Managing a contracting economy

[Andylusion]

Questionable. We outlawed child labor and sweat shops so Corporate America offshored for the 5% greater profit.

Dont allow them to do that

btw, corporate America was forced to go offshore because the federal government allowed cheap chinese imports to flood the country

Bull crap.

You are just wrong. I've worked at companies that off shored.

They would have been forced to off shore, with or without imported Chinese goods.

And by the way, *ALL* of the companies I worked for... were selling products international, including China.

If you cut off trade coming from China, you'll end up cutting sales to China, and that will cause just as much damage.

No, you are just wrong. You don't know what you are talking about.

What companies?

Vanner, Microcom, ADL, Ohio Semitronics, Sutphen Towers, Redemtek, and numerous others.

 

[Andylusion]

If you cut off trade coming from China, you'll end up cutting sales to China, and that will cause just as much damage.

Cutting sales to china he says

we buy $500 million more from china than we sell to them

That doesn't matter. Look at some general statistic doesn't change the effect it has on companies.

At one company I worked for, 25% of our total yearly sales were to China.

What different will these irrelevant factoids make to that company, if you kill off trade?

If you kill off 25% of their yearly sales, the fact that we didn't buy $500 Million more from China, is not going to save that company form laying off a bunch of employees.

And here's the other side to that. Part of that $500 million in imports, are goods we use to create other products.

Some of the cases we used, were manufactured in China.

So think about what you are doing to this company here in Ohio. You are jacking up the cost of raw materials, like case parts used in our product. At the same time you are kill off some of our sales.

So sales go down. Price of making the product goes up.

What do you think that is going to do to that company? You say that could never happen? It already did once. In the 1930s.

Pittsburgh Steel companies all went bankrupt in mass, because the tariffs on imported iron Ore from Canada, which came across the great lakes, suddenly it was drastically more expensive. At the exact same time, Canada put a tariff on imported Steel from Pittsburgh.

The companies went bankrupt. The price of Ore went up, and the price of Steel went down, and the companies all imploded.

If you engage in a real trade war, which Trump thus far hasn't really, if you really put in place protectionism... millions of people will be out of work for a long time. It will another great depression.

The trade war is one of the reasons I specifically didn't vote for Trump in 2016.

 

[Mac-7]

If you engage in a real trade war, which Trump thus far hasn't really, if you really put in place protectionism... millions of people will be out of work for a long time. It will another great depression.

It will not mean a depression for America but could start one in china

china has 300-400 million consimers that its factories can sell to

but even that is misleading since they are already buying as much chinese as possible

china absolutely needs its export markets to survive

but the US economy does not depend on trade with china

there is NOTHING made in china that we cant make here. Or in vietnam or thailand

 

[Andylusion]

If you engage in a real trade war, which Trump thus far hasn't really, if you really put in place protectionism... millions of people will be out of work for a long time. It will another great depression.

It will not mean a depression for America but could start one in china

china has 300-400 million consimers that its factories can sell to

but even that is misleading since they are already buying as much chinese as possible

china absolutely needs its export markets to survive

but the US economy does not depend on trade with china

there is NOTHING made in china that we cant make here. Or in vietnam or thailand

So lets think about that a minute.

First I'm assuming you understand my point about breaking up trade, will in fact cause mass job loss across the country, as the price of raw materials goes up, and the number of buyers goes down.

Again, in the 1930s they said the same thing. There is nothing in Canada that was need, that we can't get here in the US. Which is true. That is factually true.

That didn't change the fact, that when the price of iron ore dramatically increased because the supply of ore from Canada was cut off.... and the demand for steel declined by because the buyers of US steel in Canada were cut off....

Just think how that would effect ANY business. Any business at all. You jack up the cost of production, and then cut prices on product because sales decline. That is disaster with any business.

And further, that has a cumulative effect. Meaning, that as businesses lay off people, the internal demand inside the US, also starts to fall.

This is how you have a depression.

Now lets talk about the "China needs us, be we don't need them".

Right now, there are 320 Million possible consumers in the US. There are 7.6 Billion people outside the US.

Will it harm the Chinese economy to cut trade with the US? Sure. No question.

But here is what you need to know. Most companies today, make more money outside the US. Microsoft, Apple, GM, GE and so on. All make more money outside the US, than inside the US.

Even Walmart, which you would think as a retail chain would be almost entirely confined to the US, over 1/5th of their yearly profits are international.

Point being, China can easily recover from the loss of one trading partner. Even if we're their largest trading partner.

There are 7 Billion plus customers outside the US. Hindering the US economy from engaging with the world, will not stop the world. But it might stop the US.

By the way, Chinese history itself proves this. Long before the Opium wars, China had a free-trade policy, and that was the golden age of China, when they were the technological leaders, the economic leaders, and the cultural leaders of the world.

Just before the Opium Wars, the government decided that they didn't need to trade with foreigners, because they were so wealthy and strong.

And we know the history of how that ended up. Cutting off trade, resulted in economic decline, and the opium wars.

This is the reality.

 

[Mac-7]

First I'm assuming you understand my point about breaking up trade, will in fact cause mass job loss across the country,

less so than the job losses cause by making everything in china

in fact far less if we return to manufacturing more stuff in America

such as pharmaceuticals

did you miss the threat china made to cut off our drug supply?

 

[Andylusion]

First I'm assuming you understand my point about breaking up trade, will in fact cause mass job loss across the country,

less so than the job losses cause by making everything in china

in fact far less if we return to manufacturing more stuff in America

such as pharmaceuticals

did you miss the threat china made to cut off our drug supply?

No that isn't true either. Most of the job losses in manufacturing, have happened because of automation.

None of those jobs in China are coming back to the US. None. Zero. Zilch.

If you completely banned all imports from China, not a single one of those jobs would pop up in the US.

Those jobs, are such low pay, that moving them here, is impossible.

Jobs done by hand in China, will be done by machine in the US. The taxes, the regulations, the health care mandates, the cost of production difference... all of those jobs simply can not be done profitably here in the US.

Can't happen. What they will do, is have those jobs automated, and you'll have one or two guys in the control room, pressing the start button, and watching the dials.

So those thousands of jobs are not coming here either way.

Now that isn't to say that manufacturing won't be here in the US, it will. We know that because 2019 was a record year in manufacturing, as were the previous 10 years.

We have always produced tons of stuff in the US. But the stuff they are building in China is the cheap stuff, that can't be produced profitably in the US. Cutting trade with China, will not change that. Those jobs are gone.

As for drug manufacturing outside the US....

There is a huge problem with that. The US government over the past 20 years, has made it excessively difficult to manufacture specifically drugs, in the US. They have done this through regulations, and price controls.

When you require that drug companies only get a few dollars for drugs, because Medicare is paying for it.... drug companies have no choice but to outsource production to where it is cheaper.

Something has to give. You can't demand they make the drugs in the US, and then demand they only charge $10 for the drugs.

Government involvement did this. I'm not sure what people expected to happen, when the government got involved in every aspect of the pharma industry.

Did you think they would still be made in the US, when they slammed them with thousands of regulations? Of course not.

 

[Mac-7]

Those jobs, are such low pay, that moving them here, is impossible.

Sure as if welfare bums are too good to work in a factory

 

[Mac-7]

When you require that drug companies only get a few dollars for drugs, because Medicare is paying for it.... drug companies have no choice but to outsource production to where it is cheaper.

That is not an insurmountable problem

would you rather not have the drugs at all if china cuts us off?

 

[Andylusion]

Those jobs, are such low pay, that moving them here, is impossible.

Sure as if welfare bums are too good to work in a factory

So you and I agree on this completely. I'm with you.

But.... the facts are, the minimum wage is way too high, and the regulations, taxes, and benefit mandates are way too expensive, for those jobs to move here.

The only way it would happen, is simply politically impossible.

Cut all payroll taxes, and have a flat tax. 10%, nothing more or less.
Cut all benefit requirements. No health care requirements, nothing.
Cut the minimum wage. As in just gone.

Then.... THEN... you might have those jobs come to the US.

 

[Mac-7]

But.... the facts are, the minimum wage is way too high, and the regulations, taxes, and benefit mandates are way too expensive, for those jobs to move here.

I dont agree

As long as every competitor pays the same minimum wage it all equals out

 

[Mac-7]

Then.... THEN... you might have those jobs come to the US.

Meaning lower our standards to what labor costs in china or vietnam?

I dont think so because their living conditions are as low as their wages

 

[Andylusion]

When you require that drug companies only get a few dollars for drugs, because Medicare is paying for it.... drug companies have no choice but to outsource production to where it is cheaper.

That is not an insurmountable problem

would you rather not have the drugs at all if china cuts us off?

First China can't actually cut us off.

Just like the OPEC embargo didn't cut us off in the 1970s.

China would have to simply not sell the product. Well they can't do that, because it would do more damage to them, than to us.

So they are going to sell. Well whoever they sell to, is going to have the option to sell it to us.

Just like the oil in the 1970s. Once that ship left the dock... they have no control over where the ship goes. As soon as it leaves the port, and the buyer in Spain owns the oil, he can spin right around and sell it to the US at a profit.

Similarly, once that ship with drugs on it, leaves the port in China, the buyer in EU, can spin right around and sell it to the US.

There is no way to prevent a product from going to where it is needed.

That is not an insurmountable problem

Well I mean it is a math problem. Math doesn't magically change.

If the cost of making a drug in the US is $50 a pill, and the government mandates that Medicare which is the vast majority of your buyers, only pays out $20 a pill.....

There is no possible way to over come that math problem. No way.

You must outsource it. And if you ban all imported drugs, then it still doesn't make the math problem go away. You simply don't have the pill at all. No one is going to spend $50 to earn $20. Would you?

You do know that the entire pharma market has been shrinking, right? This is well known.

Crisis Looms in Antibiotics as Drug Makers Go Bankrupt (Published 2019)

First Big Pharma fled the field, and now start-ups are going belly up, threatening to stifle the development of new drugs.

www.nytimes.com

This is one story of dozens I could post. New drugs are being killed off, because the government regulations and price controls, make creating new profitable drugs almost impossible.

Pharmaceutical companies are backing away from a growing threat that could kill 10 million people a year by 2050

Novartis last week joined a number of large pharma companies that are dropping their antibiotics research projects. As superbugs become a growing problem, here's a look at what drugmakers have in store to combat this issue.

www.businessinsider.com

Even the large companies are dropping research, and focusing on existing drugs, even if they are less effective.

Because the government has made it unprofitable.

This is where the problem is. Fix that. Fix the government screwing up the system. China is not a cause of the problem. China is a symptom of the problem.

This is the problem. You fix that problem, and we'll have drugs being made all over this country.

You don't fix that fight with China, you are giving Aspirin to a person with cancer. You treating a symptom, instead of the illness.

 

[Mac-7]

First China can't actually cut us off.

Why cant they?

who is to stop them?

no one

 

[Mac-7]

Similarly, once that ship with drugs on it, leaves the port in China, the buyer in EU, can spin right around and sell it to the US.

China can easily manage that by not selling to the EU if it tries to resell to the US

 

[Mac-7]

New drugs are being killed off, because the government regulations and price controls, make creating new profitable drugs almost impossible.

In that case the hated Big Pharma does not have the influence libs accuse it of

I think government is capable of milling the golden goose through incompetence

but if all US drug companies go out of business china will pick up the slack

its almost as if lefties are working with china against their own country

 

[Andylusion]

But.... the facts are, the minimum wage is way too high, and the regulations, taxes, and benefit mandates are way too expensive, for those jobs to move here.

I dont agree

As long as every competitor pays the same minimum wage it all equals out

No, it does not.

Let me give you an example.

There was a mother on the Huffington Post, which had a article about babysitters. They wanted $100 to watch the kid for 2 hours, on a Thursday night, so she could go out for dinner with her husband.

She of course thought this is ridiculous. That kid is going to hit play on Netflix, and then spend two hours taping texts on her phone, and then go home after the movie is over.

The mother said the following.... A: She simply won't go out to eat, because it's ridiculous to spend more money on the babysitter watching one kid, than the meal at the restaurant.
B: She'll find another mother in the neighborhood, and have a trade off. She'll watch their kids once. They'll watch her kids once. And pay zero.

Her point was, if the cost was low enough, it would be worth it. But if the cost is too high, they'll do without, or find a cheaper alternative.

That's how life works. If the cost of doing something is too high... you simply don't do it, or find a cheaper alternative to doing it.

Just because everyone pays minimum wage, doesn't mean it will all equal out.

I personally used to go to Chipotle all the time. Back when you could buy a cheap chicken and rice burrito, for $4.25, I would go there every day for lunch.

Today the cost of that same exact same cheap chicken and rice burrito is almost $7.

I don't go there anymore. Too expensive. Doesn't matter that the minimum wage has gone up for everyone else. I've reduced how much I go to those place too.

If what you said is true... that as long as everyone pays the same minimum wage, then it will all even out... then raise the minimum wage to $100/hour.

No. It doesn't work. The price goes up, people will simply do without. Then those products will stop being made, and the employees will be laid off and unemployed.

 

[Mac-7]

The price goes up, people will simply do without.

For luxury or non essential items yes

but our economic life does not depend on cheap imports from china

 

[Andylusion]

Similarly, once that ship with drugs on it, leaves the port in China, the buyer in EU, can spin right around and sell it to the US.

China can easily manage that by not selling to the EU if it tries to resell to the US

But whomever they sold to, would have the same ability. If they sold to Vietnam, Vietnam would sell it to the US. Or anyone else.

The only people they could sell to, that would not resale it to the US, would be places under sanctions like Russia and Venezuela. And problem there is, none of those countries have any money.... because they are under sanctions.

And even if they did, none of them would buy those drugs, because the only value in having more drugs you can possibly use, is if you resell them. If you can't resell them, and you simply don't have enough demand to use them... then you are just bankrupting yourself.

Essentially they would have to sell to no one anywhere. And if they sold to no one, that would wreck their economy completely.

There is no point in trying to damage someone else, if you end up doing more damage to yourself.

 

[Mac-7]

B: She'll find another mother in the neighborhood, and have a trade off. She'll watch their kids once. They'll watch her kids once. And pay zero.

Why didnt she do that?

 

[Andylusion]

The price goes up, people will simply do without.

For luxury or non essential items yes

but our economic life does not depend on cheap imports from china

If they go without, then you are saying that a large portion of the US economy will dwindle.

The vast majority of the economy, is luxury and non essential items.

You realize that, right? Most goods in the US, are in fact luxury goods. Smart phones are luxury items. You can do without them. I have.