Is China's growth the product of free market , state owned enterprises or both?

[EdwardBaiamonte]

. If you want to see both the good and the bad of rather unfettered Capitalism go to China..

to stupid of course!! what could be bad about eliminating 40% of the world's poverty by diminishing soviet liberalism under which 60 million slowly starved to death?

 

[kaz]

1) US consumers benefit from lower costs, that means they have more money to spend on other things since the price of products are cheaper
2) The company is more profitable. That profit is used in one of three ways, it is spent on further projects creating more jobs growing the company, it is held and invested where someone else gets the cash and uses it to grow the economy. Or it is returned to investors who either spend it (in the economy) or re-invest it (in the economy)
3) US employees benefit because if American companies don't then they have a cost disadvantage to European companies who are doing it which harms their sales and in term harms the company costing jobs.

so...

4) So in fact there was no further debt borrowed, in fact the government made more money and paid down debt. There is a stipulation to 4. The company has to do it for economic efficiency or it does not help the economy. If they do it to escape belligerent government tax and regulatory policy as many are doing today, it's the rational decision by the company, but it does not help the overall economy positively, it only prevents it from being a negative impact if the company had stayed.

1) Yes of course , lower costs. Agreed.
2) The company is more profitable. Totaly irrelevant unless the profit is re-invested again in the US. Not of much use if it is re-invested in China.
3) No. US employees do not benefit , because they have already been laid off in my example.
4) Actually yes. there is a further debt necesarily due to the foreign trade imbalance. And this is the most common mistake that junior economists make. Textbooks will tell you that this trade imbalance is not sustainable in the long run. Eventually all those dollars from debt must come back, else the economy with the trade deficit will suffer harming the economy with the trade excess (China) as the market shrinks.
But then , there is a catch in that too: A smart trading partner will use all those savings to acquire land, assets and capital goods.

On #2, you didn't read my post, or you didn't process it. I'll tell you what, I'll let you take an econ 101 course and argue with your professor about that companies making money doesn't help the economy. I'll let you on a little secret. Companies making money IS the economy.

On #3, you are referring to the wrong employees, re-read more carefully

On #4, when you take that Econ101 class, you can argue with your professor about that too. This one if you know calculus is very intuitive once you draw the curves and walk through it. Economic efficiency is the holy grail of economic growth in an economy. An open economy driven on economic efficiency is the way to maximize overall economic wealth

 

[SteadyMercury]

Is this guy brain impaired or just is stupid and has problems with the English language?

Hah hah I've had this happen before, if you fluster Special Ed enough he sometimes locks up and just posts the same thing over and over. Don't worry, eventually he reboots and returns to the forum to continue using one of his five available posts instead of being stuck on just one.

I read there is a new update to Special Ed's firmware that fixes the issue (Baiamonte patch 11.6.1.2) but USMB hasn't downloaded and installed it yet.

 

[EdwardBaiamonte]

Is this guy brain impaired or just is stupid and has problems with the English language?

Hah hah I've had this happen before, if you fluster Special Ed enough he sometimes locks up and just posts the same thing over and over. Don't worry, eventually he reboots and returns to the forum to continue using one of his five available posts instead of being stuck on just one.

I read there is a new update to Special Ed's firmware that fixes the issue (Baiamonte patch 11.6.1.2) but USMB hasn't downloaded and installed it yet.

personal attack from typical liberal without IQ for substance

 

[SteadyMercury]

I'm not a liberal, I'm a die hard capitalist who's anti-union, anti-minwage, and 100% for free market.

However I understand you have trouble with anything not easily categorized into liberal or not, hopefully the firmware update fixes that when applied.

 

[CultureCitizen]

On #2, you didn't read my post, or you didn't process it. I'll tell you what, I'll let you take an econ 101 course and argue with your professor about that companies making money doesn't help the economy. I'll let you on a little secret. Companies making money IS the economy.

On #3, you are referring to the wrong employees, re-read more carefully

On #4, when you take that Econ101 class, you can argue with your professor about that too. This one if you know calculus is very intuitive once you draw the curves and walk through it. Economic efficiency is the holy grail of economic growth in an economy. An open economy driven on economic efficiency is the way to maximize overall economic wealth

2. No , there is an interdependency between production and consumption. Now the fact that there are less jobs in the US and more jobs in China and companies have bigger proffits doesn't really help US economy ( I am sure it is wonderfull for the chinese economy though).

"Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer"
Adam Smith

3. Employes with jobs get a benefit, but it is not really usefull for those without a job.
4. Make an argument that makes some sense, what curves are you talking abount ( supply and demand )?.
You are actually telling that a country which imports more than it exports doesn't have a trade deficit which is absolute crap. The US is in a privileged position because it is the reserve currency and it won't run out of reserves as other countries do. Thanks to that it can export its inflation to other countries.

 

[EdwardBaiamonte]

On #2, you didn't read my post, or you didn't process it. I'll tell you what, I'll let you take an econ 101 course and argue with your professor about that companies making money doesn't help the economy. I'll let you on a little secret. Companies making money IS the economy.

On #3, you are referring to the wrong employees, re-read more carefully

On #4, when you take that Econ101 class, you can argue with your professor about that too. This one if you know calculus is very intuitive once you draw the curves and walk through it. Economic efficiency is the holy grail of economic growth in an economy. An open economy driven on economic efficiency is the way to maximize overall economic wealth

2. No , there is an interdependency between production and consumption. Now the fact that there are less jobs in the US and more jobs in China and companies have bigger proffits doesn't really help US economy ( I am sure it is wonderfull for the chinese economy though).

"Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer"
Adam Smith

3. Employes with jobs get a benefit, but it is not really usefull for those without a job.
4. Make an argument that makes some sense, what curves are you talking abount ( supply and demand )?.
You are actually telling that a country which imports more than it exports doesn't have a trade deficit which is absolute crap. The US is in a privileged position because it is the reserve currency and it won't run out of reserves as other countries do. Thanks to that it can export its inflation to other countries.

dear, the wage reduction in China becomes the price reduction in American so there is no net loss, but rather a comparative advantage as each country does what it does best. Its identical when CA trades with NYS.

Liberals lack the IQ to understand capitalism so would ban free trade between states and then between cities in states using the identical idiotic liberal arguments. The world is now more united than the United States were 100 years ago.

 

[kaz]

On #2, you didn't read my post, or you didn't process it. I'll tell you what, I'll let you take an econ 101 course and argue with your professor about that companies making money doesn't help the economy. I'll let you on a little secret. Companies making money IS the economy.

On #3, you are referring to the wrong employees, re-read more carefully

On #4, when you take that Econ101 class, you can argue with your professor about that too. This one if you know calculus is very intuitive once you draw the curves and walk through it. Economic efficiency is the holy grail of economic growth in an economy. An open economy driven on economic efficiency is the way to maximize overall economic wealth

2. No , there is an interdependency between production and consumption. Now the fact that there are less jobs in the US and more jobs in China and companies have bigger proffits doesn't really help US economy ( I am sure it is wonderfull for the chinese economy though).

Begging the question, you're just repeating your unsubstantiated claim as fact. Not only are you contradicting what economics says, what they say makes sense and is backed up by endless research and math and as a career business guy I know it works in real life. Still looking for your explanation how you know the field of economics is wrong. That would be a great start to getting me to take your claim more seriously

"Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer"
Adam Smith

This quote is dead on in support of my point. You want to raise prices on consumers by raising production costs. And the idea that saving the low end, micro margin portion of the economy to do it is, let's just say bizarre.

3. Employes with jobs get a benefit, but it is not really usefull for those without a job.

Begging the question. You obviously did not go back and re-read this bullet as I pointed out you completely whiffed on what I said and you are continuing to completely whiff on what I said

4. Make an argument that makes some sense, what curves are you talking abount ( supply and demand )?.
You are actually telling that a country which imports more than it exports doesn't have a trade deficit which is absolute crap. The US is in a privileged position because it is the reserve currency and it won't run out of reserves as other countries do. Thanks to that it can export its inflation to other countries.

You are looking at the whole concept of import and export through 1970s eyes. Today Fords are mostly imports many made in Mexico and Toyotas are mostly domestically made, many from the southern US. It's a global economy, Holmes.

I never said "telling that a country which imports more than it exports doesn't have a trade deficit which is absolute crap.". Are you hallucinating this or referring to something someone else said? Not sure. But as for the point, as I said, even calculating trade deficits is incredibly complex. Let's take Ford for example:

Ford ships components from all over the world to Mexico, including from the US, so they are exporting components. Then they import assembled cars to the US, so they are importing. Then they sell the car in the US for a profit and that stays here where Ford is based. Overall, they imported more then they exported, but they kept the profit here. Tell me how that import hurt our economy.

Toyota ships components from all over the world here, so they are importing. Then they build a car and sell it here. Then they ship part of the the profit back to Japan and keep some here. They created jobs and saved a consumer money and reinvested here how did that hurt the economy?

Again, you are looking at imports and exports through 1970s eyes. As for trade deficits, we overwhelmingly export high margin services and we import low margin products. We are getting a lot more profit than we are losing. Value created is what matters when it comes to economic activity. You can't just look at revenue, you have to look at margin, that's a far better indicator and we are doing far better at it.

Your idea that fighting to keep the low end stuff here is what will lead to economic expansion is just ridiculous and there is no way you can show that because it's wrong. It destroys far more wealth in consumer overspending than it creates in low margin jobs that have to be continually saved by government continually warping a market.

As for the curves, yes, the supply and demands show the greatest economic gain for the overall economy is a market set price. Only government can change that because only government can use force to compel people to act against their own interest

 

[CultureCitizen]

Your idea that fighting to keep the low end stuff here is what will lead to economic expansion is just ridiculous and there is no way you can show that because it's wrong. It destroys far more wealth in consumer overspending than it creates in low margin jobs that have to be continually saved by government continually warping a market.

I think you are missing a point . As companies move out , capital goods do so, and the wealth of one country decreases while the wealth of another increases. Furthermore the same has happened with the capacity to create wealth.

 

[kaz]

I think you are missing a point . As companies move out , capital goods do so, and the wealth of one country increases while the wealth of another increases. Furthermore the same has happened with the capacity to create wealth.

I'm confused, this is actually correct. Was it a typo?

 

[EdwardBaiamonte]

Your idea that fighting to keep the low end stuff here is what will lead to economic expansion is just ridiculous and there is no way you can show that because it's wrong. It destroys far more wealth in consumer overspending than it creates in low margin jobs that have to be continually saved by government continually warping a market.

I think you are missing a point . As companies move out , capital goods do so, and the wealth of one country decreases while the wealth of another increases. Furthermore the same has happened with the capacity to create wealth.

it depends on whether America adjusts to the Chinese comparative advantage in cheap labor. If we don't you are partially correct. If we do adjust then both countries see higher standards of living.

If we don't adjust the damage is small since the value of our dollar to them shrinks if they can't buy much stuff here until the trade is worthless to them.

In any case only the nearly insane are opposed to free trade which explains why the the entire world is switching to it. Also free trade between NY and CA is not different than between US and China. Should NY protect itself from CA fruits and vegetables

 

[EdwardBaiamonte]

Your idea that fighting to keep the low end stuff here is what will lead to economic expansion is just ridiculous and there is no way you can show that because it's wrong. It destroys far more wealth in consumer overspending than it creates in low margin jobs that have to be continually saved by government continually warping a market.

I think you are missing a point . As companies move out , capital goods do so, and the wealth of one country decreases while the wealth of another increases. Furthermore the same has happened with the capacity to create wealth.

America cant match the cheap unskilled labor in China so to compete we have to use more expensive skilled labor. The transition from unskilled to skilled in America can be killed by liberal govt programs that seek protection or that offer welfare to workers to spare them the pain of transition.

 

[CultureCitizen]

I think you are missing a point . As companies move out , capital goods do so, and the wealth of one country increases while the wealth of another increases. Furthermore the same has happened with the capacity to create wealth.

I'm confused, this is actually correct. Was it a typo?

Sorry ,it was a typo . I corrected it abount 15 minutes after you answered.

Just to clarify. As industry moves from one country to another so do capital goods and the capacity to create wealth.
China is now better at producing wealth now than 30 years ago. The US capacity to produce wealth has not diminished, but it has definively stagnated. The real per capita gdp has barely grown 30% in 30 years.
Add to that the fact that distribution has become more unequal. For everyone below the median income life has become harder now than it was 30 years ago.

 

[CultureCitizen]

Your idea that fighting to keep the low end stuff here is what will lead to economic expansion is just ridiculous and there is no way you can show that because it's wrong. It destroys far more wealth in consumer overspending than it creates in low margin jobs that have to be continually saved by government continually warping a market.

I think you are missing a point . As companies move out , capital goods do so, and the wealth of one country decreases while the wealth of another increases. Furthermore the same has happened with the capacity to create wealth.

it depends on whether America adjusts to the Chinese comparative advantage in cheap labor. If we don't you are partially correct. If we do adjust then both countries see higher standards of living.

If we don't adjust the damage is small since the value of our dollar to them shrinks if they can't buy much stuff here until the trade is worthless to them.

In any case only the nearly insane are opposed to free trade which explains why the the entire world is switching to it. Also free trade between NY and CA is not different than between US and China. Should NY protect itself from CA fruits and vegetables

But now we are talking about "adjusting".
From my point of view the two main generators of growth are industry and science. If trade decreases the industrial output then measures must be taken to dramatically increase the scientific output.

Some strategic areas must never be completely outsourced, not by economic reasons but for geopolitical reasons. Outsourcing the automotive industry doesn't really make too much damage. But depending totally on other countries for energy, food , water or weapon manufacturing is extremely risky.
My point: there is more to policy than the pure economical aspect.

 

[kaz]

I think you are missing a point . As companies move out , capital goods do so, and the wealth of one country increases while the wealth of another increases. Furthermore the same has happened with the capacity to create wealth.

I'm confused, this is actually correct. Was it a typo?

Sorry ,it was a typo . I corrected it abount 15 minutes after you answered.

Just to clarify. As industry moves from one country to another so do capital goods and the capacity to create wealth.
China is now better at producing wealth now than 30 years ago. The US capacity to produce wealth has not diminished, but it has definively stagnated. The real per capita gdp has barely grown 30% in 30 years.
Add to that the fact that distribution has become more unequal. For everyone below the median income life has become harder now than it was 30 years ago.

What you don't grasp is that ironically you quoted Adam Smith that in the end business is best served when it serves customers first. Yet you advocate consumers pay more for the same thing, and then you conclude that is good for the economy. You are just wrong. Again, seriously, ECON 101 you will learn that is wrong and why. I'm not going to keep arguing the point over and over where you ignore logic and the field of economics. Fine the sun circles the earth. You continue to believe that

 

[kaz]

From my point of view the two main generators of growth are industry and science. If trade decreases the industrial output then measures must be taken to dramatically increase the scientific output.

According to the field of economics, growth in the economy by definition is profit. Yes, I know profit is evil, companies should exist to provide jobs, but there it is. As horrible as it is, jobs are created when companies make a profit. When companies fail, they are replaced by better companies. When companies automate and offshore, they increase profits and reduce costs so their customers have more money and buy things that are made by other companies that gasp, make a profit. The horrors of making money. What an awful thing.

- Industry - You only care about low margin businesses and you want them to overpay and fight automation, which isn't what drives economic growth, not at all

- Science - True but irrelevant, when science is viable companies do it and far better than government. OK, so government invented teflon frying pans. Look what's happening in technology.

Some strategic areas must never be completely outsourced, not by economic reasons but for geopolitical reasons. Outsourcing the automotive industry doesn't really make too much damage. But depending totally on other countries for energy, food , water or weapon manufacturing is extremely risky.
My point: there is more to policy than the pure economical aspect.

Energy: This was proven in the 70s, yet since the Democrats have continued to fight to keep us dependent on foreign energy. Fortunately technology is finally getting past their clutch

Food: True but not an issue

Water: True but not an issue

Weapon Manufacturing: I agree for high end technology

 

[CultureCitizen]

What you don't grasp is that ironically you quoted Adam Smith that in the end business is best served when it serves customers first. Yet you advocate consumers pay more for the same thing, and then you conclude that is good for the economy. You are just wrong. Again, seriously, ECON 101 you will learn that is wrong and why. I'm not going to keep arguing the point over and over where you ignore logic and the field of economics. Fine the sun circles the earth. You continue to believe that

Ok , I quoted Adam Smith because of it suits my example. Economy is a two sided coin with production in one side and consumption in the other side: production is useless if there is no consumption.

So while it is true that cars are made cheaper , the jobs that were lost were hardly ever recovered. The decline of Detroit is due in a large part to the offshoring of jobs. And while eventually other jobs were created in other areas and other locations, but most of the people who lost their jobs were not quallified to occupy them. While I knew one illegal that jumped from factory worker to programmer in a 5 years span, this is an exception and not the norm, and please notice the amount of time it took him to shift his skills : five fracking years !!! Normally this kind of skill shift takes a full generation (assuming the education scheme allows this).

Traditional economy fails to see this ( I tend to see it as a supply chain, since I've worked several years as a logistic consultant). This is a natural tendency of industrialization : unskilled labour demand is reduced and the demand of high tech jobs increases. This is something the market will not address by itself.

But , I'll be glad to hear what you think about this shift in labour skills.

Table 1-15 Annual U.S. Motor Vehicle Production and Factory Wholesale Sales Thousands of units Bureau of Transportation Statistics

 

[CultureCitizen]

According to the field of economics, growth in the economy by definition is profit. Yes, I know profit is evil, companies should exist to provide jobs, but there it is. As horrible as it is, jobs are created when companies make a profit. When companies fail, they are replaced by better companies. When companies automate and offshore, they increase profits and reduce costs so their customers have more money and buy things that are made by other companies that gasp, make a profit. The horrors of making money. What an awful thing.

- Industry - You only care about low margin businesses and you want them to overpay and fight automation, which isn't what drives economic growth, not at all

- Science - True but irrelevant, when science is viable companies do it and far better than government. OK, so government invented teflon frying pans. Look what's happening in technology.

No, that is not correct. Economic growth is the " increase in the amount of goods and services produced per head of the population over a period of time."(see link). A company might increase profit by stripping employees beneffits or income , or laying off half of the workers and making the rest work two shifts, but that doesn't yield growth. On the other hand acquiring a machine which duplicates productivity per employee efectively yields economic growth.

When companies automate --> ok agreed this increases both wealth , capital and economic growth.
Offshore --> no, not really , that is my point precisely . You reduce the price, but you loose jobs and the market shrinks to some extent. And it will take a lot of time to replace those jobs. Also this reduces both capital goods and the size of the economy ( while many argue that American companies with factories in other countries will re-invest in the US 100% of their gains I think this is not true).

"You only care about low margin businesses and you want them to overpay and fight automation,"
No , I do not want to fight automation. What I think is that more though has to be put into the skills shift. Again, no one can shift from factory worker to surgeon in 6 months( specially if the tuition costs 100K per year), and while industry has a low margin in general it is a matter of scale. Some of the largest companies in the world are oil companies: they have a low margin but high volume.


Economic Growth Definition Investopedia

 

[kaz]

What you don't grasp is that ironically you quoted Adam Smith that in the end business is best served when it serves customers first. Yet you advocate consumers pay more for the same thing, and then you conclude that is good for the economy. You are just wrong. Again, seriously, ECON 101 you will learn that is wrong and why. I'm not going to keep arguing the point over and over where you ignore logic and the field of economics. Fine the sun circles the earth. You continue to believe that

Ok , I quoted Adam Smith because of it suits my example. Economy is a two sided coin with production in one side and consumption in the other side: production is useless if there is no consumption.

That isn't what Adam Smith said. He was right and you are wrong. Here is his quote: Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer

Adam Smith correctly stated that consumption drives production. You want government to restrict production capabilities driving prices higher harming the consumer. That contradicts Adam Smith and the field of economics.

So while it is true that cars are made cheaper , the jobs that were lost were hardly ever recovered.

No matter how many times you repeat the sun circles the earth, the sun doesn't suddenly decide to circle the earth. You can keep arguing the field of economics is wrong. We still have no explanation from you how you and liberal lawyers figured out it is wrong.

The decline of Detroit is due in a large part to the offshoring of jobs. And while eventually other jobs were created in other areas and other locations, but most of the people who lost their jobs were not quallified to occupy them. While I knew one illegal that jumped from factory worker to programmer in a 5 years span, this is an exception and not the norm, and please notice the amount of time it took him to shift his skills : five fracking years !!! Normally this kind of skill shift takes a full generation (assuming the education scheme allows this).

Detroit was destroyed by incompetent management and unions. Offshoring saved Detroit. Again, most Fords are imported.

Traditional economy fails to see this ( I tend to see it as a supply chain, since I've worked several years as a logistic consultant). This is a natural tendency of industrialization : unskilled labour demand is reduced and the demand of high tech jobs increases. This is something the market will not address by itself.

The market won't do it by itself, LOL That has been continually disproven. What has been proven is that government sucks at it and has done nothing but harm the economy with waste, inefficiency and overt corruptness.

People are a resource. We in the American business community are clever buggers and we'll figure out more and more ways to use them like we do with all resources. The problem right now is that socialism is disincenting businesses and employees from developing employees as a resource.

 

[kaz]

But , I'll be glad to hear what you think about this shift in labour skills.

Table 1-15 Annual U.S. Motor Vehicle Production and Factory Wholesale Sales Thousands of units Bureau of Transportation Statistics

If this is passenger cars produced in the US, an interesting thing as I pointed out before is that more and more of the produced cars are foreign automakers. I'm not sure what point you're making with this table.