OT: The free-trader's agenda

Oh, boy, Harold, don't get carried away with what I know. I've read a couple of analyses of Medicare, in terms of its relative costs to operate, but I have no idea about the practicalities of enrolling in it, or which is the best plan. For that, I'd ask AARP or your state seniors' office.

It's still a decade away for me. Ask me then...if Medicare still exists.

Ed Huntress

Reply to
Ed Huntress
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================================ Ha. In 1970, after my Air Force tour of duty, I went to college and took an English course. The instructor insisted that all the great authors were motivated solely by the high art of creativity. I said, in class, that the vast majority of them undoubtedly wrote because it was something at which they could make money. He was, I think, frustrated because I was the oldest student, almost as old as he, and not afraid to voice my opinion. Gave me Cs, the only ones I got as final grades in college, no matter what I turned in. In subsequent years, I got As in English. I still hate that guy.

Joe

Reply to
Joe Way

Part of the problem - we make so much of our stuff overseas and import it back - only sending money overseas to do it again.

I suspect some companies might be over charging themselves to ship money off shore for other reasons.

Martin

Reply to
Eastburn

Straightforward excessive transfer pricing is illegal and you can get into real trouble (like jail) for it. However, there are clever ways of using different tax jurisdictions to (in some cases) legally defer indefinitely any taxation of profits on transactions that occur and are fulfilled elsewhere. You won't find this stuff directly in annual reports, but it's legal and actually benefits the shareholders.

Best regards, Spehro Pefhany

Reply to
Spehro Pefhany

You instructor is a good example of how colleges and universities are havens for hopeless romantics. Not all profs are hopeless romantics, of course. Not even a majority, IMO. But the hopeless romantics tend to find their way into those institutions.

Reply to
Ed Huntress

On Sat, 22 Nov 2003 01:21:29 GMT, "Ed Huntress" brought forth from the murky depths:

Oh, I inferred the opposite from your last post for some reason. I have heard more about the abuses. It's time I found better sourcing for news than TV or local newspapers.

My BIL was totally stymied by the VA's INefficiencies and politically run system. When he tried to help someone, some political agenda nixed it. I can only imagine how frustrating that was.

-------------------------------------- PESSIMIST: An optimist with experience --------------------------------------------

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Reply to
Larry Jaques

On Sat, 22 Nov 2003 01:21:30 GMT, "Ed Huntress" brought forth from the murky depths:

Was he properly flogged for it? (10 w/ the cat)

He must have conspired with Mikey's surgeon.

Hoboy, did you see the mug shot in yesterday's paper? Jackson looks like a white-boy version of himself in drag. That brings up the latest sale this weekend at the mall.

"Boy's Underpants, Half-off"

I grok that.

-------------------------------------- PESSIMIST: An optimist with experience --------------------------------------------

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Reply to
Larry Jaques

Well, the abuses aren't coming from Medicare. They're coming from doctors and hospitals. Congress just needs to fund a better fraud investigation unit to protect us from private medicine.

I think the VA is a clunker from the welfare-state days. It's probably time to replace it with something better.

Ed Huntress

Reply to
Ed Huntress

I asked my wife if that was him, or his cadaver.

It tells us something about the limitations of medical science, doesn't it? I'm waiting for it all to collapse, and my guess is that, when it does, he'll look like Bette Midler.

They have their fingers on the pulse of world events, all right.

Ed Huntress

Reply to
Ed Huntress

Dickens was paid by the word. It shows.

And I still hate "Great Expectations."

Jim

================================================== please reply to: JRR(zero) at yktvmv (dot) vnet (dot) ibm (dot) com ==================================================

Reply to
jim rozen

Even this illiterate dude can recognize that! He sure had a way with words.

Harold

Reply to
Harold & Susan Vordos

.

Good. You now understand an important concept in international trade that is misunderstood by at least 90% of our legislators and policy makers. You'll hear them, and pundits, use the term in TV interviews without a clue of what they're talking about.

That's a good and thorough explanation, BTW. That URL is a keeper.

Strictly speaking, no. At least not in such a neat theory. But there are higher-level, professional analyses that supposedly extend the principle. Paul Krugman's professional writings on trade (that's his main area of expertise) are said to go into it. It's over my head. I don't read the post-post-graduate level stuff that high level academics write for each other.

You'll see it stated both ways. The Economist's lexicon uses the labor-time

  • resources definition, which isn't the same as, but which works out the same as, "opportunity cost," for both absolute and comparative advantage. An easy way to imagine it is to assume that all of the trade involved is barter, and that there is no money. That works the same as if you had money involved and extracted the opportunity costs. Assuming it's barter (which is what Ricardo did) keeps it simple.

The advantage of using an opportunity-cost definition is that it avoids the complication of who gets paid what. It's also necessary to use the same terms for both absolute advantage and comparative advantage when you're comparing and contrasting them. Comparative advantage only makes sense if you base it on opportunity cost. So it's best to use the same terms for each.

economist,

Well, I *do* believe it. It's a theory that's useful for penetrating and simplifying messy reality, and understanding it better. But it's only one of many things going on when countries trade. The principle of comparative advantage explains why trade usually is advantageous for both parties, even if one runs a trade deficit while the other runs a surplus.

This is something that one can't really grasp without understanding the theory. But it doesn't address the costs, other than those involved directly in production.

Note all of the assumptions stated in the explanation. The degree to which reality departs from them is a measure of the costs that are left out of the equations. For example, the cost of a worker changing jobs from one industry to something unrelated, and perhaps having to move his home for the new job. The theory assumes there is no cost and no delay in switching from one job to the other. You can depart from the assumptions and it still works, but you may reach a point at which the costs outweigh the advantages claimed by the theory. The explanation at the above URL acknowledges these costs but it makes no attempt to account for them. That's true of every explanation of it I've seen.

For these purposes, that's close enough that I won't quibble.

Ok, but watch out for that use of "efficient," for the reason I stated above for using labor + other resources when measuring efficiency. China is cheap, but it isn't efficient at all. In fact, their aggregate productivity is only

6% of ours. Just keep it in mind to help keep the issues clear.

Yes, indeed. And this is a good place to point out that the "efficiency" you're talking about here can be measured either in terms of costs or of labor + resources. In other words, a low-profit, low-efficiency Chinese industry could drive a high-profit, high-efficiency US industry into a state of no-profit, and then into bankruptcy, regardless of whether the Chinese industry is just lower-cost, or if it's lower-resource. That happens.

But note that the theory says also that a high-priced US industry could drive a low-priced Chinese industry out of business, if that Chinese business was one that had low comparative advantage, which is, remember, a measure of relative productivity -- the resources used to produce a good -- not of relative costs. That only happens on paper, not in reality, and the reasons for this failure point out what's wrong with this classical free-trade theory.

There are several explanations for those Chinese businesses not being run out of business. The overwhelmingly dominant one is that the entire theory you read is based on BALANCED trade. In other words, something like barter, in which one country gets paid for its goods with some amount of the other country's goods.

That isn't what's happening. China has no compelling reason to buy an equal amount of our goods, or even an equal amount, worldwide, to what they sell. And that's for a couple of additional reasons: we're working with money, which doesn't have to be spent on goods; and the money they're getting from us is the most desirable money in the world to just gather up, like a squirrel gathers nuts, and to use for any of several purposes. If you're a mercantilist country, like China, those purposes do NOT include buying goods from your trading partner, to satisfy the material desires of your people. If you're a modern mercantilist, you have a more complicated plan.

First, you need foreign reserves to stabilize your currency. There is no better reserve than US dollars.

Second, you want to keep your currency value down to aid your export/import ratios, and you do that by depressing the purchasing power of your people and by finagling the world currency and government-bond markets (you buy US dollars and US Treasury bonds with your yuan, in the first case, and with those dollars you've gathered up, in the second) to make yourself look poorer than you really are, on paper, at least. That means you discourage the purchase of foreign goods by keeping their prices artificially high.

Third, the country you sell to has to be a rich one, but you're often better off doing your buying from a poor one. You'll get more for the goods you sell and you'll pay less for the ones you buy.

There are more things like this. China does all of them. There is no way to correct them, if we eliminate standard protectionist measures (and we should eliminate them) except to find another way to bring trade into balance. That's what my offsets idea is all about. That's also what Warren Buffet's much better trade-credits idea is all about. Neither one is workable as it stands, but they're ideas that point in the right direction.

Financial services. We're the best. We're running trade surpluses in financial services with almost every country we trade with, including China. Our trade with China in services overall resulted in a $42 billion *surplus* last year.

We're good in pharmaceuticals, too.

Thank you, Jeremy Bentham. So, do 10,000,000 people with smiles on their faces equal 1,000 people who drop in human status from self-supporting workers to welfare recipients? I'd have to see your Utilitarian calculus. Free trade theory tends to be Utilitarian, which you can see when you look at the assumptions on which the theories are based.

Yeah. They're examples of command-and-control socialism. What does that have to do with trade theories?

I think you're looking at the wrong thing. Capitalism does not dictate the form to be taken by international trade, or vice-versa. If you doubt this, consider that the principles of free-market economics assume that the same rules apply system-wide. Uniformity of laws and equality of opportunity are essential to fulfill the ideal, including the operating theories and principles of free-market capitalism.

Trade theory, even "free" trade theory, acknowledges that there are different sets of rules interacting at the level of countries trading with each other. It's a mistake to assume that either capitalism or international trade compel the other. If we can have trade with a communist country like China, then the disconnect is obvious.

The bottom line is that the realities of trade with a country like China diminish the ability of comparative advantage to works its wondrous ways, and empower the principle of absolute advantage -- in its crudest form, the advantage of cost alone.

But we have to keep in mind that none of these theories operates to the exclusion of the others. We sell something like $25 billion worth of goods to China annually. Obviously, there are complex and contradictory things going on simultaneously. The trick is to pick the more powerful forces out of the web and identify them, and then to try to see where they lead.

Reply to
Ed Huntress

On Mon, 17 Nov 2003 19:29:36 -0800, "Harold & Susan Vordos" wrote something ......and in reply I say!:

I am not a salaried employee. I have been, and I have also run small businesses. At the moment I spend money, not make it, trying to get a property up and running as an orchard from scratch. :-

Reply to
Old Nick

On Thu, 20 Nov 2003 16:12:59 GMT, Larry Jaques wrote something ......and in reply I say!:

But that covers only part of what Ed was saying.

- Many of the unemployed will be brought about by the big mover-in

- others will have to accept lower wages.

So yes. It is better than unemployed. But not if you were employed until your "saviour" came along.

**************************************************** 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.

Reply to
Old Nick

snip--

Nope! I've seen too much of the negative attributes of too much pay for too little work. In one instance I witnessed the closure of a manufacturing facility (Eimco, crawler tractor division) with the net result of it being shipped to Japan. This was back in '65, so it's been going on for one hell of a long time. I worked there so I know that's what happened, and the reason it happened was because the union workers figured they could do next to nothing and be paid a respectable fee for doing it. This was the example I had cited in a recent post, where I was threading final drives.

The reward was to see all jobs eliminated, as it should have been, considering the negative approach to one's responsibility to carry their own weight. The tragedy was the company was an old established one that had contributed to the community for a prolonged period of time, until the union workers killed the profits and made it impossible to continue.

I'm not convinced we can measure today by the past. I agree, workers should expect decent wages, and management should be wise enough to pay such. I also agree that that is not always the case. The problem, as I see it, is workers expect wages above and beyond their contributed value, in spite of the amount they receive. It's the American way, it appears. Everyone wants to do as little as possible for the maximum pay.

I'm not convinced that is the case. The cost of doing business elsewhere is not cheap, either. What I fully expect to see is a leveling of wages across the board. We will go down, other nations will come up. That we receive identical pay is unlikely, but the benefits of moving work to other countries may be lost, at least enough to maintain a respectable work force in all industries. That is, if it's not already too late, anyway.

Yep, I agree, and that's yet another of the issues that drive me nuts. I don't agree with Iococca's $16 million salary, never did. He could have made his contribution at a much lower fee to the corporation, just as athletes could play for far less, with the reduced costs passed along to the consumers in both instances. Makes a nice topic of discussion, but I realize that "ain't gonna happen", primarily because of greed. Everyone seems to be charging what the traffic will bear. Everyone appears to have the desire to make everything they come in touch with a retirement plan, earned or not.

That's the real world, yes, but in my "hoped for" world it might result in lower prices, again, making us more competitive with other nations. If everything dropped in price, our standard of living wouldn't necessarily change, would it? Yet we'd be competitive?

I can't tell you how often I've heard that decisions are made to favor the stock holders, so yes, I understand what you're saying.

Tell me about it as I look at my useless shares of stock in phone companies. How I wish I had sold Lucent when it was worth something. Too bad the certificates are printed on such heavy stock. Otherwise they'd have some value in the bathroom. They sure as hell have little on the market these days, even with conditions improving to some degree.

Yep, that's me. I've prided myself in always carrying my weight, not only in production, but in excellence. I had employees only briefly, and took the advice my father , who had but a 5th grade education and was an immigrant, offered, which was to take it slow, let the business grow. Don't over extend. I ended up choosing to work alone in my own little world and had few headaches, thanks to being responsible for everything. That, of course, limits what you can make, but I never had outrageous expectations. The most important thing for me was to be independent, to not have to answer to others that in many cases didn't have enough sense to pour piss out of a boot with the instructions written on the sole.

Yes, we live modestly, but not poorly. We have expensive hobbies, and we have a net worth that's well above average, but we don't do stupid things to waste our money, which accounts for our ability to be retired and still enjoy life, at least to our expectations. By the way, paying hundreds for a room for a night is definitely one of the things that I wouldn't consider, not even if I had thousands in my pocket. Talk about a poor value!

Ha! A loser that isn't keeping company with the likes of Martha Stewart or others in trouble for making money the illegal way. I could always go to sleep at night, and don't, even, to this day, look over my shoulder in fear that someone I screwed may be gunning for me! I ran a tight, honest ship and reaped a small reward for my efforts.

Our worth is mostly in hard assets, not paper. Some of them just appreciated over 30% in the past few months, too, if you get my drift.

Harold

Reply to
Harold & Susan Vordos

Fred Bear, of archery fame, had a big factory in Grayling Michigan where I attended Highschool. The same thing happened to them.Archery equipment is very labor and craft intensive, at least in the 60s before injection molded plastics were big...and the local employees were craftsmen in the finest sense of the word. Fred took pretty good care of his people and it was almost family, until the union came in. The unions tried to get in several times, until enough of the workers voted for it, and in the next two years, the company started going down hill.

Fred finally got tired of screwing around with the union, and sold to Victor Comptometer (odd choice for diversifying) but within 10 or so years, the unions had run the company ragged (it was sold again), went on strike one time too many, and the entire operation was moved to Gainsville Florida.

Only problem was..few if any of those skilled craftsmen went with the plant. It put a very big hole in the economy of that town which really never did recover. I recall coming home in the late 70s, not long after the factory was gone..and all those skilled artisans were sitting in a bar, drunk, in the middle of the afternon, crying in their beer about how they had been screwed by the company..when in fact..it had been them screwing the company badly enough that they finally said screw it and moved.

Shrug.

A little research

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The Fred Bear Museum was always a source of inspiration and wonder to me, and I spent a lot of time there. It was also moved to Florida.

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I knew Fred well enough through my Dad , and most of the pro archers who repped for the company. I was coached by Owen Jeffery who was Bears VP and had been production manager from early on and Jim Pickering, world class professional archers., when I started shooting archery matches all over the state in the late 60s as a kid, joining the PAA around 1967 or so.

In those days.. a local archer could mention to Fred, at coffee down at Dawsons coffee shop , next to my Dads jewelry store, that he sure would like to try the so and so bow, or needed one for his kid, and before long that bow would show up for a couple dollars, marked as a Second....always a cosmetic flaw in the finish somewhere and often needing a microscope to see. If you were a local competitor, often a box would be delivered to your house with a note "Try this for a while. Fred B"

Gunner

"The British attitude is to treat society like a game preserve where a certain percentage of the 'antelope' are expected to be eaten by the "lions". Christopher Morton

Reply to
Gunner

Harold you seem stuck on this issue. How about if I point out that this is indeed part of a 'free market ecomony?' That companies are free to charge whatever the market will bear, and employees are free to seek out whatever wages they can obtain?

What other system would you install, in place of this 'free' market? The alternative would be to have the govenment doing any or all of: price controls, wage controls, tarrifs, protectionism, rationing, subsidy, and so on.

Granted some of those things exist right now in some small, mild forms. But I strongly suspect that if there is any consensus among the thread contributors it might be this: if you *really* want to screw up the economy, give it over wholesale to the government. I think that Ed is correct when he says that most politicians simply are not smart enough, and those who *are* smart enough have other agendas, to enact effective long term economic policy.

So I would propose this for your consideration: You have, through a fluke of the universe, just been breveted to president. You can now set economic policy as you see fit, you can enact wage controls or whatever other action you think would stem the flow of jobs.

Do you (the govenment) step in and begin 'doing something about it?'

Jim

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Reply to
jim rozen

In 1968 Victor was at the height of it's growth. It had already swallowed up all the big adding machine companies it could and was a Fortune 500 company. To diversify, they acquired several sporting goods manufacturers including Bear, Daisy and some golf cart manufacturer, whose name I can't recall.

Having built the Norden Bombsite, I suppose BB guns and bows and arrows seemed like a reasonable choice.

Eventually, they were a day late and a dollar short when cheap pocket calculators hit the market.

They got chewed up and spit out a couple times and are still in business selling electronic adding machines.

Paul K. Dickman

Reply to
Paul K. Dickman

Huh. Calculating machines. Who would have figured?

Jim

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Reply to
jim rozen

Hated to quote it all, Jim, but in this instance, I think it's justified.

No! If you'll notice, I have yet to place blame on government. I fully agree, for the most part, government reps tend to have an agenda, generally one with advantages aimed at their constituents at best, but hardly one in favor of the majority. Further, for the most part, they are well educated lawyers, most of which have long ago lost touch with the common man, and I'm of the opinion that they have some hidden agenda that benefits them instead of the constituents. Simply by having the appointment of a congressman or senator, they receive benefits the likes of which you and I will likely never be privy. They do grant us the privilege of paying for all of it, though, so I don't feel totally left out. I dare say they have no clue what it's like to work for a living. It's safe to say that even the Democrats are in that group, in spite of their proclamations of concern for the common man. I'd be inclined to say they have a concern to control him, but they don't share a real concern for his welfare. Not really. There are places for government, but my bedroom or my job is likely not one of them. I wonder if any of them have given any thought to actually getting on with the business of running the country?

If you read between the lines, I tend to place blame on the shoulders of those that don't earn what they are paid. That's really the issue in my mind. I've stated time and again that it is pay for doing nothing. It's the old "free lunch" that really bugs me. I can't speak for anyone but myself, but I actually worked for, and earned, my small fortune, such as it is. I didn't make my way though life demanding pay for something I didn't do, nor did I try to gouge my customers, even when it would have been dead easy to do so, especially when I was refining precious metals. That could have gone on for years and never been detected because they simply have no clue about what is being shipped in most instances.

Maybe it's a moral statement about me, perhaps the one and only thing I can say with pride. Don't really know, but it's one of the things that are important to me, something about which I am very proud, and very sensitive. Like the fact that I was never unemployed in my lifetime, nor have I ever drawn as much as one cent of unemployment pay, never. Had my circumstances demanded it, I'd have likely done so, but I had enough hustle to stay in front of the issue, and it is that fact about which I am proud.

I fully agree, the free market place is the controlling factor, but it appears that workers have lost sight of the fact that when they price themselves out of the market, corporations have little choice but to find another source for the product, in this case, labor. Some corporations do it for greed, others are driven to do so to stay viable. People should earn what they are paid, and should be paid for what they earn. It has to go both ways in order to work properly. The way I see it anymore, most everyone I encounter expects the other guy to bite the bullet while they go through life taking all they can get and giving as little as they can. Like I said-----it's the American way. You know---the one that's dying! No one should let go of that, it's too important.

Harold

Reply to
Harold & Susan Vordos

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