If companies are going to go offshore for cheaper labor then they should be selling those products here cheaper.
""""They are! Imagine what your every day consumer products would cost if the manufacturer was paying average U.S. wages. I don't believe there are more than a handful, if any, American companies that produce televisions. Televisions!, that most American of appliances. Is that a problem? I don't think so. US capital that was poured into an increasingly commodified industry (consumer electronics) could then be used to discover new products and ideas.""""
That is bull, a company will sell its product in the US for what ever the market will bare. Regardless is the production process was made cheaper, they just get a bigger profit margin.
I don't necessarily think these companies should be forced to stay in the US, but if they want to take their companies else where then they should have to pay a heavy tariff to bring the product back in, therefore making it a wash if you take your company somewhere else. Also they should not be protected by the US government if they run into a bad situation. You made you bed now sleep in it. The US consumes a large percentage of the world goods and they wouldn't just say, oh, then we wouldn't sell our product in the US.
I have no intention of minimizing the pain of losing a job or even the value of an entire skill set (earned over many years) to another country on an individual basis. But it is reality, and it is not bad for the country as a whole.So in effect you admit that you are going to 'minimize the pain' because of your unsupported...and dubious...proposition it isn't bad for the country.
The phoney free traders don't see what's bad for the country. They are oblivious to what is happening, and so much so that it is a clear manifestation of cognitive dissonance. They expressly show appeasement behaviours to China (see below from Alan Tonelson). And they want everyone else equally oblivious.
Will U.S. Policymakers Come to Grips With China Before Its Too Late
By Alan Tonelson
Monday, December 12, 2005
If this were also a holiday time in China, its hard to imagine anyone having a happier holiday season than the leaders of China.
Despite a year of non-stop complaints from American leaders about Beijings predatory trade policies and especially its currency manipulation, it could not be clearer to China that U.S. policy is at worst from their perspective gridlocked. At best, Washington decision-making still may seem to Beijing completely dominated by the outsourcing multinational businesses that benefit significantly from a trade status quo that is devastating so many domestic U.S. manufacturers and American workers.
The latest sign? A stunningly revealing statement by Frank Vargo, a top official of the outsourcing-dominated National Association of Manufacturers. Responding to charges that NAM has been all talk and no action on the China currency front, Vargo eloquently told The Wall Street Journal Dec. 2 that the accusations are Nuts and then added, You cant throw away the world trading system.
In other words, NAM considers a policy of actually doing something to stop the Chinese currency manipulation it keeps whining about as too dangerous to support. Indeed, accepting Chinese mercantilism apparently is the price America must pay to keep the world economy intact.
As a result, the multinationals power over the administration is so obvious to Beijing that the Chinese feel free not only to ignore official American protests about currency and trade issues. They also perceive no downside to brushing off American concerns about their military buildup. The Chinese realize that their growing strength is financed indirectly but substantially by the hundreds of billions of dollars they earn from the multinationals favored free trade policies.
Not surprisingly, the recent visits to China by Treasury Secretary Snow, Defense Secretary Rumsfeld, and the president himself played out like an updated but even more perverted version of that old Soviet-era joke: Americas leaders pretend to push U.S. interests in Beijing, but the Chinese dont even pretend to take them seriously.
The evidence of the latter pretense: After a Bush speech in Japan touting democracys virtues (and holding up Taiwan as a shining example), the Chinese government reacted by cracking down on dissidents. Then the Chinese trotted out the old trick of announcing new purchases of Boeing jetliners. The hollowness of that public relations move was underscored last week when Chinese Premier Wen Jiabao traveled to Europe and unveiled a Chinese order for Airbus jets more than five times larger than the Boeing sales. In between, of course, the Bush Treasury Department in its new semi-annual report absolved China of currency manipulation charges by pointing to the token revaluation Beijing announced in July.
Coming from a culture that places extraordinary value on face, Chinas leaders received a very powerful message from these White House decisions to turn the other cheek and even justify Chinese behavior after these transparent humiliations. Its a message virtually impossible to square with the administrations stated desire to remain the most influential power in Asia and throughout the world and one more (not less) likely to produce dangerous Chinese miscalculations and even military confrontation.
Congress also seems reluctant to buck the outsourcing multinationals. Although numerous members have complained about the currency problem since 2003, passing legislation that could solve the problem remains a long shot. And the odds may be falling. Following the Treasury Department currency report, the main author of the strongest China currency bill, Democratic Senator Charles Schumer of New York, vigorously denounced the administrations meekness. Then he boldly promised to consider actually seeking a floor vote on his measure at some point.
Perhaps Schumer is prudently waiting to muster enough support to win the vote even by a veto-proof margin. Yet his reluctance to pull the trigger after two years of talking about the issue, and presumably lobbying his colleagues, suggests that his leadership skills and influence just arent strong enough.
Not that Schumer faces an easy task. A huge obstacle to effective action undoubtedly has been the U.S. economys solidly satisfactory performance since the last brief recession. This performance, to be sure, reflects policy smoke and mirrors, not sound fundamentals. But most important for the short-term and for the politics of U.S.-China trade, economic gimmickry has worked. The record post-9-11 stimulus the White House and the Fed have poured into the economy to prop up growth neutralized pocketbook issues during Bushs reelection campaign, and is still offsetting much of the damage done to U.S.-based manufacturers by predatory Chinese policies. Ironically, this stimulus has been affordable largely because huge purchases of U.S. debt by central banks in China and elsewhere in East Asia have held down interest rates and thus Americans borrowing costs.
Still, all of the economic and security problems responsible for the China-related ruckus keep growing worse, not better. And even though the Bush administration now acknowledges these dangers, current U.S. policy keeps worsening them.
On the security side, Rumsfeld has begun warning that Chinas vigorous and secretive military modernization raises questions about its intentions especially since China faces no threats to its own security. More pointedly, the Pentagons latest annual report on Chinese military power states that Beijings new prowess indicates objectives that range far beyond prevailing in a Taiwan crisis, and that could threaten U.S. interests throughout East Asia.
Yet the administration and even many conservative critics of Chinas military policies still havent connected the economic and security dots. After all, much of the new wealth funding Chinas military development comes from record-setting U.S. net imports of Chinese goods. Thus to a great extent the buildup ultimately is possible because of U.S. trade policies that have ignored currency manipulation and Chinas myriad other predatory trade practices. U.S. trade policies have also buoyed Chinas earnings by encouraging so many multinationals like the leaders of NAM to supply the U.S. market from factories in China..
Of course, these policies began in earnest during the Clinton years, but under Bush alone, China has amassed $624.5 billion in trade surpluses with the United States. Next year, largely as a result, its foreign exchange reserves will hit $1 trillion.
Just as important, China will keep disregarding American security concerns as long as U.S. controls over militarily relevant technology transfers to China continue weakening. The main reason: heavy lobbying by U.S. multinational companies, which view China as a low-cost, profit-enhancing supplier of advanced as well as labor-intensive products. Consequently, Washington today cant even monitor the flow of U.S. technology to new U.S.-owned laboratories as well as factories in China.
On the economic front, the Bush administration remains behind the curve as well. It has begun to warn about the economic threats posed not only to the United States but also to the entire world by Chinas rapid integration into the global economy. Yet it still views the only actions capable of addressing the problem as verboten.
As Treasury Secretary John Snow stated during his own October visit to China, Chinas longstanding strategy of growing mainly by exporting is fueling record U.S. deficits and debts that could produce a dollar crash and a long, deep worldwide downturn.
Yet Snow and other trade cheerleaders still wont admit the fundamental flaws in U.S.-China trade patterns which were already obvious when the United States began greatly expanding trade with China in the early 1990s: Chinas very low living standards were bound to limit the greatly hyped growth of Chinas domestic market for decades. By contrast, Chinas was already becoming a major supplier to world markets thanks partly to Beijings decision to make exporting a top priority.
The bottom line: Chinas entry into the world economy has generated an immense new source of output whose scale and growth simply dwarf that of its own expanding consumption. On top of the parallel integration into the trading system of many other poor, export-led third world economies, Chinas emergence is creating economically unsustainable and therefore unstable international economic conditions. Too many producers are relying on too few consumers. Even worse, the new producers increasingly make what the consumers in the wealthy countries and especially the United States once turned out.
Yet as discussed in my October 27 column, Snows proposed solution to this looming crisis boosting domestic demand in China is sure to be ignored because China lacks the domestic wealth to sustain its progress. Moreover, 20 million job-seekers are entering the labor market each year. Therefore, Chinas will be hard-pressed to contain let alone reduce its towering unemployment by producing much more than its economy can consume and exporting the surplus. Thats why the share of Chinas economy represented by consumption keeps shrinking, while the share accounted for by exporting keeps growing. A quarter century of intensifying engagement with global capitalism was supposed to produce exactly the opposite results.
Thus China will never change its dangerous economic or military policies voluntarily. They are simply creating too many economic and political benefits for Beijing. As a result, Washington must recognize that only new unilateral U.S. trade moves can both limit Chinas military development peacefully and avert a new global financial crisis.
New tariffs on Chinese imports to offset currency manipulation as proposed by the Schumer-Graham bill would shrink the pool of resources available for Chinas armed forces, and in the process, moderate the trade imbalances. Additional tariffs may be needed if, as in the past, China plays bait and switch by increasing other subsidies as it plays ball on currency.
Alternatively, or along with China tariffs, Congress must begin debating the type of economy-wide tariff being pushed by the U.S. Business and Industry Council on Capitol Hill. Similar ideas have been advanced by the likes of mega-investor Warren Buffett and economists from the New York-based Levy Institute. Unless they quickly develop better ways to resolve the mounting trade crisis, legislators will need to get over their irrational prejudices against such trade restrictions.
Much tighter export controls are needed as well. Going multilateral is the obvious preference, but unilateral sanctions would be highly effective if needed. After all, much non-U.S. high tech investment in China is export-oriented. Without access to the U.S. market, foreign multinationals lose much incentive to place factories and labs in the Peoples Republic.
The new strategy would run few risks on the security side. Whatever assistance China is offering in the North Korea talks undoubtedly reflects Chinas desire to de-nuclearize a volatile neighbor, not a determination to please America. If economics trumps Korean issues in Chinas view, then current U.S. strategy on Korea is bound to fail anyway. Best to learn this ASAP.
Nor is China remotely likely to dump U.S. debt or launch a trade war. Both steps would further reduce access to markets China still desperately needs. Moreover, the Fed has ample reserves of dollars to swamp any Chinese gambit.
Interrupting U.S.-China trade could indeed fatally strain Chinas fragile banking system and trigger broader economic and political upheaval. Yet much of the cash flow propping up Chinas bankrupt banks and easing pressure for reform comes from U.S.-generated export revenues. Continuing the status quo for fear of rocking the boat amounts to inflating further a Chinese investment and production bubble that increasingly mirrors Americas consumption bubble. The longer they keep inflating, the more damage will result from the inevitable bursting of both bubbles.
Indeed, this is the strongest argument for transforming Americas China policy. So many dangerous excesses have been encouraged for so long that entirely painless remedies are no longer possible. The sooner and more decisively the President acts, the more limited the pain, and the more control America will wield over the adjustment.
A pretty grim holiday message to be sure. But an America that faced up to the need for some short-term sacrifices to strengthen its economic future would be giving a priceless gift to its children.
Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).
(c)Copyright 2001-2006 AmericanEconomicAlert.org, USBIC
SIDE COMMENT: Tonelson appears to be way too sanguine about what China is or isn't willing to to do to sabotage the U.S., or if it even cares about its "fragile banking system." LOL!
And he is also frankly way too sadly reliant on communist Schumer's leadership on the trade issue. The GOP has fallen so far. He is a democrat, and will only just pander to the issue...never deliver for the nation's security and well-being. The Rats intererst is in preserving problems to run with. Hence, they must be allowed to fester, while promises are endlessly made. "Don't just do something, Stand There!" is their motto...
The only hope is that GWB turns things around. That he truly is smarting from being bitch-slapped in Bejing, and the scales knocked off his eyes. We will see. The appeasement auto-pilot responses so far post-Bejing are not encouraging...