They expect that surplus to shrink to virtually nothing in 2003 and for a small deficit in 2004. I truly believe there is no problem with us buying. I believe our problem is that we do not sell anything. The obvious I was stating was that someone is selling to China, but it is not the USA. it is also obvious on frequent visits to China that they prefer Euro and Asian goods over most USA goods. Our deficiency in marketing mfg products to export markets doesnt help.
Actually, they run into trade barriers to the USA market often as well. See what they have to go through to sell peanuts in the USA. Or duties for steel. Or Apples and apple juice. Everyone has their own line of defense for given industries to protect. However, ours are limited and the Euros, Koreans, and Japanese give them the hardest time.
I agree. WTO cant really do a totally effective job.
I'm not sure your idea is foolproof, but then we already know nothing is. For example, we buy Cobalt from certain african nations. Those nations cannot afford to buy a reciprocal amount of goods from the USA. But we need more and more Cobalt every day. Further another issue is MFG goods. You cant force nations to purchase mfg goods in any market if there is no buyer. Raw materials, food energy are different classes. I will think about your idea further. it doesnt sound bad if the logistical details can be worked out.
Who's "they"? Our trade balance with China through August of 2002 was $63 billion. Through August of 2003 it's $77 billion. On an annualized basis, that will increase our trade deficit with China from $103 billion in '02 to $123 billion in '03.
It's headed the opposite way.
Haha! Yeah, you could say that, Yogi.
So, who's selling to them, and what are they selling? You can look it up.
Examples?
Now you're closing in on what Mickey Kantor (former U.S. Trade Representative) said about it. He said there is no such thing as free trade.
Perhaps none. Doesn't matter. The point is that there is more basis to the legal theory of corporations than your assertion of "limited-liability ... nothing else".
If corporate law somehow had never existed, and tomorrow the division of ownership (etc) were implemented as you hypothesize in contract law, then this would simply be the law of corporations by another name, with or without limited liability.
They're all elaborations, Richard. The revolution occurred when stock associations were first granted charters and an associated limitation of liability to the amount invested. From that, the entire blossoming of corporations occurred.
Of course it's more complicated now, and the whole idea has been elaborated and fine-tuned. But the precipitating idea, and still the fundamental idea that makes it all possible, is the limitation of liability.
If you look at the history, you'd see that the development and flowering of stock companies occurred after liability was limited.
And, if you didn't have limitation of liability, every stock holder in Enron would be liable to any suits brought by the Federal Government, the state of California, or the company's employees, individual customers, and so on. It would be a nightmare. Knowing they were liable from the beginning, very few people would ever invest in ANY corporation.
Thats only the trade balance with the USA. but if China wasnt playing fair, why do they not have such surpluses with the rest of the world?
:)
I dont need to, though it is not really difficult to do. They are selling telecommunications equipment, machine tools, manufacturing production lines, power generation equipment, assembly line equipment, quality control equipment, etc. I see it myself. I ask them numerous times in numerous facilities, "why dont you buy american goods?" their reply is usually one of two major reasons:
The price or quality. This leads one to believe that we are not doing a good job. I have always known we havent. In 1990 i visited the leipzig fair right after the wall came down during the elections. Not one American company was exhibiting. I called on the doc in washington upon my return and asked a man, "what do you do there? we had no representation at all, while the rest of the world did.". He replied that we are improving and trying to do a better job. I nearly laughed at him (only 27 at the time and too embarrassed to do so).
Anything and everything I mentioned above and plenty more. Go to any factory producing machine tools or metalworking equipment and you will find all Euro and Japanese Production equipment.
Go to any stone manufacturing facility and you will find only Italian machinery.
Almost never American mfg products.
SO if this given is true, and judging from their trade numbers it is, why are we in the USA having such a problem, while the rest of the world is exporting to China? I think we need to analyze this question and the answers should lead us to a more productive outlook on whose problem this trade deficit really is. Because blaming China for a yuan valuation that is 10 years old certainly is not the answer. It is far off the mark and from any logical economists view, nearly embarrassing to broach.(though our administration has no problem in broaching the embarrassing - It is almost comical that someone from the Bush admin would direct China on how to run their economy)
To date, that is correct. There are very few completely open economies, if any. some Island nations that need to import most everything are probably the closest to true free trade out of necessity.
This needs some more work before I'd buy into it, bg. Germany's exports to China, for example, are just slightly more than half of the US's exports to China.
I'd agree that gives it "wheels". But there is more to it, and corporations as a legal entity would still exist in a hypothetical world where there was no limited liability.
True, in the sense of small, disconnected investors.
There are many entities which are, in effect if not name, corporations without limited liability. Lloyd's is one example.
The "limited liability" shield of small business corporations is typically non-existent. The owner(s) typically have to pledge personal guarantees to make things liquid. This very common situation makes for a de facto unlimited-liability corporation, quite the opposite of your assertions.
Enron, Worldcom, Montana Power, and the like, yes, these are abusive examples of limited liability being exploited to cheat investors. Ask me how I know. Better yet, don't. It still smarts.
Look up the numbers Ed. China overall is not doing that badly when you look at the worldwide perspective. This means we are not doing a good job. (we never have). According to Eurostat:from jan to April 2003 EU15 increased exports to China 22% over same period 2002 They increased imports by 15% in the same
Total trade imbalance during this period was -16.8 billion euros - a trifle considering the size of the EU15 and the key is that it is going down.
The Eurozone has similar numbers
The EU 15 has a trade imbalance with the USA of +20.4 billion Euros and growing.
What this tells me is that we dont do a good job anywhere. My eyes dont deceive me. If you've been to china, count how many times you saw American capital equipment in factories. I almost never do. I think you can go online now and look at the bids that China puts out publicly for capital machinery. The machines spec'd are almost always Japanese or european.
Look at it this way: How far did blaming the japanese in the 1970's take us? It took us absolutely nowhere. We adapted to different styles of management and investment to overcome our own problems. we learned from the Japanese. It was the best thing that ever happened to us. Otherwise we might today be looking at the big three owned by Japanese instead of two American co's and one German.(we lost one, didnt we?). We need to do the same today. This is what we made of it. It was no one elses fault. Our own automation and technological advances have increased productivity to the point of losing jobs bigtime. This also has to be factored in. Darwin was right about everything. we need to adapt.
Chasing down statistics for an online discussion gets real tedious real fast, bg, and you aren't encouraging me to spend my time on it. First you say "They expect that surplus to shrink to virtually nothing in 2003 and for a small deficit in 2004." In fact, China's trade balance is up 40% this year from Jan-Aug, compared to Jan-Aug last year. Their positive balance actually is accelerating. Japan is having a fit about it. The EU is alarmed, and, according to one report, "embarrassed."
You say that they "prefer" Japanese and German production equipment. Of course they do. We hardly make any. The Japanese cleaned out our machine tool business in the 1980s. According to AMT, there are only 70 companies in the US now that could be considered machine-tool manufacturers, and most of them make custom equipment. When it comes to big-time production equipment, we're almost out of the business.
I reported on the way they were doing it in the late '70s. In the very early '80s, I worked for Japan's Ministry of International Trade and Industry, and I saw how they did it. And then, a couple of years later, I was marketing manager for a Japanese machine tool company, and I watched it being done. While David Halberstam was writing his book about Japan's ascendance, _The Reckoning_, a top executive from Toyota took him aside and said, "There's one thing we don't understand. Why don't you protect yourselves?"
Meantime, Germany and Japan protected their machine tool and automobile markets to beat hell, with both tariff and non-tariff barriers (Germany limited Japanese car importers to 10% of their market, with strict quota enforcement). Look at who is exporting those things now, eh? Can you say, "protectionism isn't necessarily bad"? I've learned to say it.
Regarding "improving" our manufacturing, the profit in it is going to hell because the Chinese and other low-wage countries are moving into one market after another, with no governmental resistance from us and no possibility of competing with their prices. We now have the most productive and efficient manufacturing in the world and barely enough profit to keep much of it alive. What irony, eh?
The basic premise of your first message seemed to be that the EU has a beneficial balance of trade with China, while we have a horrible one. In fact, the EU is going to run over US$60 billion in the hole with China this year and they're climbing out of their skins over it. Watch for some kind of barriers to appear, somewhere. They've done it before, when the Japanese put their industry under a lot of pressure. They don't stand for that kind of pressure.
BTW, it's Japan and the other Asian countries that are the big exporters to China, not the EU. The entire EU taken together represented only 13.1% of China's imports last year. China's US imports were 8.8% of the total.
That's the end of my chasing statistics for this thread. It's too much work just to straighten out issues in this context. You can't really discuss these things intelligently or accurately without it, but, for that kind of work, I like to get paid.
snipped-for-privacy@> Look up the numbers Ed. China overall is not doing that badly when you
I wonder if some off that is caused by the imperial units use prevalent in the US manufacturing and toolmaking industry. In a world where we aren't the automatic #1, maybe we should switch? After all, that's what Detroit did in the 80s to better fight Nipponese.
On another note: I just heard on the radio that China has 450 million unemployed. Wow. Between that, and the fact that overall, China apparently has fairly small trade surplus, the Economist correspondent argued that floating yuan won't work---it will either not do anything or hurt them internally so much that they won't do it (a little strange flow of argument but there you go).
I doubt it will make much difference, at least on common stuff, the US is a big enough market and manufactured stuff is a buyer's market in many areas. They can make 1,000,000 6-32 screws about as easily as
1,000,000 M3 screws.
"Unemployed" or "underemployed"? They use people where an advanced country would use machines- for example, posting a policeman to stand in the middle of an unlit subway under train tracks during the day, where a developed country would put some lighting and security cameras.
Yes, it's true, IMO. It would hurt US, Japanese and European companies that are major exporters from China. It's US domestic politics at work. BTW, you can argue that the trade surplus that China has with the US is really, at least in part, the *exported* trade surplus of countries such as Taiwan and especially Japan, with which China has a large trade *deficit*. Probably distorted somewhat by the transfer pricing anomalies that Ed mentioned.
On Thu, 16 Oct 2003 13:51:22 GMT, "Ed Huntress" wrote:
You forget a few points. NZ has a population of 4 million. You could drop it into a number of US cities, and notice little change (except a decent rugby team that could win a World Series where other countries are invited to play as well :) That $468m works out at ~$1.50 each American - how much is a burger again? To put it into perspective, the US economy IIRC is ~700 trillion GDP give or take a few hundred billion. I may have missed a few zeros. To expect NZ to buy $US468m pa from the US is unrealistic - we cannot afford or need that much "stuff". More to the point, as you have noted, the US no longer makes anything (more about that later), so buying from the US is not necessarily an option. Why buy an item from the US - half way around the world, when it is cheaper to buy exactly the same item from Asia or Australia? Finally, does that trade figure take into account the issues of transfer pricing and foreign ownership and repatriated profits? although the US doesn't make anything these days, US corporations still own big chunks of overseas companies and operations. The profits from those shares go back to the parent companies. Do these count as "trade"/ Telecom NZ sent ~$US400m back to the then US owners in one year a few years ago. The joys of a monopoly... The other point is transfer pricing. One of the benefits of being an Evil Capitalist Megacorp is that you can fiddle the prices charged to overseas branches to take advantage of relative tax rates or to return profits while avoiding tax. A good example is software. The actual physical cost of the media and manual is say $20. What is charged is something else. Does this count as "trade"?
see above
and going to get bigger, with GM's new Chinese engine plant, etc Well when you consume say 30% of the world's resources, drive monster SUVs with 12" lift kits and so on, that stuff has to come from somewhere. The deficit means you are importing more than exporting, which brings us neatly back to the original "exporting jobs" thread. It is not unique to the US. Huge numbers of jobs at all levels in New Zealand have vanished - mainly to China or Australia. As it is quicker to fly to Auckland from Australia than to many other Australian cities, many companies run NZ as a branch office. Customer service reflects it, but who cares, it is cheaper for the bean counters.
US companies are free to export to NZ, how about returning the favour? Trade is not a one way trip.
Buy some NZ lamb and find out :-) IIRC the average US consumption for sheep meat is ~1 lamb chop per person.
Your comments appreciated Ed. I thought that article you did on China was very good. I printed it off and have it for some bedtime reading. Geoff
One of the Australian and NZ complaints about teh US sheepmeat tarrifs was that they had actually grown the market for US farmers as well, by making US consumers aware of the product. US production had actually increased on the back of their advertising. The US market for sheepmeat is very small oveerall.
New Zealands problem in regard to wine is we don't make enough of the stuff, despite planting millions more vines last year. IIRC NZ wine makes up 0.2% of the world wine market. One Californian winery makes more wine than the entire NZ output...Of course, most wine made in the world is quaffing wine, made in huge quantities and sold cheap in bags. Geoff
Ah, the US economy is around US$10 trillion GDP. It was $7 billion a few years back. You probably added a couple of zeros.
I have no idea. If you want to look at the types of things we export to each other, you'll find them here:
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Take a look at the Principal Markets report near the bottom of the page. Beef is the big item. Do we own your beef production? Casein is number two. Is that a US-controlled industry? You'll have to tell us. We don't know.
Oh, jeez. US manufacturing is producing more than it ever has in history, whether you look at it in constant dollars or current dollars, in terms of value-added, or anything you want to talk about. There is a modest two-year falloff in production that corresponds to the recession. Otherwise, we've been pumping stuff out like there's no tomorrow.
It isn't that the US produces nothing. The problem our manufacturing faces is two-fold: First, specific industries are completely vulnerable to targeted, low-cost competition from low-wage countries, and some of them are crucial metalworking industries that will have a multiplier effect throughout the economy. Second, we're in for a whole hell of a lot more of it, as US companies have laid plans for VAST increases in their component and finished-product imports from China, and for services-outsourcing to India.
What I've been writing about is not the consequences of what has gone on before, but rather the consequences of structural changes occuring right now, and a genuine economic threat that's just starting to appear.
I'm sorry, Geoff, but with your country running a US$468 million surplus with the US, it sounds like what you want is more, and that you're using all of the details as grumbling fodder and to justify your demand for even more surplus. You already have a trade surplus with the US that amounts to something like $120/person. What more do you want? $500? $1,000?
That's what I've been saying. Right now, the round trip is resulting in a trade surplus for New Zealand. How about returning the favor and restoring some balance?
Thanks, Geoff. I hope it resulted in a sound night's sleep.
No and no. Those huge cash flows to the US aren't counted as trade.
But without these huge cash inflows, the US couldn't run a trade deficit year after year, ie we'd suffer hyperinflation (as Germany did after WWI), because the government would have to print more fiat money to replace that which went out of the country. But the dollar remains strong, and that's because money is coming into the country at a rate greater than it is going out.
In my experience from dealing with US companies through work - they are terrible at dealing with overseas customers and exports. Many are very insular and are only concerned with the US market, never reply to inquiries are to expensive anyway. On the other hand, our motor supplier in Taiwan replies within 24 hours, ships immediately are very helpful, despite what are (by their standards) small quantities. Geoff
Your message, and several others' as well, suddenly showed up as a month old, although they are still in order in the thread. I am told that the content is no longer available.
Was this some wider thing, or only my ISP?
**************************************************** sorry remove ns from my header address to reply via email
Imagine a _world_ where Nature's lights are obscured by man's. There would be nowhere to go. Or wait a while. Then you won't have to imagine.
Hmm. I haven't heard anything else about it, so I don't know. There were a lot of messages in that thread so I don't know what it refers to, either. Sorry.
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