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To: RockinRight

"Do you propose a solution, or shall we close up our borders and trade with nobody?"

Yes, I do propose a complete and fair solution.

There are certain "givens" of American life which we've established for good reasons, based on experience: Social Security, Worker's Compensation, Unemployment Insurance, OSHA, child labor laws, universal education, minimum wage laws, maximum hourly work weeks after which overtime must be paid.

All of that stuff is expensive for employers, employees, the whole economy. The REASON that foreign labor is so cheap, whether you exploit it in China or use illegal aliens here, is precisely BECAUSE you don't have to pay all that overhead.

Chinese slaves make socks for about a dime. They get sold here for $1. American sockmakers...when there used to be some...were far more efficient at making a given pair of socks, but all that mandatory overhead made the socks cost $3.

The answer, the whole answer, is to impose import tarriffs that equalize the effect that non-protection of foreign workforces has on price. So, for example, there would be no import tarriff from Japan or Europe: their workers and employers pay the same or more than American workers and employers do, and have comparable or greater protections. But Chinese socks would have a $2 equalization tarriff imposed on them, to increase the price of those imports to compensate for the fact that they were made by unprotected slaves abroad. Note that shifting Chinese goods to a less-oppressive place like Indonesia doesn't avoid the tarriff. (This is why you can't just ban the goods from the really bad places but import them cheap from less bad places: the goods get made in the bad places but shipped raw, to have the labels sewn on them in the less-bad places, defeating the whole purpose of the ban. By contrast, impose the equalization tarriff, and the socks from Indonesia, which doesn't have worker protections to speak of either, get hit with just about the same $2 tarriff, so there's no defeating it.)

Equalization tarriffs are the answer. They protect American businesses from the effects of foreign non-protection of workers, without, however, raising the drawbridge on free trade with other countries that DO protect their workers.

This does indeed impose costs on the American consumer. No doubt about it. They have to pay $3 for a pair of socks they currently pay $1 for. That $2 difference can be bandied about as a 200% increase, by those who would oppose the idea, but this is not something that would hit the entire economy. This is something that would particularly hit consumer goods, and that 200% does not slide all the way up the scale. More expensive things don't have the same huge profit margin in them that cheap things do, because even China doesn't use slaves to make more sophisticated manufactured goods.

That's the answer.


24 posted on 11/02/2006 1:35:42 PM PST by Vicomte13 (The Crown is amused.)
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To: Vicomte13

OK...you say "This does indeed impose costs on the American consumer. No doubt about it. They have to pay $3 for a pair of socks they currently pay $1 for. That $2 difference can be bandied about as a 200% increase, by those who would oppose the idea, but this is not something that would hit the entire economy. This is something that would particularly hit consumer goods, and that 200% does not slide all the way up the scale."

How much though? Does a DVD player go from $40 to $475? Or $40 to $60? If you think about the plethora of goods manufactured overseas in cheap markets, the average consumer could easily spend TWICE as much as they do now buying things, or just not buy them. Either way, decreasing consumer spending to a point that could cause a large depression.


25 posted on 11/02/2006 1:38:43 PM PST by RockinRight (Maintaining a Republican majority is MORE IMPORTANT than your temper tantrum.)
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To: Vicomte13

tariffs will not happen. the only way to rebalance the equation - is to raise taxes on consumption of these goods at the point of sale, and lower taxes on wages.


27 posted on 11/02/2006 1:46:19 PM PST by oceanview
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