Shifting blame for manufacturing job loss

[Moonglow]

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

 

[expat_panama]

 

[iamwhatiseem]

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.

 

[ccravens]

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."

 

[EdwardBaiamonte]

Are you willing to pay $50 more for a lawn mower?

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.

 

[Widdekind]

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.

 

[EdwardBaiamonte]

What keeps US manufacturers from matching others' prices? Whatever is the cause, that is the problem.

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.

 

[Moonglow]

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.

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

 

[Moonglow]

What keeps US manufacturers from matching others' prices? Whatever is the cause, that is the problem.

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.

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

 

[ccravens]

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.

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

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

Think about it, you'll get it eventually.

 

[Moonglow]

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.

Many countries subsidized their products to make them cheaper on the open market. Just like the US and it's ag farm subsidies.
Brazil subsidizes gas to make it cheap domestically.

 

[Moonglow]

all super powers decline in manufacturing and domestic consumption.

 

[Moonglow]

this is why the dollar has been depreciating, happened during reagan also.

In reality, the manufacturing jobs crisis in the United States can be resolved, and to do so, it is crucially important for the trade account to move closer to balance through rising exports and/or falling imports. The single best way to influence these import and export flows is by encouraging a further (and wider) depreciation of the U.S. dollar to make domestically produced goods more competitive on global and domestic markets.

 

[EdwardBaiamonte]

What keeps US manufacturers from matching others' prices? Whatever is the cause, that is the problem.

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.

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

OF course some unions do no harm and allow you to have the most competitive wages in the world while others,i.e., American liberal unions, drive 20 million or so jobs off shore.

 

[EdwardBaiamonte]

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.

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

you mean cheap crap like Apple products??
paying more for one thing leaves you less to buy other things and so less ability to stimulate other American industries. Slow liberal??

 

[Widdekind]

The following figure attempts to visualize the national income statistics, for the US in 2005, published by the BEA.

Inexpertly, interest payments are a major money flow, up to several trillion dollars per year. Interest payments are received by businesses (including financial businesses, i.e. banks) along with retail sales, for new & final goods & services (GDP). Those interest payment revenues fund taxes (T), savings (S), and (through wages & salaries) personal consumption (C). Thus, the actual "income equals expenditure" formula is:

i + C + G + I + X = i + T + S + C + M

GDP = T + S + C = C + G + I + NX + Ni​

saying that GDP includes terms for "net exports (NX)" and "net interest payments (Ni)". If all interest payments were only from-and-to domestic US persons & businesses, then Ni = 0. In reality, some interest payments are paid abroad; and others received from abroad. At present, Ni is small and positive (US persons & businesses receive more from abroad, than they pay to abroad). In the future, present-day borrowing may mean, that net interest payments abroad become comparable to net imports from abroad. I.e. the US may suffer both a "trade deficit" (NX << 0) and an "interest deficit" (Ni << 0), combining to reduce US GDP. Trade deficits, today, may cause interest deficits, tomorrow, too. Trade deficits are both "bad" (money & jobs flow overseas, today), and "worse" (debts, principles plus interest, flow overseas tomorrow).

Domestic producers must become more economically competitive, in order to keep their current domestic market-shares (out-competing further imports); and to expand foreign market-shares (competing for further exports). Overall, US workers cannot demand to be paid high wages, whilst demanding to pay low prices, without pricing themselves, and their products, out of every market on earth, domestic & foreign. (Far far) more-than-less, Americans themselves know, that they themselves are not willing, to pay the prices, for the products they produce -- whose high prices are required, to pay them the high wages they demand. Americans themselves know, that they are not worth what they are asking. So now what?

 

[Widdekind]

where is HQ ?

"Blue collar" workers see "white collar" workers earning high salaries. Then they, too, want high wages. Meanwhile, "white collar" workers keep demanding higher salaries, to keep funding higher luxury expenses. So, "blue collar" workers keep demanding higher wages, to match as much as possible. Thus, there exists a de facto chain-of-expensive-command, stretching from the factory floors, to office high-rises, "and beyond". By the time accountants reach the "bottom line" on the financial statements, the prices of US products are as high, as the wages and salaries, of all the blue and white collar workers. Thereby, US businesses have priced themselves out of domestic & foreign markets, yielding the former to imports, and yielding exports from the latter. US trade deficits increase, US employment decreases, money & jobs flow overseas (from whence money is loaned back, to increasingly debt-ridden Americans, all of whom keep trying to "keep up with the Joneses", whose appetite for American indebtedness has not yet been sated).

election platform
pay cuts for e-v-e-r-y-b-o-d-y
"hike"
(guys, guys, where's everybody going...)​

 

[EdwardBaiamonte]

Domestic output is now just 76.5% of domestic demand,

a huge new study just the other day put the number at 86%!!! That means only 14% of demand is from international trade!

More importantly we are far better off than all other major countries in that regard yet we moan like crazy.

Since we have to compete against China and many other low wage manufactureres for that small 14% of our economy we might as well resign ourselves to it and become competitive:

1) Make unions illegal ( 10 million new jobs) Democrats oppose

2) make minimum wage illegal ( 5 million new jobs) Democrats oppose

3) end business taxation; especially tax incentives to off-shore jobs ( 5 million new jobs) Democrats oppose

4) make inflation illegal ( 2 million new jobs) Democrats oppose


5) make Federal debt illegal( 2 million new jobs) Democrats oppose

6) send illegal workers home(8 million new jobs) Democrats oppose

7) Pass Balanced Budget Amendment to Constitution( 3 million new jobs) Democrats oppose

8) cut pay of government workers in half( 4 million new jobs) Democrats oppose

9) Make health insurance competition legal( 6 million new jobs) Democrats oppose

10) end needless business regulations ( 2 million new jobs) Democrats oppose

11) restrict Federal spending to 15% of GNP( 2 million new jobs) Democrats oppose

12) support unlimited free trade( 2 million new jobs) Democrats oppose

13) reduced unemployment compensation, welfare, food stamps, medicaid.( 2 million new jobs) Democrats oppose

14) privatize education, social security ( 4 million new jobs) Democrats oppose

15) end payroll taxes ( 1 million new jobs) Democrats oppose

Since Democrats always oppose wisdom and common sense the only serious option is to make them illegal as the Constitution intended