US trading away their ASSETS

don't forget that wages are far from the only cost to make and sell a product

 

This is idiotic, even for the right wingers. But let's play pretend. Please refer to the economic analysis in support of your make believe stance.

 

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conservatives and libertarians believe in free market wages and free market trading. Do you understand?

 

There is no free market, nor do we want one. Referring to 'free market wages' is cretinous to the extreme.

 

It can be kind of hard to have a minimum wage when the country you're trading with doesn't.
Imagine having a minimum wage apply to some people but not others. What would happen?

Or maybe choose two groups of people at random and say one can work for no less than 9 an hour, and the other can work for 7 an hour.
(By the way, this helps prove how the notion of men being paid more than women is completely bogus)

 

Absolute drivel. First, trade reflects factor proportions. The minimum wage country specialises in capital intensive product. Second, the minimum wage merely reduces underpayment (e.g. increases economic efficiency by reducing the impact of monopsonistic power). Third, try some economic history. Thatcherism eliminated minimum wage protection (ie the wage council system). Compare Britain's performance relative to European countries who maintained the logic of minimum wage protection. They created a low skilled equilibrium, with resources inefficiently skewed towards the production of good with low income elasticity of demand.

 

So the question is WHY those in control, i.e. trump and the Republicans, are aiding and abetting greed among the rich. Why are they working to crush the US economy and reduce us to the lowest common denominator and 3rd world status. And the answer is that they see the deep crisis of our economic system while they are trying hard to make things look fine. The rich friends of an economist I know who has a Yale PhD., are telling him they are just grabbing everything they can, while they can. They are raping our economy and going to "safe havens" like New Zealand and buying up acreage and building large, hardened compounds with armed guards where they can retreat and hide when all hell breaks loose. They see it coming and most certainly DON'T want us to know what they see and know. They intend to ensure that THEY get it and that we are left out in the cold to fight over scraps in the not-so-distant future.

THAT is why they are trading away our assets.

 

So does paying men 10% more than women.

That's assuming that enough demand actually exists for all those domestic jobs, at the minimum wage level, in addition to the demand for the foreign ones.

Anyway, like I've been saying, like the topic of this whole original discussion, what happens when that 'capital intensive product' is capital itself?
Still such a good idea then? When you export capital, that could mean less ability to export capital intensive product later on.

 

You won't find a theory of discrimination that refers to factor proportions. You will see analysis such as labour crowding, but that reflects structural limitations in the economy.

More cobblers. The minimum wage, if anything, increases employment (reflecting the increase in economic efficiency via reduction in the effects of monopsonistic power)

Nonsense. The notion that a country goes from capital to labour abundant through capital exports is as reality consistent as David Icke's lizard people.

 

Let's look at a theoretical analysis over the long run. The capital will keep getting spent until the country's comparative advantage becomes labour, and that will only happen when price of living, cost levels, and price of labour lower to equalize to the level of the other country.

Otherwise, how do you think a trade imbalance could ever correct itself?

Even though this is ultimately self-correcting over the long term, this is really not something you want. It will wreck all sorts of havoc in the meantime, and ultimately lead to lower standards of living for the formerly wealthy country.

 

This is drivel. Capital spent? What on earth are you rambling on about?

Exchange rate movements or changes in savings rates. Basic macro.

 

Because that's their comparative advantage.

Why don't you think capital can be a country's comparative advantage?
Is it because you're narrow-minded?

 

So you're saying it would correct itself when the dollar finally becomes so worthless that it's not even able to buy from other countries what the yuan can.
That's going to make it very difficult for the U.S. to import foreign materials or oil.

 

Where did you get your MBA?

 

I'm referring to basic macro. Typically the correction is through exchange rate movements. The US is different. There is evidence that the movement required would be destabilising . We're therefore left with the GDP identity. The imbalance reflects low savings in the US (and high savings in China).

 

You come out with utter drivel and expect me to treat your argument as it is sensible. Capital is not spent. It does depreciate, but it's added through investment.

Get back to me when you have a sensible comment.

 

What makes you think that?

Because you've never read of any examples of it in your theories?

 

Why would China stop saving so much if they're drawing dividends and interest off these savings from the U.S.?
Or alternatively, what makes you think the low savings rate in the U.S. would turn around?

It seems to me your theory is the one that is senseless, if we start scratching a little bit beneath the surface.

 

Because that is the reality. "My factory has produced something, I've spent my capital" would be cretinous.

 

How about "My factory can't compete with this other factory, but hey, why don't I buy things from this other factory by selling my factory?"

 

That bit of a puzzle isn't a problem. China is naturally shifting from export led growth to consumer growth (fed by the development of a middle class)

The problem is the US and its neoliberalism, which has encouraged a productivity gap and over reliance on consumerism.

A GDP identity is my theory? More ludicrous comment.

 

That isn't spent capital. That is failure in business leadership. You could refer to foreign direct investment, but that isn't a bad thing.

Perhaps the problem here is your tendency to rely on nationalism and fascism? There's no valid economics with that guff.

 

Why is it a failure in business leadership? The shareholders might want the dividends that come with liquidating the company.

What makes you so sure this is always a good thing?

Do you think foreign investment always benefits a country?
A lot of criticism in Africa that foreign countries have carved up their resources and it's just a continuation of colonialism.

 

Bit obvious really: profits are low. They have either made mistakes, failed to adapt to economic conditions or ignored diversification opportunity.

Economic evidence.

Any negative effect is restricted to developing country (e.g. failure to grow domestic industry and generate dynamic comparative advantage). All irrelevant to your nationalism.