Are there any economic beneffits from global corporations ?

[georgephillip]

I'm wondering which claims made in the following two paragraphs are subject to debate?
"Q1 GDP came in at .2% growth, this was a whopping $6 billion worth of growth for the quarter. This number was an obvious disappointment as estimates were around 1%+. Of course the apologists were immediately out in full force to remind us of how terrible the winter was and 'weather' was to blame. I would ask, isn’t that what 'seasonal adjustments' are for? Steve Liesman of CNBC even posed the question why seasonal adjustments are 'not working'. The obvious answer is because you can only stretch, massage and outright lie about economic numbers so far before you cannot any longer …because even the blind will see it. (?)

"Breaking the quarter down and looking under the hood, were it not for the biggest inventory build of any quarter in history(?), the quarter would have shown a negative 2.6% growth rate . What exactly does this mean? It means the consumer or final user has shut off their purchases. It means 'stuff' was produced but wasn’t sold. The inventory build number was over $120 billion, can this happen again in the 2nd quarter? And what if the end buyer keeps their pocketbook shut again? Something must give, either the inventory gets sold or the producers must cut back production drastically."

Gold Silver and Crashing Markets . It s Ugly if You Look Under the Hood Global Research - Centre for Research on Globalization

 

[EdwardBaiamonte]

Luckily this will not be happening any time soon.

so why bring it up you fool?????

Well Ed, that it won't happen soon doesn't mean the US isn't heading that way : The BRICS have created a development bank which is an alternative to the IMF and China is both selling its debt with the USA (at a rate of 1% per month) and converting its dollar reserves into gold. So that scenario could become a reality by 2030. No, not soon but not too far away either.

so what liberal fool?????????? Economies grow thanks to Republican supply side inventions. That's how we got from stone age to here. The % of the world's reserve currencies that are in US dollars is 98% irrelevant.

 

[Andylusion]

So what exactly do you think they are going to do with US dollars? Sit on them? Stuff them in their pillows? Bury them in their back yards?

Well they can buy oil on the international market, or they can exchange the US dollars at the bank.

The short answer
A) They can store them sure, they have 3.8 trillion of USD reserves.
B) They can give them back to the US in the way of a loan... China is the main creditor with 1.27 trillions.

Add it all , roughly 5 trillion. Sure , no problem as long as the US remains the main economy in gross terms and the US stays as the default reserve currency.

Do me a favor. If you are going to respond to a post, please actually read the post you wish to respond to. I don't think that's unreasonable a request.

Had you actually read the post, would have read this:

Now there still can be a trade imbalance, but not due to Capitalism.

Put simply, when the government borrows money, then there is a trade imbalance. Imagine a situation, in which the government simply didn't borrow money. Imagine if you can, what would a Chinese company, or bank, do with an American dollar, if they simply didn't have buying US Federal Bonds, as an option?

They would have no choice but to either invest the money in the US, or purchase goods from the US. Again, if they exchanged the dollar, or purchased an international product like Oil, those companies which got that dollar, would still have the same problem. They would be forced to use the dollar to purchase goods from the US, or invest in the US.

The primary reason we have a trade imbalance, is specifically because our government borrows money. By selling bonds, that action allows foreign banks and companies, to lend the money to the US government which blows it, instead of buying or investing in the US.

The solution is simply to STOP BORROWING MONEY. Which has been a mainstay of right-wing conservationism for ages.

So I already answered the question of borrowing. If the Federal Government stopped borrowing money, that would force them to do other things with the cash, such as investing in the US, or purchasing goods from the US.

Thus the trade imbalance would disappear (for the most part).

This is a trade imbalanced caused by socialism (government borrowing and spending money), not capitalism.

As for the foriegn currency reserves, my understanding is that those reserves are deposits like any other. Which means, that they are similar to a wealthy man depositing his money at the bank.

The bank doesn't bury it under the floor of the bank. It loans that money out, or buys investments, or purchases goods with it, like a new bank location.

Similarly, the central bank of say China, deposits it's dollar reserves into a bank. Like the IMF or World Bank, or some international bank, like HSBC.

Regardless of where they place the foreign reserve deposits, the bank has the exact same problem all over again. What does that bank do with all that foreign currency? They can't pay their employees with it. They can't buy goods from the domestic economy with it. They can't invest it, and buy a new bank branch in China with it.

The only thing they can do, is invest it back into the country of origin. Such as, placing it on the money market for example. Which again, means the money is back in the US.

And just like I said before, if you were right, and the Chinese central back was sitting on $1.27 Trillion in US currency reserves, buried in the back yard, then by that estimate, the US should have virtually no cash left in the entire country. The Federal Reserve says that there is only $1.36 Trillion in physical US currency in circulation today. You are suggesting that $1.27 Trillion is held by China. That means that only $90 Billion physical US dollars exist in the entire country?

That's impossible, because we would have massive deflation. You realize that if you divided that $90 Billion per person, that the most any person could have in actual money would be $281 dollars. Do you see the problem? So the currency reserves are largely irrelevant.

In short, if no government borrowed money and no country had currency reserves then,yes no imbalances would be possible.
But that's not a real situation, that's a hypothetical situation. I am talking about the real actual economy.
So no , what you and Ed point out does not match reality, it is just a nice hypothetical exercise.

I have no problem with trade imbalances. What I have problem with is borrowing money, which creates them.

Saying that is not the real situation is true, and pointless. If the purpose of the thread is simply to state the way things are.... then you are a waste of time. I can read the Washington Post, and watch CNN to find out how things are.

The purpose of the discussion is to determine a course of action. I submit we should cut spending, until we have zero deficit, and indeed a surplus, so we can pay back the debts we owe.

This will have the side-benefit of reducing the trade deficit. It will not eliminate it, but if the trade deficit is a big deal to you, then this would be an excellent course of action.

I also have no problem with currency reserves. Saving currency in deposits is a great thing. Everyone should do it.

Although that does cause a trade deficit, it does not harm the economy, and is not a bad thing.

 

[CultureCitizen]

Saying that is not the real situation is true, and pointless. If the purpose of the thread is simply to state the way things are.... then you are a waste of time. I can read the Washington Post, and watch CNN to find out how things are.

The purpose of the discussion is to determine a course of action. I submit we should cut spending, until we have zero deficit, and indeed a surplus, so we can pay back the debts we owe.

This will have the side-benefit of reducing the trade deficit. It will not eliminate it, but if the trade deficit is a big deal to you, then this would be an excellent course of action.

I also have no problem with currency reserves. Saving currency in deposits is a great thing. Everyone should do it.

Although that does cause a trade deficit, it does not harm the economy, and is not a bad thing.

It is actually the point. At some point Ed said "trade imbalances were not possible".
I corrected saying "trade imbalances are not possible in the long-run. Because in a normal situation you will run out of reserves ".And I will have to add, the surplus country will run out of customers.

A trade deficit is not bad by itself. It depends on many things : the amount of debt, and the capacity to produce and distribute wealth. Seeing how things are going in the US, I would very much question the effectiveness of outsourcing production as a means to produce and distribute wealth.

 

[Andylusion]

Saying that is not the real situation is true, and pointless. If the purpose of the thread is simply to state the way things are.... then you are a waste of time. I can read the Washington Post, and watch CNN to find out how things are.

The purpose of the discussion is to determine a course of action. I submit we should cut spending, until we have zero deficit, and indeed a surplus, so we can pay back the debts we owe.

This will have the side-benefit of reducing the trade deficit. It will not eliminate it, but if the trade deficit is a big deal to you, then this would be an excellent course of action.

I also have no problem with currency reserves. Saving currency in deposits is a great thing. Everyone should do it.

Although that does cause a trade deficit, it does not harm the economy, and is not a bad thing.

It is actually the point. At some point Ed said "trade imbalances were not possible".
I corrected saying "trade imbalances are not possible in the long-run. Because in a normal situation you will run out of reserves ".And I will have to add, the surplus country will run out of customers.

A trade deficit is not bad by itself. It depends on many things : the amount of debt, and the capacity to produce and distribute wealth. Seeing how things are going in the US, I would very much question the effectiveness of outsourcing production as a means to produce and distribute wealth.

When I read his statement, he said it wasn't possible in a capitalist system. Which true.

Ok, well back to outsourcing.

I have first hand experience in this, given I'm in manufacturing.

At one point we built our CPU controller boards in house.

Today, we outsource them to China.

If we didn't do that..... We simply wouldn't be in business.

So... which would you prefer? Some wealth created domestically with outsourcing....... or ZERO without? Which do you think is better?

 

[CultureCitizen]

When I read his statement, he said it wasn't possible in a capitalist system. Which true.

Ok, well back to outsourcing.

I have first hand experience in this, given I'm in manufacturing.

At one point we built our CPU controller boards in house.

Today, we outsource them to China.

If we didn't do that..... We simply wouldn't be in business.

So... which would you prefer? Some wealth created domestically with outsourcing....... or ZERO without? Which do you think is better?

Well Andy,
It is a really complex question isn't it? It just makes me think of the other posibilities: was it possible to upgrade to a process with higher tech which required less labour or was that option too risky or simply not an option given the time you had to reduce costs?

Regarding the wealth creation part, it is a tricky question. Does a significant part ( more than 50%) of the gains still remain in the US. Is that wealth re invested in the US somehow?

Even if the company went bankrupt, economic theory would say that such company should be replaced by another which makes goods more efficiently in the US than in China... eventually.

The trick is that the yuan is undervaluated and has been kept so by the Chinese government on purpose. It is very hard for a true market to work correctly under such circumstances. The Chinese have played the market game rigging it to win and the US fell into the trap willingly.

Finally , I have a separate question to address trade agreements between nations. And it is relevant regarding the question you ask. So I'll make you another question : would you rather have the company in its current state or in its former state knowing that the CPU production was protected against an undervaluated currency by tariffs ?

 

[Andylusion]

When I read his statement, he said it wasn't possible in a capitalist system. Which true.

Ok, well back to outsourcing.

I have first hand experience in this, given I'm in manufacturing.

At one point we built our CPU controller boards in house.

Today, we outsource them to China.

If we didn't do that..... We simply wouldn't be in business.

So... which would you prefer? Some wealth created domestically with outsourcing....... or ZERO without? Which do you think is better?

Well Andy,
It is a really complex question isn't it? It just makes me think of the other posibilities: was it possible to upgrade to a process with higher tech which required less labour or was that option too risky or simply not an option given the time you had to reduce costs?

Regarding the wealth creation part, it is a tricky question. Does a significant part ( more than 50%) of the gains still remain in the US. Is that wealth re invested in the US somehow?

Even if the company went bankrupt, economic theory would say that such company should be replaced by another which makes goods more efficiently in the US than in China... eventually.

The trick is that the yuan is undervaluated and has been kept so by the Chinese government on purpose. It is very hard for a true market to work correctly under such circumstances. The Chinese have played the market game rigging it to win and the US fell into the trap willingly.

Finally , I have a separate question to address trade agreements between nations. And it is relevant regarding the question you ask. So I'll make you another question : would you rather have the company in its current state or in its former state knowing that the CPU production was protected against an undervaluated currency by tariffs ?

The cost of the equipment was simply beyond what the company had to invest. Simply put, we couldn't afford it. That's all there is to that.

Additionally, we sell a couple thousand printers a year. The machine could run non-stop for one week, and build all the CPU boards that we would need for the entire year.

That means that for 51 weeks worth of time, the machines would be idle. The cost would be several millions (which we didn't have), and then spend most of the time moth-balled and depreciating. Even if we could afford it, it wasn't worth it.

First off, the company provides jobs to people working here in the US, with me being one of them. That alone, is a benefit to the US economy.

Second, yes of course we are creating wealth that is a benefit to the US economy. The sheet metal used in our printers, is provided by domestic suppliers. They have jobs, because we purchase from them. Many other suppliers are all domestic as all. Others or not, such as the motor made in Japan, the Print Head made in Hong Kong, and the power supply from Taiwan.

But the barrings, gears, seals, paint and digital displays are all domestic.

Now as to what percentage is domestic or foreign, I don't know... I don't think it matters. Regardless of how much, or little, of the product is domestic or foriegn, the fact is without those foreign parts, there would be no product... no jobs... no tax revenue... no wealth creation. Even if it was only 10%.... is that better or worse than 0%?

Even if the Yuan is undervalued..... wouldn't that be a plus? We're getting goods from China, cheaper than we could afford otherwise, and the Chinese citizens are paying for it. How is that bad for us?

If Walmart subsidized the costs of their own products that they sell, allowing us to buy them below cost.... would we complain about this? Now that's bad for Walmart.... but that's good for us.

Why should I be upset if, say, China is subsidizing steal? I want steal products. I'd love to buy them more cheaply. If China is willing to do that.... that's good for me. Not bad.

I am skeptical of the claim that the Chinese are holding the Yuan artificially devalued. Venezuela tried that, and the result was a massive black market for currency. If the Chinese were doing that, the same black market would appear. We would see evidence that the real market value was different than the government enforced value. We don't see that. I doubt it's undervalued.

Regarding the question you posed on protection from currency exchange rates.

Exchange rates are almost irrelevant. They have never caused us a problem before, and are not significant now. See, once you sign the contract, the exchange rate is meaningless. When we sign on the dotted line, we sign for how much it costs us.

So we head to China and write up a contract, we want X product, for T time frame, at P set price, on a per-order basis. So for the next 2 years, we want these CPU boards, at $200 per unit, per order size. It's $200 per unit. No matter what. They get $200 for each CPU board, as per contract. Exchange rate can go up or down a hundred times in those 2 years, doesn't matter.

Now eventually the contract expires and we have to negotiate a new contract, and those exchange rates will of course influence the negotiation.

However.... that still isn't really a big problem.

I'll tell you what the problem is.

It's not the exchange rate, and feds, and inflation or deflation or anything else.

It's going to China that we hate. We have to fly there to meet our vendors. We have to hire translators. When there's a problem with an order, we have to fly back. We have to translate our instructions into Chinese. We have deal with the shipping costs. We have to wait months to get product. Same with any other foriegn vendor.

We had some bad power supplies. Dozens of them actually. It was a month to have them shipped here. Then it was a month to ship back. Then a month to get the replacements. Three full months to get an error fixed. Not to mention the cost of shipping we paid. (They paid for 2 trips, we paid for 1, but it's still a ton of money).

We don't deal with China because it's fun. We don't want to deal with them at all. We'd LOVE to have a domestic vendor down the street we could just drop by, and fix all our problems.

But again.... here's the deal. We can't absorb the higher cost of domestic manufacturing. It is simply too high. If we jumped up our prices to pay for domestic suppliers, our customers would cancel, and we'd be out of business.

 

[EdwardBaiamonte]

. The Chinese have played the market game rigging it to win and the US fell into the trap willingly.

100% stupid!! When someone offers you goods and services below market prices you enrich yourself by taking advantage of it. When the Chinese get up and go to work each morning Americans get a raise in pay! The extra money we have is then spent to stimulate the economy. Moreover, China trades with the entire world so if we didn't we'd be getting poorer and the rest of the world would be getting richer.

I do realize I'm talking to a liberal fool who wants America to grow its own bananas instead of buying them for 5 cents a pound where they grow naturally.

 

[EdwardBaiamonte]

t the CPU production was protected against an undervaluated currency by tariffs ?

1) 100% stupid if you protect your city state or country from competition you halt economic progress. China has cheap labor and SA has cheap bananas. That's an huge opportunity for us as is our ability to design iphones and jet planes a huge opportunity for China and SA.

A liberal simply lacks the IQ to understand capitalism.

 

[CultureCitizen]

First off, the company provides jobs to people working here in the US, with me being one of them. That alone, is a benefit to the US economy.

Second, yes of course we are creating wealth that is a benefit to the US economy. The sheet metal used in our printers, is provided by domestic suppliers. They have jobs, because we purchase fom them. Many other suppliers are all domestic as all. Others or not, such as the motor made in Japan, the Print Head made in Hong Kong, and the power supply from Taiwan.

But the barrings, gears, seals, paint and digital displays are all domestic.

That was a long answer. First , thankyou for the insights. It was a long post so I'll be answering in parts.

It's good to know the company is still running. Regardless, how much time until more is offshored ? Digital displays could be next. What then ? The rest ( barrings, gears, seals and paint) seem like quite basic stuff, how much until the whole printer is made in China? Yes, big gain for the consumer ( for those left with a job).

I've seen the pattern before, in factories at Juarez, same pattern : import high tech components from industrialized countries assemble them and export the finished good. So, there's no high-tech production down there. The "maquiladoras" keep running because the labour is cheap and its just a quick 15 minute trip to El Paso. Those factories provide work , but the fact that all the high-tech components are imported have kept Mexico from becoming an industrialized country ( see where I'm going?).

Now, Mexico has never been a fully industrialized country, so there's an explanation for their situation. On the other hand the integrated circuits were first created in the US (Jack Kilby). So I find rather depressing that the circuits are imported from China.

The US has had tariffs up until 1947, the rate of economic growth was by far better than what has happened during the las 3 decades.

Integrated circuit - Wikipedia the free encyclopedia

 

[EdwardBaiamonte]

The US has had tariffs up until 1947, the rate of economic growth was by far better than what has happened during the las 3 decades.

Economists began to see the pure ignorance in protection from competition when Smoot Hawley collapsed world trade and caused the Depression. Competition makes us better. Its a difficult concept for a child and liberal to grasp.

In 1980 you paid 10 years salary in Hungary for a car without a gas gage (dip stick instead) that had to be backed up a hill because of a gravity fed carburetor. They employed engineers by the 1000's all of whom swore that was the best they could do.
It is not until you have had decades of free Republican capitalist international competition that you have any idea how many engineers are needed, at what salary, and to produce what quality.
Can you understand the analogy?

 

[CultureCitizen]

Even if the Yuan is undervalued..... wouldn't that be a plus? We're getting goods from China, cheaper than we could afford otherwise, and the Chinese citizens are paying for it. How is that bad for us?

If Walmart subsidized the costs of their own products that they sell, allowing us to buy them below cost.... would we complain about this? Now that's bad for Walmart.... but that's good for us.

Why should I be upset if, say, China is subsidizing steal? I want steal products. I'd love to buy them more cheaply. If China is willing to do that.... that's good for me. Not bad.

I am skeptical of the claim that the Chinese are holding the Yuan artificially devalued. Venezuela tried that, and the result was a massive black market for currency. If the Chinese were doing that, the same black market would appear. We would see evidence that the real market value was different than the government enforced value. We don't see that. I doubt it's undervalued.

There is no black market for the USD, because chinese imports from the US are minimal.

"Nevertheless, U.S. exports to China are on the upswing. China is the third-largest U.S. export market, trailing behind Canada and Mexico."

The third !!! They import less stuff than Mexico, a country with 110 million persons half of which are below the poverty line ! Add to that the fact that China's economy is 7 times bigger.

So no, you won't see a black market for the US dollar any time soon.
Again , cheap steel. Nice, but , what happens to the steel industry in the US ?
In theory , if the US steel industry breaks , then the market should manage to create an industry which can provide more efficient output. But, with an udervaluated yuan and entrepreneurs more interested in playing the casino at the stock market than in creating actual capital investments I am wondering what that would be?

Link :
Where And What China Imports From U.S. - Forbes

 

[EdwardBaiamonte]

Nice, but , what happens to the steel industry in the US ?

oh how incredibly stupid can a liberal be. In the late19th century Britian led the world in production and 40% of its exports went to the USA!! Competition is good for the worlds standard of living not bad. Competition makes us better. USSR was totally protected and did not produce one single consumer products innovation ever.


Imagine someone who jogs for fun and someone who races in life and death competition? Who would be a faster runner? Now you understand competion and how it makes us better. Not so hard was it?

 

[CultureCitizen]

oh how incredibly stupid can a liberal be. In the late19th century Britian led the world in production and 40% of its exports went to the USA!! Competition is good for the worlds standard of living not bad. Competition makes us better. USSR was totally protected and did not produce one single consumer products innovation ever.

At that time the US had tariffs Ed.
The problem with the USSR is that it was a centralized planned economy which left no place for innovation.

 

[EdwardBaiamonte]

]
At that time the US had tariffs Ed.

yes to limit competition and therefore to limit the world's standard of living. Do you understand how competition works dear?

Imagine a group of 2 runners in a race, then imagine a different group of 2 billion runners in a race. Which group would have the fastest runner? Do you see how expert I am at expplaining things so even a liberal can understand?

 

[EdwardBaiamonte]

The problem with the USSR is that it was a centralized planned economy which left no place for innovation.

dear, USSR and our libsoviets, like you, are identical. Our libsoviets want 1000 interventions because they lack the IQ to understand capitalism. They want minimum wage, trade protection, Obamacommiecare, etc etc. When the 1000 interventions fail they want more and more intervention to compensate and soon enough you have a centralized libsoviet Obamacommiecare economy with no innovation or growth.

I trust you finally understand??

 

[Andylusion]

First off, the company provides jobs to people working here in the US, with me being one of them. That alone, is a benefit to the US economy.

Second, yes of course we are creating wealth that is a benefit to the US economy. The sheet metal used in our printers, is provided by domestic suppliers. They have jobs, because we purchase fom them. Many other suppliers are all domestic as all. Others or not, such as the motor made in Japan, the Print Head made in Hong Kong, and the power supply from Taiwan.

But the barrings, gears, seals, paint and digital displays are all domestic.

That was a long answer. First , thankyou for the insights. It was a long post so I'll be answering in parts.

It's good to know the company is still running. Regardless, how much time until more is offshored ? Digital displays could be next. What then ? The rest ( barrings, gears, seals and paint) seem like quite basic stuff, how much until the whole printer is made in China? Yes, big gain for the consumer ( for those left with a job).

I've seen the pattern before, in factories at Juarez, same pattern : import high tech components from industrialized countries assemble them and export the finished good. So, there's no high-tech production down there. The "maquiladoras" keep running because the labour is cheap and its just a quick 15 minute trip to El Paso. Those factories provide work , but the fact that all the high-tech components are imported have kept Mexico from becoming an industrialized country ( see where I'm going?).

Now, Mexico has never been a fully industrialized country, so there's an explanation for their situation. On the other hand the integrated circuits were first created in the US (Jack Kilby). So I find rather depressing that the circuits are imported from China.

The US has had tariffs up until 1947, the rate of economic growth was by far better than what has happened during the las 3 decades.

Integrated circuit - Wikipedia the free encyclopedia

All you have to do, is jack up taxes, the minimum wage, health care mandates, and labor laws, and it will be entirely possible that the entire production department will be outsourced, and the core company in the US will only be engineering and repair.

It is unlikely at this point that repair will be outsourced, because the cost of shipping back to China is too high for a repair job.

If you want to reverse that trend, lower mandates, lower taxes, lower minimum wage, and reduce regulations.

If you prevent imports..... then we close. And no one, not even the engineers, will have jobs.

Um... that is entirely untrue.

The growth rate prior to 1947, was horrible. And in fact, it wasn't until the tariffs went down, that growth really picked up.

The claim that growth during the 30s and 40s was good, is based on a single data point. GDP. The problem with GDP is that it includes government spending.

Well.... government was spending money on the war effort. That was not growth of the economy. Quite the contrary... the economy shrank by many estimates. They had rationed food, rationed meat, rationed clothing, rationed cars, rationed sugar. By any an all measurements, the standard of living FELL during the 30s and 40s. It didn't grow at all.

The only thing that grew, was government spending on the military, which isn't an economic benefit. How is building a tank, shipping it to Europe and having it blown up, a benefit to the economy?

Now there were some tariffs before the depression. But they were very small, and largely insignificant.

That's the whole reason the Smoot-Hawley Act was even written. The Tariffs of Hoover is exactly what ushered in the Great Depression.

And honestly, you can't point to any country, anywhere in the world, in which protectionism, and tariffs, were a benefit.

 

[Andylusion]

oh how incredibly stupid can a liberal be. In the late19th century Britian led the world in production and 40% of its exports went to the USA!! Competition is good for the worlds standard of living not bad. Competition makes us better. USSR was totally protected and did not produce one single consumer products innovation ever.

At that time the US had tariffs Ed.
The problem with the USSR is that it was a centralized planned economy which left no place for innovation.

Not really.

We have never, at any point, had a universal tariff on all imported goods. Never. Some goods are tariff free, and others are not. That's the way it's always been, and still is even to this day.

Second, the US government has rarely actually created a protectionist tariff. It is entirely possible, and easy, to create tariffs that do not prevent imports, but yet raise revenue.

We did have a steady stream of tariff revenue for the first 100 years of this country, because that was original the only source of revenue to the Federal Government. The tariffs went up and down over the century, from 8% to 35%. But usually high protectionist tariffs of 20% or higher, didn't last long. Because the damage caused by the tariff caused massive political pressure to change it.

Now it is accurate to say that the country grew and advanced faster in the 1800s than it has in the 1900s. That is true.

But you and I will disagree on why. There is no evidence that it was the tariff was the cause of this.

Instead, what is much more likely to be the cause, is that there was very low regulations of business. Zero corporate income tax. Zero personal income tax. People were allowed to keep, and invest as they saw fit, all of their own earnings. Corporations were largely allowed to keep, and invest whatever they wished, as they saw fit, to grow their companies, with virtually no legal red tape.

This made investing in the US, extremely profitable, and so it was done.

I would argue that had more to do with it, than a tariff.

Especially given the fact that imports were about 10% to 8% of GDP for the majority of the 1800s. In 2000, imports were 10% of GDP.

In fact, imports were significantly lower in the 1900s, when you claim growth was slower, than in the 1800s which admit the growth was faster.

Implication: Imports didn't harm growth. Possibly improved growth.

Like I said before, you can't point to any country in which protectionism was a big boost to the economy. And there are tons of counter examples, where free-trade clearly resulted in a growing economy.

Singapore.... South Korea... Taiwan... Hong Kong... Switzerland... Canada... All of these countries have little to no tariffs at all. And most are doing better than we are economically.

On the other hand, look at protectionist countries... North Korea, Cuba, Venezuela, Agentina, Pre-78 China, Pre-90s India, Zimbabwe, Barbados, Niger.... You don't see a lot of rich wealthy countries on that list.... in fact, you don't see any at all.

 

[Pksimon2007]

I am arriving to the conclusion that global corporations do not beneffit the economy at all.
They actually harm it because they tend create cross country monopolies, evade taxes and practice dumping.
But I would like to hear if someone thinks global corporations have some beneffit.

I must underscore the word global . Please notice corporations are an absolute must for every healthy economy, specially medium and small corporations.

- I think that goes hand in hand with Warren Mosler's saying: "a financial sector is more trouble than it's worth".

I'm not completely convinced that corporations need to exist at all. I'm still a little fence-y, but leaning toward "no".

 

[Pksimon2007]

The claim that growth during the 30s and 40s was good, is based on a single data point. GDP. The problem with GDP is that it includes government spending.

Well.... government was spending money on the war effort. That was not growth of the economy.

- And what is the problem with including government spending in GDP? If government pays its employees and buys stuff from firms in the economy, the problem is.....?

The economy grew at an astonishing pace between 1933 and 1937. That wasn't war spending. That was spending largely on infrastructure which enabled the growth that followed, some of that infrastructure still in service today.