Originally Posted By: chubbs1
It is sad, we need to do something about this or all of our jobs will be overseas. I don't understand why we can't make the product here. Especially with low employment. We need to Tax China's goods coming in more or, Have big penalties (tax wise) for moving manufacturing jobs out of the USA or Canada.
This was posted to another thread, and it got me all fired up. Sure, we can make a standard copper spark plug for 8 bucks, but who will buy it? This has been tried in history past, in economic parlance (Yes, I'll admit to being an Economist. Please don't shoot!) it's called " Protectionism. " Books and papers and articles and thesis papers galore have been written by the average man and Nobel Prize winning Economists alike, in almost all instances, free trade wins over protectionism.(There are times when protectionism wins, but they are not applicable to a large economy. Normally just third-world developing nations with specific industry or infrastructure needs.) The problem with goods from China is not the loss of jobs (see Creative Destruction, ignore the communist comments on the article, who came up with the theory, in this case, is not relevant to the theory's practice today). The real problem is called the "Race to the Bottom". The Race to the bottom is present in product quality as well as regulation for child labor, worker safety, environmental degradation, and the like.
If the issue is quality, the companies that move their production to China would be well-advised to implement more stringent quality assurance. It's not China's fault, and it's not the US Govt's fault. Free trade (or freer trade?) is here to stay. Best to make it known that we expect the same quality from China that we get here, otherwise, we won't be buying their product. In a world of global economic problems, protecting one economy will make theirs and others suffer. But, keeping jobs here will drive up cost on products here, and allow lower-priced competitors from overseas into the market. Similar to the Wal-Mart effect in local economies. The only way to stop this is by injecting a Barrier to Entry into the market (i.e. tariffs, local laws prohibiting Wal-Marts) but then we are back to protectionism. We institute protectionism, they do too, and we are in a downward spiral where no one can engage in trade because we are so afraid (This actually happened in the US twice, once within living memory, during the great depression. It was a disaster as you may recall although this was not the sole cause). Your costs go up, you spend more money for the same goods(VERY BAD!), you have less/no money to spend on other goods, people slow down on their purchases, credit freezes, people stop buying big ticket items, etc... Like I said, this actually happened in the great depression. And that's not theory; you can see it in the data. Scary.
Should be avoided at almost all costs.
Sorry if this turned into a economics essay, but I see this argument made all the time and the reasoning just doesn't work in a real-world global economy. It only hurts.
It is sad, we need to do something about this or all of our jobs will be overseas. I don't understand why we can't make the product here. Especially with low employment. We need to Tax China's goods coming in more or, Have big penalties (tax wise) for moving manufacturing jobs out of the USA or Canada.
This was posted to another thread, and it got me all fired up. Sure, we can make a standard copper spark plug for 8 bucks, but who will buy it? This has been tried in history past, in economic parlance (Yes, I'll admit to being an Economist. Please don't shoot!) it's called " Protectionism. " Books and papers and articles and thesis papers galore have been written by the average man and Nobel Prize winning Economists alike, in almost all instances, free trade wins over protectionism.(There are times when protectionism wins, but they are not applicable to a large economy. Normally just third-world developing nations with specific industry or infrastructure needs.) The problem with goods from China is not the loss of jobs (see Creative Destruction, ignore the communist comments on the article, who came up with the theory, in this case, is not relevant to the theory's practice today). The real problem is called the "Race to the Bottom". The Race to the bottom is present in product quality as well as regulation for child labor, worker safety, environmental degradation, and the like.
If the issue is quality, the companies that move their production to China would be well-advised to implement more stringent quality assurance. It's not China's fault, and it's not the US Govt's fault. Free trade (or freer trade?) is here to stay. Best to make it known that we expect the same quality from China that we get here, otherwise, we won't be buying their product. In a world of global economic problems, protecting one economy will make theirs and others suffer. But, keeping jobs here will drive up cost on products here, and allow lower-priced competitors from overseas into the market. Similar to the Wal-Mart effect in local economies. The only way to stop this is by injecting a Barrier to Entry into the market (i.e. tariffs, local laws prohibiting Wal-Marts) but then we are back to protectionism. We institute protectionism, they do too, and we are in a downward spiral where no one can engage in trade because we are so afraid (This actually happened in the US twice, once within living memory, during the great depression. It was a disaster as you may recall although this was not the sole cause). Your costs go up, you spend more money for the same goods(VERY BAD!), you have less/no money to spend on other goods, people slow down on their purchases, credit freezes, people stop buying big ticket items, etc... Like I said, this actually happened in the great depression. And that's not theory; you can see it in the data. Scary.
Sorry if this turned into a economics essay, but I see this argument made all the time and the reasoning just doesn't work in a real-world global economy. It only hurts.