Posted on 10/25/2006 5:56:53 AM PDT by from occupied ga
There are only a handful of products that Americans import that cannot be produced at home and therefore create jobs for Americans. Let's look at a few of them.
We import cocoa from Ghana and coffee from African and Latin American countries. We import saffron from Spain and India and cinnamon from Sri Lanka. In fact, India produces 86 percent of the world tonnage of spices. There's absolutely no reason these products cannot be produced by Americans, and we could be cocoa, coffee and spices independent.
You say, "Williams, that's crazy! We don't have the climate and soil conditions to produce those products. Many spices, for example, require a moist tropical environment." No problem. We have the technology whereby we can simulate both the soil and weather conditions. We could build greenhouses in which to grow cinnamon trees and get our scientists to create the same soil conditions that exist in Sri Lanka. Greenhouses could also be built to simulate the climate conditions in Africa and Latin America to grow cocoa and coffee. In the case of cocoa, the greenhouses would have to be Superdome size to accommodate trees as high as 50 feet.
You say, "Williams, that's still crazy! Imagine the high costs and the higher product prices of your crazy scheme." I say, "Aha, you're getting the picture."
There are several nearly self-evident factors about our being cocoa, coffee and spices independent. Without a doubt, there would be job creation in our cocoa, coffee and spices industries, but consumers would pay a much higher price than they currently do. Therefore, nearly 300 million American consumers would be worse off, having to pay those higher prices or doing without, but those with the new jobs would be better off.
So let's be honest with ourselves. Why do we choose to import cocoa, coffee and spices rather than produce them ourselves? The answer is that it is cheaper to do so. That means we enjoy a higher standard of living than if we tried to produce them ourselves. If we can enjoy, say, coffee, at a cheaper price than producing it ourselves, we have more money left over to buy other goods. That principle not only applies to cocoa, coffee and spices. It's a general principle: If a good can be purchased more cheaply abroad, we enjoy a higher standard of living by trading than we would by producing it ourselves.
No one denies that international trade has unpleasant consequences for some workers. They have to find other jobs that might not pay as much, but should we protect those jobs through trade restrictions? The Washington-based Institute for International Economics has assembled data that might help with the answer. Tariffs and quotas on imported sugar saved 2,261 jobs during the 1990s. As a result of those restrictions, the average household pays $21 more per year for sugar. The total cost, nationally, sums to $826,000 for each job saved. Trade restrictions on luggage saved 226 jobs and cost consumers $1.2 million in higher prices for each job saved. Restrictions on apparel and textiles saved 168,786 jobs at a cost of nearly $200,000 for each job saved.
You might wonder how it is possible for, say, the sugar industry to rip off consumers. After all, consumers are far more numerous than sugar workers and sugar bosses. It's easy. A lot is at stake for those in the sugar industry, workers and bosses. They dedicate huge resources to pressure Congress into enacting trade restrictions. But how many of us consumers will devote the same resources to unseat a congressman who voted for sugar restrictions that forced us to pay $21 more for the sugar our family uses? It's the problem of visible beneficiaries of trade restrictions, sugar workers and bosses, gaining at the expense of invisible victims -- sugar consumers. We might think of it as congressional price-gouging.
Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.
One big reason why the U.S. was able to maintain a strong manufacturing sector in the past was that the country was less of a "nation" than it is today -- and regional variations in the cost of doing business allowed different parts of the U.S. to deal with each other as "trading partners" even though they were part of the same country.
The implementation of things like national safety standards, national environmental standards, a national pension system, etc. effectively put the U.S. manufacturing sector on the road to inevitable decline -- at least from the standpoint of its role as a major source of employment compared to other sectors.
Wow...it was such a short article...you should have understood the analogy...but then... It was aimed at you! This is why we the people, can be duped into spending $1,000,000 to save a $25,000 job...Duh!
"The answer lies in the suffering business model of Ford nd GM, whose eventual bankruptcies, just like thier cousins in the steel industry, are inevitable."
ANd had Ford and GM not been making substantial profits at the time these agreements were made, these privlidges would never have been granted. Those concessons to labor were the price Ford and GM were willing to pay in order to stay in business.
Again, I am no fan of labor unions, and the days where they did more good than harm have long since passed or been superceeded by state and federal legal protections for workers. However, the problem with Detroit (and a good number of other American industries) is that we have achieved a point where it now costs more to provide benefits to workers than it does salaries (as per a study I saw when I was a VP at Smith-Barney, it can often cost 2.5-3 times salary to provide a worker with the full panoply of benefits that Americans have either become accustomed to or demand). Many more benefits have been mandated by the American government. To compensate, companies tend to find cheaper alternatives (i.e. overseas labor and lax enforcement regimes), and pooh-pooh homegrown, common-sense solutions (automation, multi-tasking employees, safety and production technology). This is only common sense, if your goal is the quick fix.
But, what happens when, in the course of lowering costs, you begin to follow a tried-and-tested formula which becomes counter-productive in the long term, as in, trading short-term profitability for the prospect of losing the talent base you need to stay in business?
That pretty much ended with the dawn of the Industrial Revolution.
In fact, the most destructive aspect of any business model based on "mass" (mass production, transportation of large quantities of products, etc.) is that it basically conditions a very large segment of the population to live their entire lives with the expectation that they will rely on someone else for their well-being.
"That other job thing is crap too. You go from making something to being a checker at Wal-Mart is not the same. You have pride, you are creating something for your neighbors, your family to use. Paper or plastic doesn't give you the same feeling of accomplishment." Maybe an improved vocabulary would be one of the job skills that would allow a worker to move up into a better job! Attitude is key, too.
Actually, no ... that's probably driven more by economics. Both illegal immigration (insourcing of labor) and outsourcing of manufacturing, point to the fact that American wages and expectations are probably too costly, in relation to the rest of the world.
Without doubt a lot of that extra cost is imposed by politics; but at some level politics and economics merge.
Those are the words I was searching for.... Exactly correct.
You may remember that sugar subsidies grew out of shortages and rationing of sugar experienced during WWII when access to sources in the Pacific were blocked. In that sense it was relatd to national security.
Considering that the Big Three US automakers own, wholly or in part (or have merged with, in the case of many European automakers), Honda, Toyota and Nissan, what exactly is your point?
The Big Three flounder for a variety of reasons, most of them having to do with the inability of the geniuses there to respond, in many cases, to the world market; they build gas-guzzling tanks when gasoline is a much more expensive commodity elsewhere than it is here, they fail to modify production to meet the needs of foreign markets (for example, failing to put steering wheels on the right side of a car for sale in countries where they drive on the opposite side of the road for us), and while they reap the benefits of cheap labor, they very often fail to pay those foreign workers a decent wage so that they may buy the very products they are producing.
They compensate for this stupidity by trimming the fat HERE (in terms of slaries and benefits), and not in being more pro-active with regards to the markets they hope to tap into.
LOL, good one.
Williams is a moron and you are smart. Now I get it.
However there is always hope that one of the emotion-driven types will read this and see the logic. That they might realize the implications of comparative advantages. That they might see the real costs associated with protection.
By an ever smaller margin as time goes on.
You conveniently ignore the other half of the equation that far more economic damage is done by restraint of trade and protectionism. eg every sugar job saved cost consumers $826,000. That's about $800,000 per job that could have been used for other things - real dollars wasted.
--Williams, that's crazy! We don't have the climate and soil conditions to produce those products. Many spices, for example, require a moist tropical environment." No problem. We have the technology whereby we can simulate both the soil and weather conditions. We could build greenhouses in which to grow cinnamon trees and get our scientists to create the same soil conditions that exist in Sri Lanka. Greenhouses could also be built to simulate the climate conditions in Africa and Latin America to grow cocoa and coffee. In the case of cocoa, the greenhouses would have to be Superdome size to accommodate trees as high as 50 feet.--
Williams should stick to teaching his brand of "economics" at Close Cover Before Striking University, and leave agriucltural science to those who understand it. It is now possible to genetically engineer most if not all of the plants he mentions to be more cold tolerant, so they could grow quite happily in at least the southern United States. A lovely substitute for all the tobacco they grow down there. But then he's a crazed free-trader with no concept of economic independence.
And now?
You wouldn't say this if you'd read all of the first 50 posts :-(
I "conveniently ignored" nothing. I simply noted the appearance of something Williams has glossed over in the past.
You will note that I said nothing about "restraint and protectionism."
My point was simply that there's more to the equation than "cheapness." Your comments on this thread reveal you to be very unwilling to admit this. Perhaps a less ideological approach on your part would make your comments a bit more persuasive.
Actually he's one of the most respected economists in the country. I'd say you lost your credibility on this one.
It is not all about logic though.
Is it logical to make a 16 year old girl have a child when she is pregnant with her whole life in front of her?
Is it logical to cheer for the Detroit Tigers when none of the players are actually from Detroit?
Is it logical to want manufacturing jobs instead of retail? Maybe not. But so what? What do we value? The most efficient race to the bottom for labor? Mexico is already hurting because their workers who made our stuff for $1.00 an hour is too expensive. We can make labor even cheaper. $.17 an hour in some parts of the world. Then what? So we have billions of people making stuff for the tens of millions who can afford it. It kind of reminds me of the feudal era. I want to conserve the past, but not go back that far.
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