trickle up poverty

If two comanies in the U.S. are competing for business and company A is whipping company Bs butt. So what does company B do? They move to China to compete in the U.S. Now company B can produce the product for less than company A. Company A has no choice but to look to cheaper markets for labor to compete with company B. So both companies move out of the United States and lay off workers. So now you have unemployed workers and people working for less money.

As a result of companies moving to cheaper labor markets. The consumer market (the ones that buy the products) become depressed and buy less. This also results in less taxes coming in to the government and more money going out for unemployment, food stamps etc.

So then less products are bought...businesses "cut back", produce less products, and lay off more workers.

A business can deal with regulations (even though we some regulation reform) and business can deal with taxes.

But one thing a business can not deal with is a lack of customers.
With little or no customers businesses loose money, stock prices tank, and underemployed and unemployed people can not pay off loans and poverty "trickles up".

People with less money buy less...

 

I completely agree with this. Some forms of competition can lead to a death spiral, pushing wage levels into the ground.

An agricultural business might prefer to hire documented workers, but it likely would not be able to compete with another business that hires illegals to pick their tomatoes.

Similarly, how can a single state fight the employment of illegal labor? If it tries to deport all the illegals, all the businesses in that state will have to compete with other states that tolerate illegal labor. Especially since individual states are not allowed to impose tariffs or restrict interstate trade. No, the federal government needs to do something.

I believe that allowing too many poor people into the USA will reduce living standards for everyone else except the privileged few.

 

Bobbins! The original post ignored all notion of productivity. While we can attack capitalism for its underemployment and underpayment, to suggest wages aren't related to productivity levels is bobbins.

The real issue is why the yank company finds it so easy to replace domestic labour (which benefits from human capital created through experience) with foreign labour. Sounds like a standard case of comparative advantage to me. The real issue is whether it ultimately harms the developing country, as domestic firm growth is more likely to be conducive to aiding economic development

 

It harms both the developed country and the developing country...in the long run.

Less money in the developed country to buy imported goods and not enough wages in the developing country to buy the products they produce.

Not to mention the lack of tax money to fund the government in the developed country.

People make less money...so they borrow money they can't pay back.
The government has to bail out banks to delay (not stop) a meltdown.

The government has to come up with money to bail out banks. They either borrow money or raise taxes. That equals even less money to spend on products.


A person making 15.00 to 20.00 an hour would have to be very productive to compete with a dollar an hour or less.

And regardless of public opinion... workers work just as hard...or harder in China and India...even Brazil.

The customer base is dissapearing...no customers, no business...no matter how productive the workforce.

No business (or less business) means less profit...less profit means lower stock prices..lower stock prices means that poverty is going to "trickle up".

And as government bails out banks and other governments they either have to borrow or raise taxes. When they do this public assistance suffers and even less money goes into the economy.

 

One of the main reasons is unfair advantage. The companies in the third world countries are subject to lower tax rates, and much lower envirormental regulations. At the very least, there should be tariffs on imports to compensate for these differences.

Both China and Thailand have been using forms of forced or "slave labor", including child labor. How do you expect American workers to compete with this?

http://www.solidaritycenter.org/Files/pubs_policy_brief_shrimp_2009.pdf
http://www.anti-slaverysociety.addr.com/slaverysasia.htm
http://news.change.org/stories/how-forced-labor-in-asia-costs-you-money
http://chinaview.wordpress.com/2010...on-overseas-projects-in-the-developing-world/

This picture gives just a small idea of how polluting Chinese industry is:

 

In terms of unfair advantage its actually skewed against the developing or transitional country. A simple reference to economies of scale demonstrates that

Bit rich to moan about Chinese pollution given the US record! I'd also ask 'in terms of GDP, what proportion of US imports come from China?'. Its not going to be a high figure!

In terms of comparative advantage, we'd have to refer to the product life-cycle. Demand for domestic labour declines once innovation switches from product to production, where technical progress leads to a reduction in the demand for skilled labour. However, there's nothing worrying about that. Indeed, such shifts increase innovation opportunities and therefore drive GDP growth further

 

Reiver, they have a completely juvenile notion of the economy. These are the same types of people who think that economics is a zero sum game and that for someone get rich, someone else has become poorer.

No amount of facts or truth will change their ideas.

 

The simple fact is that the U.S. has very slow growth in GDP and 9% unemployment.

Talking points will not change those simple facts.

And as jobs leave the country the inovation will leave with it.

Because companies overseas will have the money for research and development.

I guess it is juvenile to think that you can continually spend more than you bring in and borrow to make up the difference and it will do no harm.

I guess everthing is just great. The middle class is fading away and the wealth is concentrated in a low percentage of the population.

The poverty is "trickling up".

 

"End is nigh" bobbins!

 

Time will tell.

 

We've heard that since the days of Mun in the 17th century

 

Reiver, the problem with economists like you is that you put too much focus on the consumer, while essentially ignoring the role of the worker. If countries continue to persue the type of policies that you are advocating, prices for services and manufactured products will fall, but wages will also fall. Prices for many things might fall but there will be fewer people that can afford them. Wealthy investors will benefit while the middle class declines even further.

 

You start with nonsense. I'm a SME consultant. My view is purely about economic reality.

Now you're taking the pish! The political economic approach that I favour places labour economics at its core. You're making bobbins up now

'End is nigh bobbins' that you won't defend with economics as you don't have economics in support. You remind me of a middle class punk singer telling the working class how to think. It deserves contempt

 

Then tell me in plain english exactly why I am wrong.

I would love to learn.

Tell me how the working class can have the same or better standard of living the way things are going.

 

You are wrong because he says you are wrong; do not argue with him. He is using an old, flawed and useless economic model that assumes everybody is stupid. Because economists can just say "OOOPs did not consider that" when they get it wrong. Hell the fed was warned this might happen and the politicians that voted for it were warned. Many of us (economist also) were complaining about NAFTA and then opening up to China and the consequences. We were ignored. We were wrong. The government was warned to tread lightly and guide this trade issue and then they dropped the ball. Well look around it is not working.

Reiver and his ilk are correct they can prove it on paper and the growth of income it is just that money goes into fewer hands directly than before.

 

You're looking at the wrong issue. Capital mobility isn't the problem. The current crisis reflects neo-liberalism and therefore the hegemony of the financial class. Market forces are no longer self-regulating; with profiteering opportunities created despite the tendency towards macroeconomic crisis

 

For the most part (little personal issues; call them nuances, that are irrelevant to this post) I agree. Wealth disparity; as far as lifting up the lower class, has less to do with influences outside of the US and more to do with our culture.

All I have to say is the rich get richer and the poor get poorer because the poor support the wealthy. The American people get what they asked for by putting money ahead of all other things and now they wont even realize that through their own greed they have destroyed or are in the process of destroying themselves. This country is full of lemmings and most are still ripe for the pickins.

 

Rants like this won't help. You don't bother to embed your argument in genuine political economy, ensuring that your comments are as low powered as the Fox news zombie

 

What?

What is your problem?

I was agreeing with you.

What the hell have you posted to back yourself up?

You are some piece of work. Constantly discounting everyone and ranting how they are wrong, even when they agree with you? Even when they provide backup they are wrong.

Man you need some help; real bad.

You want a rant look at half of your own posts (if not more) where is your evidence? You are a big ranter.

People like you need medication and a small padded room.

I mean really your intelligence seems to be vastly outweighed by your ignorance. Perhaps you suffer from some sort of autism and can not help yourself I do not know but you do need examined.

 

I composed an argument based on economics. You've responded with a rant-based comment that only damages the position. As I said, your argument is of the power of the Fox news zombie. The left deserves better

 

I do not watch television thank you much.

Anyway I apologize for that outburst. If you would like I can provide some empirical proof with some graphs and charts that seem to be more than coincidence.

Just looking at stock market gains and the timings of legislation related to blind investments does show that the lower income levels do support business. The fact that the trade deficit has grown that people are unwilling to back up their complaints about everything going off shore just because they kept buying stuff from the outside without consideration of their neighbors job or their own. These two things alone show that the lower income levels have either willingly or through ignorance helped the big boys get bigger.

 

Common sense would inform you to ensure that your economic comment is based on economic argument. You haven't achieved that slice of obviousness, ensuring that your comments will only give ammo to the right.

 

Well I am a center guy and the right and left are of no consequence to me. I will not tailor my thoughts to either and if either side agrees with me then that is fine and if they disagree that is also fine. I will not however cater to either side and present my thoughts in any way other than directly as I intend for them to be expressed.

If a person ever refuses to give evidence that might appear support the other side of an argument and then explain why they disagree with said evidence they are a liar. I am not a liar and I hide nothing. I am human and if I find credible evidence that is counter to my views I will change my views.

My point is the truth not manipulation of information in such a way that it supports my stance and not hiding information that may not support my stance. I will admit when I can see logic in the other sides argument as well.

Are you willing to say the same?

 

So your defence for non-economic rant is that you're from the centre? Golly gosh!

 

What is your excuse? I mean I have seen you use some real fakenomics.