If China exports half the wealth it creates, then as far as their wage base is concerned, it is like that wealth was never produced. Econ 101: every product produced is exported to the person next door or the person in another country. When you get paid for the export you then have the wealth created by the export. 1+1=2
Wrong. If the Chinese export half of what they produce and there is no offsetting imports, their wages can only purchase the half of their production that remains in their country. The implication being that by exporting half the wealth they create, they are cutting their wages by half. The country that imports that wealth will have a corresponding increase in wages caused by the imbalance of trade. Just remember that money is not wealth. Money is a medium of exchange, it can be exchanged for wealth but is not itself wealth. If the U.S. government confiscated all money in the country tomorrow and burned it, the United States would still have exactly the same amount of wealth it has today. Wages are determined by the pool of goods available for them to purchase. Exporting those goods with no corresponding importation of goods reduces that pool and reduces the wages.
wrong of course. If there was no offset there would be no reason to export. When I export next door or next country I do it for the money. Notice I can defeat you easily with 5% of the worlds you use.
There is no offsetting importation of wealth, that is why it is called an imbalance of trade, Duh! Furthermore, the Chinese government, because it is corrupt, buys our bonds devaluing their own currency in the process because loaning us money is the only way we can afford to buy their goods. Now here is the really juicy part We will never repay those loans with actual goods. We can't possibly repay because they have destroyed our manufacturing base. They don't even want what little we do produce because they consider it crap. The result of this IMBALANCE OF TRADE is that wages in China are severely depressed. It is caused by their government propping up our currency with loans. Except that you've got it all wrong so far.
when I export next door or next country something worth $1.00 I get paid $1 with which I buy something worth $1 so there no imbalance impossible.
you are so confused!! If we don't repay loans we are getting rich. If you buy a car with a loan and don't have to pay the loan that is good not bad. 1+1=2 FYI China has kept prices low so the world will buy goods that the world is teaching them how to produce. 1+1=2
actually when you spend a dollar at Walmart to buy goods made in China ,Walmart pays the Chinese in dollars which the Chinese then have. Unless they burn the dollars the dollars are spent back in the USA so no trade imbalance is possible. Do you understand?
dear, unless the Chinese burn the dollars we spend at Walmart the Chinese must spend the US dollars here thus no imbalance is possible. Now do you understand??
individuals businesses countries all over the world buy our bond that does not make them corrupt!! Do you understand?? 1+1=2
Why is this thread titled "Case against capitalism 2"? The dollars China earns from selling their products in the U.S. are spent by China, but not necessarily in the U.S. and for things which they feel more valuable than the dollars they are spending, perhaps gold, silver, mineral mining rights in Africa or elsewhere. But the Chinese are also investing a substantial amount of dollars in U.S. real estate as well.
the point here is that what China gets for our dollars is 100% and perfectly dependent upon what they or someone with whom they trade can buy with them in the USA. So anyone's willingness to trade with us for our dollars is showing faith in the American economy. If we made budget deficits illegal there would be less of our debt to buy and they would be stuck buying our products instead of our debt and real estate. Republicans want to make debt illegal, while Democrats in their pure and perfect ignorance oppose.
The threads topic, your creation I might add, is "Case against capitalism". How does an explanation of what happens to a US dollar when it's spent here on Chinese goods make your case against capitalism?
So far, this thread is about international trade and markets, which is not capitalism but does obliquely include capitalism because capitalism is a subset of market trading. China imports almost as much goods and services as it exports. It pays for most of its goods and services imports with $US. China needs to trade with the US to get those $US to pay for its imports so its exports to the US far exceed its imports from the US. Over time China has retained a sizeable amount of $US. Rather than just holding them in the bank it buys $US denominated debt to gain some interest and put the money back in circulation in the US so US citizens can buy more Chinese products. The safest $US debt is US government debt so that is what China buys. Contrary to popular belief China does regularly cash in some of its $US debt holdings so the belief that this is debt the US does not need to pay back is entirely ridiculous mythology. China does not convert these $US to Yuan and deploy them in China because it would inflate the economy and put pressure on the exchange rate. China also needs to retain a sizeable currency reserve in case of economic instability and US government debt is just as good as $US for that purpose. China cannot export half its wealth. That would require a wholesale liquidation of the Chinese economy.
of course it does. thats how its pays its workforce and locally sourced raw materials. Also keep in mind that China trades more with socialist Europe than the USA. Our very very liberals want more protection than European socialists do.
Is the subject not "case against capitalism"? I've yet to see you clearly state your case AGAINST capitalism.
It would like asking someone to state his case against a cure for cancer. There is no case against it. China just switched to it and instantly eliminated 40% of the entire planets poverty. Did someone tell you poverty is a good thing?? 1+1=2
Yet you titled the thread "Case against capitalism 2". world poverty I don't know where you got your numbers from, but the monthly average social spending of about $65 per city poor and $35 per rural poor, a combined total of about 80 million persons tends to reduce the number of persons who willingly remain dependent on government social programs when they could earn a minimum wage of between $1.45 and $2.75 an hour depending on where they live or relocate to. Did someone tell you poverty is a good thing?? 1+1=2[/QUOTE] I've not said it was a good thing, but government spending should only provide a poverty level of life making it the duty/responsibility of the individuals to rise above the poverty level, as it would appear China is doing. I see no case to be made against capitalism, the only case being against government misuse of it.
I would add that Chinese exports are global imports, i.e. there is demand for Chinese goods in other countries. Both parties in these transactions derive net benefit. If the Chinese have a comparative advantage in producing these goods (and they do hence the demand) all parties in trade with China benefit. And if the Chinese "manipulate" their currency such that their goods cost half of what they did before the "manipulation" their trading partners benefit all the more because consumers have much more discretionary income to spend in their own economies.
