What Would Companies Do To Stay Competitive If Cheap Overseas Labor Didn't Exist?

Something tells me you're just trying to confuse the living s*** out of me so I walk away from a valid argument. A country's savings doesn't seem to have anything to do with money leaving the country. And to say that a trade deficit isn't a problem suggests your lack of knowledge. Unfortunately, your jibberish is extremely difficult to comprehend which is why you're able to conceal your ignorance.

 

No, I just know what I'm talking about and you don't:

[Y-T-C] (i.e. private saving) + [T-G] (i.e. public saving) + [M-X] (i.e. foreign saving) = I

That's all you need to refer to how the trade imbalance reflects low private saving (i.e. X - M = S - I). Simple identity!

We've known a trade deficit isn't a problem since Ricardo.

Unfortunately you've not made one accurate remark, reflecting a simple ignorance of basic economics

 

Are you saying this is wrong? I took this information off the website in my signature. My best guess is that the people who run this website have a thorough enough understanding of economics to suggest that a trade deficit IS A PROBLEM.

 

I've already said that there is a difference between a trade deficit and a trade imbalance. I've also told you how we can understand the latter. You need to educate yourself.

Calling a trade deficit a problem is basic nonsense as it ignores how Ricardo destroyed the whole notion of trade as a zero sum game. Very basic stuff!

 

So you're saying the person who wrote that doesn't know what they're talking about?

 

I'm saying you don't know what you're talking about. The clue is in your total failure to respond to my comments: be it about Ricardo or be it about the macroeconomic identity

 

By the way, I have a 2004 textbook on micro and macro economics written by Ben Bernanke. When I finish reading my textbook on Marketing I'll probably read it to "educate myself". But I don't find it necessary to read a single word in that book to argue that a trade deficit is an enormous problem. Obviously you believe that it's OK for the US government to lose $500 billion dollars a year. I'm not buying it but everyone is entitled to their own opinion.

You remind me of this experienced mechanic who I hired to fix my car. I told the guy from the very beginning that the master cylinder had given out. He basically shrugged off my opinion and came to the conclusion that it was the break calipers. He didn't want to listen to my opinion because he was the "expert" and I wasn't. In that situation, HE was wrong and I was RIGHT. And how could that have happened? Well, it was because he was searching for a more "complicated" reason why the car was doing what it was doing. I was searching for the OBVIOUS.

 

You do make me laugh! Well done

 

What's so funny about that? I don't have a strong interest in economics so it doesn't make much sense for me to go to college for it. I would be wasting my money.

 

Its how you advertise your lack of knowledge. Very refreshing!

I'm from a working class background. Stop looking for excuses for peddling ponce

 

Well, I find it rather humorous that you understand the more complicated side of economics, but can't seem to grasp the BASIC business concept that if you're not making a profit or AT LEAST breaking even, you're eventually going to go out of business. That's basically what's happening to the United States. Sure, you can argue that we should be doing this and we should be doing that, but it doesn't excuse the fact that we're slowly going BROKE.

 

You're talking bobbins. I've simple been able to laugh at the "woe, woe, trade deficit" bobbins whilst demonstrating trade imbalances are the result of savings differences. You obviously forgot to mention it in your opening post!

Why haven't you been able to refer to one valid aspect of economics to support this 'end is nigh' claptrap? Your "I don't know any economics" excuse really won't wash

 

I'm not stupid! Stop trying to make that argument! The US is losing hundreds of billions of dollars whether it's our fault or not.

 

You are, however, trying to make economic comment without knowing any economics

Trade isn't a zero sum game. You're still struggling with the trade imbalance. Fair enough, you don't know any economics. However, to continue to peddle clear nonsense just isn't cricket!

 

Let's go back to the opening post. I believe robots are the key to the economic success of the United States. However, I do feel that they're not advanced and affordable enough due to lack of economies of scale. Like computers, products have to make their way through the product life cycle in order to make them affordable. Lack of competition leads to lack of innovation which means crappier robots at a less affordable price. How do we fix this problem when companies are unwilling to invest in robots due to cheap overseas labor?

 

Nope, innovation is the key to success. That necessarily leads to a focus on highly skilled labour, plus scientists and engineers. The problem is that her resources have, for far too long, been skewed towards military innovations.

 

How convienient to leave off the second half of my question.

 

Convenient? You've just stamped your foot and begged for attention. Back to the issue in hand. We have clear evidence that the US has a low wage abundance, despite her higher productivity levels. This makes the previous comments (e.g. 'low wages here are high wages elsewhere') unsupportable, whilst also detailing the real problem: a low skilled equilibria which has nothing to do with cheap labour elsewhere

 

Really?

Unless innovation results in sales, it is nothing but science projects. Companies that focus on innovation develop several products, with one, generating the sales to support that development.

Enter, Chinese copy. The Taiwanese, and now the Chinese, quickly copy the products with volume sales. They spend far less on copying than development, so can sell at a lower price, and take market share.

The result is innovation has much less value.

 

By asking if the US outsourced to Europe? ROTHF. Boy, are you touchy....

High productivity based on automation and 12M to 20M illegals, not unskilled labor.

How do you figure that?

I can email a product design to China, and get product shipped to the US, for half the cost of manufacturing in the US? When shipping is too expensive, I can manufacture in Mexico, thanks to NAFTA, no import fees. Both are far cheaper than using unskilled labor in the US.

Unskilled labor is limited to service sector job that can't be outsourced. Due to the large Spanish speaking population (legal and illegal), even unskilled jobs often require being bi-lingual.

 

Of course. Simple dynamic comparative advantage.

You're merely referring to life-cycle analysis, as applied in new trade theory. Nothing interesting!

No, the result is that innovation has to be maintained as trade patterns change according to the product life-cycle (and how investments shift to minimising costs, providing mechanisms for replication in less mature economy)

 

You haven't bothered to embed your foot stamping within the conversation. Begging for attention is decidedly ugly dear chap!

US workers are more productive than workers in developing countries. That is bleedin obvious. Given the low wage abundance we certainly then have to focus on the reasons behind inefficient underpayment

Mature economies should not have such abundance in low wages. They should have a greater focus on upskilling, with that engineering further social mobility gains. A low skilled equilibrium, by definition, is demand-led and therefore we have structural limitations in the US economy

Boring me with comparative advantage isn't going to cheer me.

 

Private conversations take place in PM's, the forum is, well, a forum.

Which question was foot stamping, asking if the US outsourced to Europe, or, assuming the answer was no, asking why European labor rates were salient?

Inquiring minds want to know!!!

Have you been to a developing country and watched the workers? Have you seen US workers? At best, they are on par, at worse, the US worker is a distant second.

You like to spout economic theory. Assume a company closed down a manufacturing facility in the US and move to China, and put out less product for the same cost, would they stay in China? Would they close more factories and move them to China?

Why are they?

Free K-12 schooling, low cost State supplimented universities. Student loans, grants, scholarships.

The government has to do more to educate our kids!ROTFL

Being you are so easily bored, maybe you shouldn't bother wasting your time rebutting us.

 

Cold comfort to the employees of companies that compared poorly.

Yawn.

Increased innovation funded by reduced sales, can you show me the math for that?

Minimizing costs is another form of innovation, also easily copied.

Less mature economies, pay more (high gross margin), but buy less (fewer profit dollars). You also have the "Jumping the Chasm" costs.

 

Your original comment. I've already told you why: you've deliberately ignored the conversation in order to try basic humph.

Sounds like you're particularly clued up over the determinants of productivity.

I like to refer to economics on an economic forum.

Clearly the case, as shown by the low paid abundance and the relative lack of social mobility.

There's just no economic comment in your posts.