Sunday, September 25, 2016

Trump Economic Advisers Go Totally Mercantilist in the Washington Post

In an op-ed in The Washington Post, Donald Trump economic advisers, Peter Navarro and Wilbur Ross, show they have no understanding of the basics of global trade.

They write:
[A]ccording to the Trump trade doctrine: Any deal must increase growth, reduce the trade deficit and strengthen the manufacturing base.
Just why is it necessary to "strengthen the manufacturing base"? Perhaps based on comparative advantage, manufacturing work should be done outside the United States.

The idea that the manufacturing base must be improved is shockingly incorrect and  pedestrian thinking. A view you would expect to hear from someone who hasn't even taken an economics 101 course.

And as for the idea that the trade deficit is a problem, Murray Rothbard destroyed that myth nicely:




 Ross, who may end up a Treasury Secretary in a Trump Administration, and Navarro are simply babbling long discredited mercantilist views.

-RW

18 comments:

  1. . . . because manufacturing jobs pay workers more than service jobs, many of which are being phased out? Because the trade deficit means we're buying their stuff and sending them money, and they aren't buying out stuff and sending us any?

    I could be wrong.

    I went to the Wharton School just like The Donald, btw.

    ReplyDelete
    Replies
    1. Re: Mary Gwen Dungan,

      --- because manufacturing jobs pay workers more than service jobs, many of which are being phased out? ---

      If it were the case that manufacturing jobs pay more than service jobs, the point can be made that manufacturing labor costs in the US are TOO HIGH.

      Besides this, I don't understand people's queer fetish for manufacturing jobs. It must stem from some weird form of mysticism.

      --- Because the trade deficit means we're buying their stuff and sending them money, and they aren't buying out stuff and sending us any? ---

      First, there's no "we", Kemosabe. Individuals trade; not "we". Second, why don't you stop giving your dollars to your local Target store until they buy YOUR goods?

      There's no such thing as a trade deficit.

      --- I could be wrong. ---

      Let's dispel the notion that you 'could' be wrong. You ARE wrong.

      Delete
    2. The average person in the US, defined as someone with a working-class job that did not require a college education, was far better off before Globalism became fashionable. And most people, regardless of how many generations they were here, were working class. And they still would be, if they had a job.

      I don't shop at Target in the first place. I occasionally do buy cheap imported crap because that's all that's available. Walmart, purveyor of a lot of it, is now the largest employer in the US (it used to be General Motors) so what's good for Walmart is now good for the country and their employees, most of whom make minimum wage.

      My impression from your comments is that you have no education in economics at all. You're making judgments based on emotion and a wounded sense of entitlement.

      Delete
    3. Re: Mary Gwen Dungan,


      --- The average person in the US [...] was far better off before Globalism became fashionable. ---

      You mean before the availability of cheaper computers? Cheaper electronics? Cheaper CLOTHES?

      Your contention is not supported by economics and certainly not by history.

      --- And most people, regardless of how many generations they were here, were working class. ---

      That's ridiculous. What you're saying is nonsense, for it to be true people of the current generation would not be enjoying the accumulated capital created by the precious generations. You're talking about a stagnant situation. You're not describing the US at all.


      --- I don't shop at Target in the first place. ---

      You're purposefully avoiding the point.

      ---- I occasionally do buy cheap imported crap because that's all that's available. ---

      You're purposefully avoiding the point, Mary. The point is that if you were really concerned about trade deficits (defined by you) then you would stop giving your dollars to Walmart until.such time Walmart buys your wares.

      --- My impression from your comments is that you have no education in economics at all. ---

      You certainly have the chutzpah to accuse others of not knowing economics while making the most risible of economic fallacies.

      --- You're making judgments based on emotion and a wounded sense of entitlement. ---

      And you're irony-impaired.

      Delete
  2. Trump's team: Mercantilists & no understanding of global trade?

    Mercantilist (link) defn “exports encouraged & imports discouraged” bad cuz “the point of exports is to purchase imports.”

    “Reduce the trade deficit” does not mean that. One could conclude you NEED exports to approx balance imports, else how ya gonna pay for 'em (I'll get to Rothbard). So, N&R are no Mercantilists.

    IP? China steals it. IP's a big deal to RW, but not if China steals it? Suppose RW published his newsletter for $10ea. China can copy & sell it here for $2 ea? If we put an $8 tariff on RW NL imports it would harm Americans who could reap the benefits of $2 RW NL's AND spend $8 implementing RW's good advice helping everyone downstream. Of course RW could say illegal (Copyrights) – gotcha. But so are trade violations China has been charged with & Trump says much better trade deals CAN be made.

    I'm not sure N&R should emphasize mfr base except maybe re China. To purchase US jet engines (GE) & aircraft (Boeing) China requires GE & Boeing build plants in China & train Chinese workers to eventually build all their own. We've a comparative advantage making the good stuff. Give it away?

    Tariffs: Trump sez they'll never be imposed cuz the other side will bend. Navarro [Ed for brevity]: “Tariffs are not the end game. Tariffs & their threat are negotiating tools to require countries to trade fairly.”

    Trade Deficits: I don't know enough so corrections are appreciated; however, Rothbard, et al, are not convincing on the surface. A trade deficit with China may be no more significant than mine with the grocery store. But I can't have a NET trade deficit with EVERYONE outside my home else the party ends when I run out of $'s, & furniture & appliances as I sell my capital equipment to maintain my purchases.

    Venezuela seems to have a NET trade deficit problem having trouble paying for imports. Venezuela could just balance by selling land & resources? Forever? Why didn't someone tell Mugabe?

    ReplyDelete
    Replies
    1. Re: tex,

      --- Venezuela seems to have a NET trade deficit problem having trouble paying for imports. ---

      Actually the reason Venezuela is having trouble with imports is because of the insane exchange rate the Venezuelan government imposes for imports. In a way, the government is doing exactly what El Trumpo wants to impose, and that is a protectionist economic policy.

      Delete
    2. Re: tex,

      ─ IP? China steals it. ─

      You can't steal a thing that does not exist. IP is NOT property, because ideas are not rivalrous and exclusive.

      ─ But so are trade violations China has been charged with & Trump says much better trade deals CAN be made. ─

      Sure, if you want to argue that El Trumpo is a better negotiator than the millions upon millions of people who trade with China every HOUR. He's omniscient, a perfect being of pure knowledge.

      Please. Spare me the bro-mance.

      ─ Rothbard, et al, are not convincing on the surface. A trade deficit with China may be no more significant than mine with the grocery store. ─

      Ok, but your trade with the grocery store is significant for YOU, isn't it? You're still giving YOUR money to the store and the 'only" thing you get in return are some measly goods.

      We're talking about CONCEPTS, with universality. If a trade deficit is making the US poorer, then your trade deficit should be making you poorer each time you go to the grocery store, regardless of how 'significant' is your trade with the grocery store. If you don't accept the latter, then you cannot accept El Trumpo's arguments.

      ─ Trump sez they'll never be imposed [tariffs] cuz the other side will bend. ─

      And of course you're willing to gamble a whole economy on El Trumpo's assumptions, am I correct?

      Delete
    3. Torres:

      TRADE DEFICIT (Think NET, I repeat NET):

      Link: “the point of exports is to purchase imports.”

      A NET trade deficit: The value of ALL imports from EVERYWHERE is greater than the value of ALL exports to EVERYWHERE. (My grocery store deficit is NO problem cuz my total exports match my total imports – no NET deficit).

      Are you & Rothbard telling me we can have a NET trade deficit forever? If so, why not retire, produce nothing & import everything forever?

      Venezuela's exchange rate is NOT the core problem. Had oil prices doubled rather than halved so their EXPORTS doubled they could pay their bills & buy more stuff - IMPORT more. The core problem is EXPORTS dropped so IMPORTS had to drop, all other expenditures equal. The money trouble means they overspent & don't have good credit.

      Asserting the exchange rate as the problem sez a guy with green eye-shades in the back room need only scribble new numbers & Venezuela can buy anything, oil prices (Exports) are immaterial.

      TRADE: A Trade Deal is Gov to Gov re tariffs, restrictions, etc & above the “millions of China contracts” to get Chinese gov to get out of the way of “millions of China traders.”

      If vendors allow it forever, a NET trade deficit makes us Richer. We get free stuff. Because $=Reserve Currency we can have a permanent NET trade deficit equal to the growth of other nations' need for more reserves in a growing world economy. Our “Exorbitant Privilege” even allows us to stiff the world with inflation reducing their claim for our Exports, but that's limited too – other nations already complain & China is trying to reduce world trade in $'s, reducing that “Privilege.”

      It is nonsense to suggest Trump's plan for better trade deals gambles the whole economy. You ever negotiate at all? Do you then say gimme the paper & I'll sign, no questions asked? Car dealers throw you out for haggling below sticker, or you don't haggle for fear they might?

      Delete
    4. Re: tex,

      ─ Think NET. ─

      I don't think "NET". I think CONCEPTS. And according to SOUND ECONOMIC THEORY, there's no such thing as a trade deficit.

      ─ Link: “the point of exports is to purchase imports.” ─

      Oh, crap.

      NO, tex. There are individuals who IMPORT things and individuals who EXPORT things.

      ─ The value of ALL imports from EVERYWHERE is greater than the value of ALL exports to EVERYWHERE. ─

      Why, how sweet! Another RIDICULOUS aggregate fallacy! Except we are mot Borg, tex. It is not "countries" that trade; it is individuals.

      ─ (My grocery store deficit is NO problem cuz my total exports match my total imports – no NET deficit). ─

      What are you talking about? If you give your money to Sears and Sears doesn't buy your wares with that money, then you would have a "trade deficit". You think you can rely on trickery to get out of this one?

      Just as you see China taking "our" dollars, you should see yourself as only getting "stuff" from Sears. Why can't you call that a "trade deficit"?


      ─ Are you & Rothbard telling me we can have a NET trade deficit forever? ─

      Of course we can - because what YOU think is a trade "deficit" doesn't exist. It's a fallacy, invented by the economically ignorant.

      ─ If so, why not retire, produce nothing & import everything forever? ─

      Because you have to produce in order to trade. That's why.

      ─ Venezuela's exchange rate is NOT the core problem. ─

      Not the 'core', of course. It is still an important part.


      ─ Had oil prices doubled rather than halved so their EXPORTS doubled they could pay their bills & buy more stuff ─

      Why, you're a shifty one! So you're valuing the export and import of goods in terms of prices and not quantity!

      Had oil prices doubled it would still not mean "they" could pay for their imports because importers still had to convert their bolivarian pesos to dollars and those bolivarian pesos were still losing value against the dollar. You don't seem to understand the problem with a command-and-control economy, tex.


      ─ If vendors allow it forever, a NET trade deficit makes us Richer. We get free stuff. ─

      It's not free stuff, but whatever. The fact is that the U.S. public is able to get goods subsidized by the Chinese worker.

      ─ It is nonsense to suggest Trump's plan for better trade deals gambles the whole economy ─

      Why is it nonsense? The problem is not that the deals can be changed, but the fact that El Trumpo is an economic ignoramus of the first order. So whatever you think of these 'deals', giving them to El Trumpo is worse than gambling the house, wife and kids.

      Delete
  3. I believe (Don Boudreaux has pointed this out) that actual manufacturing output is higher than it was in the "golden age" of US manufacturing. It is just done with less labor. Agriculture is the same.

    ReplyDelete
  4. The trouble is that financial products will never be wealth creation. They are derivatives of wealth creation.

    Wealth comes from the creation of things. Manufacturing, mining, logging, farming, and so on. Concentration on the financial sector has made the US less competitive in manufacturing. Inflation especially but also other factors that favor wall street. This worked for awhile, but it cannot work forever. The financial sector doesn't care where something is made so long as they get a cut off it somehow, but it does matter to the people who make things.

    For instance:

    Traditional light bulbs for instance. Manufactured in the USA. Fully automated. Capital long paid for. Mature product with little margin. Too expensive to move or recreate in China. So a law is passed that makes typical cheap incandescent light bulbs illegal to sell. The factories shut down in favor of made in China high margin CFLs and LED bulbs. Not long after the capital equipment is sent off to the scrap yard someone figures out how to make incandescent bulbs far more efficient by adding one automated station to the manufacturing process. Too bad, it's gone now.

    This was good for the corporate bottom line to force people to buy high margin product and thus good for wall street. Is it good for the US because China had the advantage for the LED bulb plant when american consumers wanted cheaper traditional bulbs?

    The US also has/had the comparative advantage of knowing how to make stuff. To satisfy the demands of wall street Chinese workers were taught how to make the stuff by the americans. The comparative advantage of the USA was given away for very short sighted gains. It could have been years even decades longer before Chinese companies learned how on their own to make things as good and as cheaply as americans.

    ReplyDelete
    Replies
    1. "The trouble is that financial products will never be wealth creation. They are derivatives of wealth creation. "

      I have thought about this topic for years and I'm still not "sure" of an answer- but I've always felt this is one of the few topics that Rothbard might be off base on...not necessarily outright "wrong"- but I don't know if he really considers everything he should on this topic.

      My thoughts, though not fully formulated- are on the basis of the portion of Austrian theory that focus on monetary base manipulation and it's disastrous effects on the economy.

      "Capital misallocation" is the buzz word in Austrian circles, or I've heard Ron Paul and others speak of "malinvestment"-same thing.

      So the question that always circles back to me/my mind is this:

      Why is it we focus on the deleterious effects of monetary base manipulation only here in the US via the Federal Reserve while ignoring it's broader implications in terms of capital distortion globally? What role does China for example, play in said global capital distortions via it's own currency manipulation?

      Do we really know that when a factory moves overseas it's because of "comparative advantage" versus money supply base induced malinvestment?

      I'm not saying "I know" for sure either way(and that answer may vary depending on the product/service)-but I can't just look at the money supply manipulation going on globally by multiple sovereigns and say "Yeah, never ending trade deficits are OK because it's improving our lives via comparative advantage."

      It could be short term gain(10 or 20 years? What's short term?) for long term misery(stripping out productive capacity in exchange for short term cost reductions)- I just don't know. What would happen to our ability to purchase things cheaply from overseas if dollar value collapsed? "Comparative advantage" has a major currency component and much manufacturing is capital intensive. What economic misery would such an event cause?

      Taking things a step further, "financialization" as a service industry seems like it's built on shifting sands- how do we know when it's "productive"? It's based on the US dollar supported by "faith" with no backing, and the purveyors of the system cover up productivity losses by monetization/debasement so it seems difficult to know what financial service is or isn't "productive"(housing mortgages anyone?).

      What's to say that the financial services industry isn't one giant "bubble"(stock market highs baby!) with artificially created demand(we know dollar supply is artificial) that makes the dollar worth more than it should be globally? (with a side effect of pushing manufacturing overseas and/or ballooning our trade deficits) Rothbard in this video acknowledged that the value of the dollar is higher than it would be without foreign investors in the dollar. But that "investment" is also done with paper money/currency manipulation.

      Rothbard seems to indicate that it's the word "deficit" that upsets people, but in my opinion it's not the "word" that concerns people, it's the resulting effects.(which aren't clear to me at this time)
      Rothbard's argument is in effect, "If someone wants to give you something, great!".
      I understand this argument and agree on the surface, but in the case of globally manipulated currencies that no one can really avoid(most global currencies are involuntary!) and considering the Austrian notion of "malinvestment"-well, it appears to me that Rothbard treats this subject as if it was in a monetary vacuum. (he does briefly acknowledge there's no "standard"/"reserve" in the video- but he uses it to make an argument that we shouldn't "care" about deficits, which to me is odd when he was very concerned with monetary base on most other topics)

      Delete
    2. Re: Jimmy Joe Meeker,

      ─ The trouble is that financial products will never be wealth creation. ─

      What? Don't you think that there's DEMAND for those products, Jimmy? If you do, then how can you say they're not wealth?

      ─ Wealth comes from the creation of things. Manufacturing, mining, logging, farming, and so on. ─

      It also comes from applying capital correctly. Besides, making things for the sake of making them is not the true road to wealth accumulation. People produce things in order to TRADE them for other things. Wealth comes from TRADE, not merely making things. The more TRADES you make the more wealthier you become. That's the basis of economic activity.

      ─ Concentration on the financial sector has made the US less competitive in manufacturing. ─

      That's balderdash. There are many factors contributing to the cost of labor and its lack of competitiveness thereof but the one you posit is just rubbish.

      ─ The financial sector doesn't care where something is made so long as they get a cut off it somehow, but it does matter to the people who make things. ─

      Is this a joke? Do you mean to say that people's economic decisions should be more in tune with the "wittle fweelings" of people who "make things"?

      Please. I'm not willing to subsidize ANYBODY, least of all for the sake of misguided patriotism. The financial sector SHOULD NOT CARE because that is what they're supposed to do: be OBJECTIVE and not SENTIMENTAL.

      ─ The US also has/had the comparative advantage of knowing how to make stuff. ─

      That's not 'comparative advantage'. Comparative advantage is a phenomenon related to opportunity cost. You're more likely thinking absolute advantage which is a different concept.

      ─ To satisfy the demands of wall street Chinese workers were taught how to make the stuff by the [A]mericans. ─

      Wall Street does not create demand, Jimmy. Manufacturers move their manufacturing operations to China or Malaysia or Indonesia or Taiwan because it reduces their MANUFACTURING COSTS. Besides, this concern of yours on how manufacturing processes could be copied is mostly a waste of time, because in most instances these processes are already well-known.

      In the end, what you're implying with your rant is ridiculous: that because of too much greed, American workers are being "deprived" of something that is rightfully theirs. Sorry to tell you but jobs don't belong to "Americans" ─ they belong to the EMPLOYERS whose money is on the line. It's THEIR MONEY, THEIR TOOLS, THEIR CAPITAL. Not YOURS, not these "Americans", not anyone else's. Stop arguing like a Marxian.

      Delete
    3. Torres:
      To trade someone first needs to make something. You can trade up from something you found in the trash but somewhere it starts with something created or made useful from nature. You're just pocketing the differences by being a middleman between people with the widest possible value perceptions for an item that someone else created.

      It's very clear you are theorizing and haven't done. This is not economic theory to me, it's day to day reality. You can babble forth all the ivory tower idealism you want but I know the practical reality. You say it's rubbish but you make it very clear in your reply that you haven't experienced it.

      Wall Street will like lower labor costs but wall street doesn't see the whole picture. Which is why such moves often don't work out into real profits.

      You think that the fedgov inflating the dollar hasn't made US manufacturing less competitive? When a person has to be paid more in nominal dollars to keep up with CPI you can't hold price point easily. The first rule in manufacturing is holding price point in nominal dollars. If the product was $99.99 on the store shelf in 1995 you want it to be no more than $99.99 in 2020. This is the every day reality. You try that with the fed's inflation targeting.

      You sit back and theorize while I am dealing with the reality of the last two decades. You come off like Rodney Dangerfield's professor. Arrogant with no practical experience.

      I've been been involved with manufacturing internationally for a long time and my cost view is based on numerous variables. You see and consider one variable that goes into the final cost. I have to deal with all of them. A US manufacturer may look expensive to you because his part is a $1.00 and the Chinese guy comes in at $0.75. But I get to see how that 25% savings gets clawed away and sometimes then some. Of course it's not on the ledger you look at.

      That 25% cheaper part from China... well guess what? You just got a shipment of 10,000 of them that are bad. Now the line has stop and that costs you a lot. Or maybe you assemble in China too so they just kept building because that's where their incentives are. Guess what? You found that bad part in the final assembled product. Now you have 10,000 that need to be re-worked. This will cost you years' of cost savings. Just this one event. And that's if it doesn't get to customers before discovery. The further down the chain it's discovered the more it costs.

      There's more than just labor or EPA regs or all the obvious stuff why the US or German or Japanese supplier charges more. But you in your tower don't know that. That higher cost supplier often knows how to make it properly. Knows what quality procedures need to be in place. You can pay him for that because he's cheaper in the long haul. That's the comparative advantage. You lose your opportunity when your line shuts down. You lose your opportunity when your product sits in warehouse being reworked. You lose opportunity to develop new product when your development engineers are living in China for months on end dealing with making your low cost manufacturing function. While you're chasing the low obvious cost your competition is taking the opportunity. And guess what? You're teaching potential new competition everything you know.

      Like the old oil commercial. You can pay one guy now or the other later.

      You end with paragraphs with CAPS attacking points I didn't make. Yes it's their capital to make shortsighted decisions with. I never stated anything else. You imagine a marxist argument. It's shortsighted because it doesn't include the whole picture. You like them see one variable of labor cost to manipulate like a true ivory tower Keynesian. I am arguing Bastiat to your Keynes. This is a question of the seen and the unseen. I see what is unseen to you. You seen labor cost. I see a lot more.

      Delete
    4. Re: Jimmy Joe Meeker,

      --- To trade someone first needs to make something. ---

      Yeah... you can also trade labor.


      --- It's very clear you are theorizing and haven't done. ---

      Aw, how quaint. You accuse me of 'theorizing'.

      --- This is not economic theory to me[...] ---


      Well, let me put out there that I don't care about you or your "wittle fweelings", Jimmy Joe.



      --- Wall Street will like lower labor costs but wall street doesn't see the whole picture. ---

      Oh, and you CAN, I bet - better than the people whose money is on the line.

      What a big conceit, Jimmy Joe.

      --- Which is why such moves often don't work out into real profits. ---


      You must be the greatest financier alive. Why oh why don't these people listen to you? Ieam, why wouldn't these companies want "real profits"?

      --- You sit back and theorize while I am dealing with the reality of the last two decades. ---

      As interesting as this woe is me catharsis could be, it is a huge waste of time for anyone. It provides not a single rebuttal of basic economic theory but merely a very wordy rant about how you feel deprived and how people with money are too selfish. It's boring.

      Delete
  5. Torres, your reply is nearly argument free. You're attacking me, projecting some sort of caricature on to me, not the points I made about the reality of manufacturing product. You are aiming to upset me emotionally rather than going into what you clearly have no experience in, manufacturing real product.

    To the one sort of point you attempted, yes, you can trade labor. What's that labor ultimately go back to? Real tangible things. If you can't produce something for me or do something with what is produced, what good is your labor to me? What value does it have? None. The only possible exceptions might be prostitution and surgery but such labors are offered to obtain real tangible things but then again both of those professions do produce something.

    You might want to talk to product development engineers some time. See what it takes to make this "low cost" manufacturing function. Cheap often costs more. RW has made a number of posts on exactly that point. That's my argument in a nutshell.

    It might surprise you but there are manufacturers that have been able to see the larger picture and kept their manufacturing in the USA or even moved it here. There are Chinese companies that have purchased US manufacturers and kept the manufacturing in the USA. If a person wants to work for a corporation that's willing to manufacture in the USA, his best choice will often be a foreign owned corporation. Their stockholders apparently don't see low cost factory floor labor to be a sole decision driver. Why can German, Japanese, Chinese, and other foreign corporations make product profitably in the USA but US corporations have to go to China?

    Basic economic theory is very much in agreement with me and there is no need to rebut it. I simply consider more variables. In any case it is fed inflation (for the benefit of wall street and government) that drives labor costs in nominal dollars higher and higher and price in nominal dollars needs to be maintained one way another.

    ReplyDelete
    Replies
    1. Re: Jimmy Joe Meeker,

      ─ Torres, your reply is nearly argument free. ─

      Maybe. I agree that, most of the time, I'm making fun at your assertions because they're hilarious.

      ─ You're attacking me, projecting some sort of caricature on to me, ─

      I don't think you understand, Jimmy. You're the one projecting a caricature - of yourself, as this person who knows better than the very people whose own money is on the line.

      "Oh, these Wall Street guys who 'demand' so much cheap labor! I hate them! They should rather invest in *expensive* labor, like mine!"

      It is very hard NOT to make fun at that, Jimmy. I spat my coffee I don't know how many times already.

      ─ To the one sort of point you attempted, yes, you can trade labor. What's that labor ultimately go back to? ─

      You're going to tell me that labor goes back to making things and so we ultimately trade things which should be made in the U.S. because of "the larger picture". Yes, I understand your attempt at circular thinking.

      ─ The only possible exceptions might be prostitution and surgery ─

      You forgot interior design. And faith healing. Or singing.

      ─ Cheap often costs more. RW has made a number of posts on exactly that point. That's my argument in a nutshell.─

      I will let Robert defend himself but I visit this page every day and can tell you I haven't read such assertion from him.

      And what you're really arguing is that manufacturers are *stupid*. That is it, in a nutshell.

      ─ Basic economic theory is very much in agreement with me[...]─

      In what sense? "The Big Picture" thing? I've heard all sorts of ridiculous arguments based on the "bigger than ourselves" premise but usually as an attack on economic theory; this is the first time someone claims that mysticism is in agreement with basic economics. I can at least make the concession that yours is unique.

      Delete
    2. The way you have to try and make things about feelings is hilarious. I'll entertain your funniest yet:

      -"Oh, these Wall Street guys who 'demand' so much cheap labor! I hate them! They should rather invest in *expensive* labor, like mine!"

      This creation of yours is a rip-roarer to me. You really have no clue how things are made. Factory location does not determine my wages. Might determine what I want in return though. You would expect something for that much air travel too.

      Why can a foreign company come into the USA and manufacture their products here when the US companies have to go to China? You refuse to answer. Why? Because you have no answer. Why do some Chinese companies purchase US companies and not take the manufacturing to China? Clearly there are other factors you refuse to consider.

      Singing? You think singing creates wealth? Tell me, how does singing conjure wealth into existence? Is this like a rain dance? Tell me how I can make wealth moving my living room furniture around?

      Where has RW discussed cheap costing more? This is the post I was thinking of: www.economicpolicyjournal.com/2015/12/has-macys-gone-mad.html Cheap and shortsighted costing them sales.

      Many manufacturers are stupid. Have you noticed how many go out of business? Where's one of the early adopters of Asian outsourced manufacturing today? Schwinn Bicycle, where are they? They started doing it in the 1970s before it was cool. When they failed with one low cost labor option they responded by moving to a lower cost yet one. They lost market share with quality problems, transferred their knowledge, created new competitors losing more market share, and eventually went bankrupt. They lost market share in part to upstart bicycle manufacturers who were at the time, manufacturing in the USA.

      You want to see $3 sub assemblies broken to save a nickel per every few hundred units or more, get the cheapest labor you can. Keep being cheap and maybe the lesson Henry Ford figured out on turn over will be learned. That is if quality and warranty costs haven't destroyed the company. It takes a lot of effort, knowledge, attention and cost to manufacture in a low cost environment successfully. The savings really aren't that great if there are any left. It's not something that can be grasped from the tower. You actually have to be involved with it. Certainly someone's written a book on it. Check amazon.

      No economic theories broken. Just information you don't consider. Seen and the unseen.

      Delete