Low Wages Cause Unemployment

Your inability to respond only further shows the ineptness of the nationalist lower lip tremble. Are you even aware of what comparative advantage is?

 

I doubt you, or a great many other economists, are fully aware of what it actually is (and is not) either. The fact that you think it can only ever be a good thing proves this.

Comparative advantage only provides a direct benefit to those individuals directly involved in the trade, not necessarily an overall net benefit, and certainly not necessarily a benefit to the entire "country". Quantifying the benefit from comparative advantage is somewhat pointless unless you can also quantify the harm caused by job losses and/or lower wages. Just automatically assuming that increased "efficiency" will inevitably create more jobs is the weak point to your ideology.

 

The employer can't afford to pay them good wages if there is too much competition from other businesses with other workers willing to work for far less.

The business will lose customers if most of the consumers in a society have declining incomes, even if a small segment of these consumers have vastly increasing incomes. The "trickle down effect" of wealth may not always be enought to offset this. Wealthier people just tend to hold on to a much larger fraction of their wealth/incomes.

Raising wages helps improve incomes more than it raises prices, as it results in lower land rents, and obliges wealthier people to part with more of their money.

 

Comparative advantage is about companies producing what's best for their situation. It's about companies in Arabia going into oil instead of trying to make snow machines. The pro-free trade crowd likes to use it to excuse off shoring, knowing most have no clue as to what it means. The dropping of tariffs and the treating of labor as a commodity globally, to take all value out of labor, is absolute advantage.

 

The problem with free-traders is that they are only concerned about lowering product price, while ignoring the affect on wages and employment.

 

Consumer income and potential markets are not declining. It's just American income and markets that are declining. American companies are not just shifting production overseas, they're also increasingly targeting overseas markets. The products are both being made and sold overseas.

GM for example has 2,700 dealerships in China this year and only 3,600 in the U.S. Worldwide it sells more cars outside our borders than in. And that ratio is accelerating. Of it's 12 highest priority projects, 11 are targeted at the rising Chinese middle class market. Across the board, major corporations are shifting focus from maintaining markets in the U.S. to expanding them world wide.

You tell companies they must increase their expenses (which will harm their competitive advantage against international competition in international markets) or loose U.S. sales. They'll choose the latter. It's the smarter investment for them.​

 

I agree with that one. Americans are the cause of their problems. To (*)(*)(*)(*)ing cheap for their own good. Yeah I am an American and I said it. (*)(*)(*)(*) all of the (*)(*)(*)(*)ed cheap skates.

 

So you admit China's rise is nothing more than a transfer of wealth, while claiming it's strictly economics and shouldn't be construed as treason, and probably at the same time argue wealth isn't a pie. Got to love it.

 

People do not work harder if they are paid more money...that is a fallacy... and anyone that is honest and has worked for a living knows this to be true.

But...when people make more money they do spend more.

 

Wealth isn't being transferred to China. It's being created there and consumed there. That's happening because that environment makes it easier to build cars and more profitable to sell them. You want to blame someone for decline in the U.S.? Find the guy who's jacked up manufacturing costs here to the point where it's impossible to compete using U.S. labor.

If you want to think of wealth as a pie -- go ahead. But I'm making more pies than I'm eating. I have no sympathy for the union guy who said he wouldn't help bake a pie unless he could eat the whole thing and now finds no one wants to cook with him.​

 

I'm all for shrinking government down to the basic necessities. Not to give into the ransom of globalists. Because right is right. But to claim China's growth isn't at the expense of America's national market is an insult to one's intelligence and history. Usually decades full of revisionist history transpire for the audacity of such an insult. The boldness of globalists has gone from shrewd to obnoxious.

 

No, I believe that vast quantities of wealth have been transeferred to China from the USA. The Chinese government is now the indirect owner of vast swaths of mortgages in the USA, and holds 1.1 trillion dollars in US Treasury debt. Guess who is going to have to be taxed to pay the interest on that debt to the Chinese government.

The incomes that normally would have gone to American workers went to vast numbers of low-wage Chinese factory workers instead. And the Chinese government took a huge chunk of that income, since it is the main stockowner of the biggest Chinese companies.

Of course, the transfer of wealth is only one of the reasons for the American decline.

 

Globalists aren't holding you for ransom, they're walking away and leaving you on your own. China's growth is at the expense of Americas. You told the brightest and best they couldn't make things in America or sell them unless they played the game your way. They couldn't make it work under those rules. So they turned their attention elsewhere. You didn't loose wealth, you lost wealth builders.​

 

China bought American mortgages. They transferred wealth from China to the U.S. to make those purchases. And we consumed that wealth. Because we are not making enough of our own wealth to satisfy our appetites we have to sell our land and borrow money. Our increasing debt to China is not the cause of decline in America, it's a result of it.​

 

Please. You act as if free trade is American tradition. Nothing could be farther from the truth. You put in place policies that crippled the American way of life through the bribing of politicians with the integrity of a rapists and con men. You act as if it's a 2 way street. Then why is there such a massive trade deficit? You act as if GM selling cars there does America favors. The products sold there are made there. I see no Chinese companies creating jobs here to sell products here. This is a fiasco. One that is perpetrated through the ignorance and cowardice of the masses. Nothing more. And on the day said ignorance and cowardice is swept away, I shall expect you all to gladly receive what is coming.

 

I am not saying that's a favor to America. Selling cars in China isn't about doing favors, it's about making a profit. It's more profitable to make cars there, it's also more profitable to sell them there. So the best and brightest around the world are going to focus on that. Put up a trade wall if you insist, it won't stop people from making cars in China and selling them there. It'll just make it harder for you to access the market that the best and brightest are focused on.

Look, Chinese companies are not creating jobs here for the same reason American companies are not creating jobs here. American labor has priced itself out of the market. The best products will not be built here. You want to change things, figure out what America can do better than China. 'Cause right now, you have little to offer and it looks like you're going to have less to offer in the future. Hold your breath, stamp your feet, shout about ignorance and cowardice. That ain't gonna make you any more attractive.​

 

I'll expect you to be moving to China here soon. For surely one would not trespass on a nation they hate with such fervor.

 

But mortgages are a form of wealth. If the homeowner does not pay all his mortgage payments, the house reverts to the holder of the mortgage. While it is unlikely the Chinese government would ever directly own American houses outright, it is the beneficiary of all that wealth. If the banks foreclose and auction off the houses, it will be China that gets the money. And what about all the interest on the mortgage payments? All this wealth will be going to China. When you pay the mortgage payments on your house, all that money goes to the holder of the mortgage (usually the bank), and ultimately the investors/depositors in that bank. One merely needs to put money into the bank to become an indirect owner of other people's houses. The interest you get from your deposit comes from the interest the mortgage payments. More money in the bank means there is more money available for lending, driving up the price of houses, as all the different buyers compete with eachother to bid the price up.​

 

I don't hate either nation. I have more than one home. I genuinely wish America had made better choices, but people gotta work with what exists. This isn't about hate, it's simply about people and businesses doing the best they can.​

 

American wages are a small part of the package that makes America the great place you call home. Labor is demand. Workers are consumers. To bemoan American pay scales is to bemoan the economy as a whole. The fact you live here makes me want to vomit. You are a globalist. An enemy of the nation. An enemy of the people. An enemy of the roads, the buildings, the trees, the beaches, the mountains, from sea to shining sea. Your day will come.

 

A mortgage is a promise of future wealth, in exchange for less wealth immediately delivered.

Create wealth faster than you consume it, you'll have no debts. Consume it faster than you create it, eventually you'll crash. The problem with the U.S. isn't that China loaned us money, it's that our appetites outpacing our efforts made it necessary to borrow it.


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Admitting to a mistake is the first step to fixing it. It's more patriotic to point out a problem than to pretend it doesn't exist. Are you really so disconnected from reality that you are not displeased with the economy?​

 

The USA has much more to offer China than the other way around. Look at the trade deficit the USA has. China will eventually decide to use its surpluses to buy up American assets. Then Americans will not be the owners of anything, and all the profits will go to China instead of staying in America.

The problem was that so many jobs were outsourced, and wages driven down so much, that people began to feel they had to borrow just to get by. When there is more money available to be loaned, it drives the price of housing up, in a way forcing buyers to borrow money to buy the same house they would not have had to borrow money for before.

 

Good to hear.​

 

Empirical analysis into the sociological approach to efficiency wages, which models aspects such as fairness, suggests otherwise. The relationship between wages and productivity is decidedly complex, something deliberately missed by those wanting to peddle some crap agenda (such as the economic nationalists attempting to huff and puff about trade with the developing world)