>>>>answer, none, and move on to other issues.
>>>>
>>>>Or you worry about a more realistic scenario, such as punitive
>>>>tariffs.
>>>
>>>And if you think they're at all likely, you start pushing exports to
>>>Germany.
>>
>>New customers don't walk in because your biggest customer walks away
>
>No. I'd be a pisspoor strategic analyst if I thought that. I daresay
>I'd cultivate the market more closely.

As, no doubt, they will.

>>demand in Germany and elsewhere would likely stay about the same or go
>>down if the contraction of trade triggered an American recession and
>>that rippled to Europe.
>
>Not if Germany could buy goods from me for practically nothing. I'd
>use the money I got from calling in your loans to pay for subsidising
>exports to Europe.

You're assuming Europe would go for that. They haven't in the past.
Forex, they were much more aggressive than we were about protecting
their auto industry against the Japanese.

The tradeoff between protectionism and free trade isn't an easy one.
Some economists say that the more protectionistic countries in the EU
have preserved high wages and good working conditions but have paid a
price in high unemployment and low growth.

>> And I doubt that the EU would tolerate the
>>sort of trade deficit that we have.
>
>Hmm. I wonder. I wonder what they would do if it was "let's ***
>America" time. I'm wondering whether we are not coming to the point
>where we're ready to *** you.

It's not in your interest to do so. Remember the Smoot-Hawley Act. The
international economy is too intertwined.

Besides, when it comes to Asia and the third world, American, Western
European, and Japanese interests are essentially the same. We're the
mature economies with high-priced labor.

>> No one in their right mind would:
>>you have to have a complete idiot at the helm to allow that.
>
>Well, Germany's voted in their idiot, and we have ours. We don't run a
>trade deficit because we have a housing boom that makes yours look
>like you're just not even trying. We pretended that we didn't have a
>recession by pumping up housing. Unfortunately, no one who doesn't
>already have a house can now buy one, and because we allowed the
>markets to be inflated by buy-to-renters, no one can afford the rents
>either, which are tied to mortgages by the lenders.

Same thing's happening here, but not in the rental market -- rentals
have in many places become much more economical than ownership.

Maybe you can explain to me how we both ended up with a housing boom
at the same time, because I sure can't see it. It's said to have
started here because interest rates were so low that mortgages were
essentially free. At some point it became a market bubble, a tulip
mania in which people started building and buying houses because they
thought they could make money at it. Did you catch our fever by
reading about what was happening here?

--
Josh

"I'm not going to play like I've been a person who's spent hours
involved with foreign policy. I am who I am." - George W. Bush
.

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