Shifting blame for manufacturing job loss

Discussion in 'Economy' started by Moonglow, Jul 17, 2012.

  1. Moonglow
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    Moonglow Diamond Member

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    It is old but still revelant




    Effect of rising trade deficit shouldn’t be ignored

    By Josh Bivens

    Many economic observers have recently exonerated international trade flows for the hemorrhaging job losses in the manufacturing sector of the United States, generally claiming that either changing demand patterns or rapid productivity growth are the cause of manufacturing’s decline. But the evidence shows that trade imbalances in manufacturing have accounted for 59% of the decline in manufacturing employment since 1998. A close examination of net imports, demand for manufactured goods, and productivity growth reveals that these three factors influence the U.S. manufacturing industry in the following ways:

    • U.S. consumers and businesses have not shifted their purchasing away from manufactured goods. In fact, demand for manufactured goods as a share of total demand in the United States has actually grown over the past 10 years.

    • The rising trade deficit has led to an unprecedented divergence between domestic manufacturing output and demand. Domestic output is now just 76.5% of domestic demand, nearly 14% less than the 1987 to 1997 average. Raising output closer to this previous relationship with demand (around 90%) would generate millions of jobs in manufacturing.

    • The rising trade deficit in manufactured goods accounts for about 58% of the decline in manufacturing employment between 1998 and 2003 and 34% of the decline from 2000 to 2003. This translates into about 1.78 million jobs since 1998 and 935,000 jobs since 2000 that have been lost due to rising net manufactured imports.

    The manufacturing sector lost more than three million jobs between 1998 and 2003, with 2.7 million lost since the immediate pre-recession year of 2000. Roughly coinciding with this manufacturing employment loss, the trade deficit in manufactured goods increased by over $230 billion. The synchronicity of large-scale manufacturing job loss and growing trade deficits has led to a debate about whether international trade flows have contributed to the loss of manufacturing jobs.
    Shifting blame for manufacturing job loss: Effect of rising trade deficit shouldn’t be ignored | Economic Policy Institute
     
  2. expat_panama
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    expat_panama Silver Member

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  3. iamwhatiseem
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    iamwhatiseem Gold Member

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    Are you willing to pay $50 more for a lawn mower?
    Are you willing to pay $300 more for a refrigerator?
    ...$25 more for a toaster...$5 more for a wrench....etc.etc.

    I am, and I do actually...but I am an anomaly.
    The American motto when going shopping is "lowest possible price".
    There is a high cost attached to low price.
     
  4. ccravens
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    ccravens Rookie

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    Buying the BEST possible item at the LOWEST possible price is good for the country who made the product (obviously), but also good for the country/people who get the best product at the lowest price.
    It's basic economics, and common-sense.

    If you are paying $50 extra for a lawn mower, or $300 more for a refrigerator, then you are hurting, not helping your country. But you sure can make yourself feel superior. Again, it's basic economics. Read a textbook for more info.

    It's called "The law of comparitive advantage."
     
  5. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    if so it propably means you are a stupid liberal with $50 less to spend on other things thusly causing a depression in the other things industries!!

    To carry liberal ignorance to its logical conclusion we would just make international trade illegal.
     
  6. Widdekind
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    Widdekind Member

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    Since 1998, over 3 million manufacturing jobs have been lost domestically, of which nearly 2 million were outsourced abroad. Meanwhile, the trade deficit in those manufactured goods increased by over $200B (per year). The ratio of increased trade deficit (over $200B per year) to decreased jobs (nearly 2 million) is over $100K per year. On average, $100K per year of sales volume generates one job (in manufacturing).

    Foreigners are manufacturing those products more cheaply than domestics. So much so, that domestics cannot resist paying their lower prices. That's good economics, lowering prices, and increasing quantities transacted, improving efficiency.

    The problem is not economically competitive foreigners. The problem is non-competitive domestics. No -- trade deficits aren't "good"; being outcompeted isn't "good"; the solution is to match their prices. What keeps US manufacturers from matching others' prices? Whatever is the cause, that is the problem.
     
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  7. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    the cause is liberalism of course. Look to Europe and see the final result. In Spain it takes years to fire someone who gets huge benefits the whole time. Its great for the few workers with jobs but horrible for the nation and those who see their jobs shipped abroad.

    We could show our economic intelligence by making unions illegal again,and, by making deficits illegal so foreign countries would have to buy our products rather than our treasury debt.
     
  8. Moonglow
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    Moonglow Diamond Member

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    I'd rather pay more and support US jobs than all the cheap crap we get from Asia.
     
  9. Moonglow
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    Moonglow Diamond Member

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    In China unions are required, they have unions and still enjoy a good economy.
     
  10. ccravens
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    ccravens Rookie

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    See my post for why you could be hurting your country.

    Think about it, you'll get it eventually.
     

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