Posted on 07/11/2013 1:39:59 PM PDT by mojito
Europe’s debt-crisis strategy is near collapse. The long-awaited recovery has failed to take wing. Debt ratios across southern Europe are rising at an accelerating pace. Political consent for extreme austerity is breaking down in almost every EMU crisis state. And now the US Federal Reserve has inflicted a full-blown credit shock for good measure.
None of Euroland’s key actors seems willing to admit that the current strategy is untenable. They hope to paper over the cracks until the German elections in September, as if that is going to make any difference.
A leaked report from the European Commission confirms that Greece will miss its austerity targets yet again by a wide margin. It alleges that Greece lacks the “willingness and capacity” to collect taxes. In fact, Athens is missing targets because the economy is still in freefall and that is because of austerity overkill. The Greek think-tank IOBE expects GDP to fall 5pc this year. It has told journalists privately that the final figure may be -7pc. The Greek stabilisation is a mirage.
Italy’s slow crisis is again flaring up. Its debt trajectory has punched through the danger line over the past two years. The country’s €2.1 trillion (£1.8 trillion) debt – 129pc of GDP – may already be beyond the point of no return for a country without its own currency.
Standard & Poor’s did not say this outright when it downgraded the country to near-junk BBB on Tuesday. But if you read between the lines, it is close to saying the game is up for Italy.
(Excerpt) Read more at telegraph.co.uk ...
Why do the anti tariff crowd love to tax income? Why are you so progressive?
please.... lower priceare not bad for the economy as it allows you to spend more on other stuff
No, lower prices aren’t bad in and of themselves. But, and it’s a big one, if you want your population to be able to buy the stuff at those lower prices they too have to be able to earn money.
And that’s what I have seen over my lifetime, businesses cutting back labor because it costs too much and sending the jobs and production overseas. In that way it’s much like a ponzi scheme. The first ones in and out make out great the ones who got in late ending up losing their money and paying for the ones who were there first.
And then we have those who use the Government, both state and federal to subsidize those who can’t work, those who can but can’t find a job, etc. Ok, fine, until the Government runs out of money too. Which is where we are at now.
So what is the solution? I’m sure there is one but to achieve it would require that Capitol, (AKA Business), Labor and Government all agree that to survive in a Capitalist Economy, all need to recognize a few absolute truths. Business needs to make a profit to survive and expand as necessary, Labor needs a living wage that allows them to be able to purchase the goods and services the Businesses provide. Government need to stick to it’s core requirements of defending the country, etc. To do that it needs some tax money to pay for the labor and materials required to do the job.
All of those needs and desires need to be balanced out for an Economy to thrive.
But will I ever see it... No. Why? Because each of these groups is short-sighted and refuses to see the big picture and where they fit into it.
Business has been taught by the Academics to look only at the Bottom line and the Three Month P&L, and not to look years down the road.
Labor, Hmmph, I want it, I want it now and I want it all, screw everybody else seems to be the attitude prevalent among the Labor Unions.
And Government? No need to go there again, but I will. In order to be elected and re-elected the Politicians will promise anything and everything and then steal from Peter to pay Paul and vice versa.
That's a myth. We had protections in this country until 1960 and they served us well. Google History of tariffs in the U.S. Wikipedia.
Total wealth usually goes up when you trade due to comparative advantange, but there is no guarantee that both nations benefit from the trade. That's especially true when one nation is a high wage nation and another is a low wage nation.
It's doubly true, when you have a nation like Communist China. China doesn't allow the dollars to come back to purchase trade goods from the U.S., so that shoots the comparative advantage model out the window.
China raises taxes equal to 90% of it's GNP. Basically the Communist government soaks up most of the profits from Chinese firms and then directs those funds not to the purchase of U.S. goods but to the purchase of either U.S. debt or worse the purchase of manufacturing ability and know how, so they they can further compete against us.
We should immediately do the following:
How is free trade a tax?
Me, a progressive??? Perish the thought!
I disagree. The laws of economics are like the laws of gravity - the longer you ignore them, the harder the landing will be at the end.
Holding back foreign goods only works for so long, and then the distortions in the market that creates overwhelms the attempted protectionism.
Unions in the US did everything they could to keep Americans from buying foreign cars, particularly Japanese made cars. The result was that unions got fat and happy, and the lack of competition led to a more expensive but increasingly inferior product. Why should Americans be forced to pay more for less to protect the jobs of people who are overpaid compared to the actual value and difficulty of their jobs?
In the long run, these attempts to prohibit competition hurt the workers and companies they were intended to help.
Subsidies Hurt Recipients, Too
http://www.fee.org/files/docLib/1007Folsom.pdf
What we are seeing an interesting uprising of workers and ordinary citizens in China demanding better pay and working conditions and better living conditions. At some point, the world economy will eventually level the playing field. If it weren’t for government interference in markets, this would have happened gradually and without such a shock to American workers who had gotten used to the status quo. Changes are almost always painful, but they lead to better conditions for everyone in the end.
We will disagree, I’m sure, but I still think free trade is the only thing that creates wealth and progress for everyone.
Well, wikipedia has its problems and biases.
As for the article, I have read parts of it (it is long!) and I think he contradicts himself in places.
Also, if protectionism is so great, then why don’t we practice it between states? Or even cities? I still believe that everyone benefits from free trade which benefits both parties. If people didn’t get something from the deal, they wouldn’t participate. I don’t see why poor people should pay more for goods to protect the jobs of union workers and CEOs.
The states all play pretty much by the same rules. There is some variation but it's not much. And we are all part of one nation. So if Atlanta incents a company to move from Boston, you at least have some Americans benefiting while some Americans lose. We do have some of the smarter cities paying incentives and giving tax breaks to businesses to come there, because they've realized the benefits.
I still believe that everyone benefits from free trade which benefits both parties. If people didn’t get something from the deal, they wouldn’t participate.
Well that's just it. I still buy Chinese goods from Walmart, because I get a cheap price. Even though I know it's putting my fellow Americans out of work. But don't expect me to self sacrifice while everyone else buy's from China. That is government's proper role to regulate those external trade relationships. I'll stop when everyone else stops.
"I don’t see why poor people should pay more for goods to protect the jobs of union workers and CEOs"
If we were at full employment, I'd agree with you. But we are not. At this point, poor people should pay more to protect their own job. Because with 25% out of work and it's still moving in the wrong direction, that's what it amounts to.
Just because Unions supported protectionism doesn't mean that they were wrong in all situations. Broken clock is right twice a day. The logical extreme is to outsource all American jobs and really teach those Unions!!!
I'm not sure I've read the article all the way through, however I do believe it mentions the exceptions for low wage countries where free trade doesn't necessarily benefit both states. China takes it to an extreme because it's not just the wage differential, its the fact that the money is not allowed to come back to buy our trade goods, only our manufacturing capacity.
The fruits of socialism and communism, coming soon to an American country near you.
I don’t care whether the unions learn anything from past experience or not, but protectionism always distorts the market and hurts everyone - even those who were supposed to be protected. Government inteference in the market always fails.
The founding fathers beleived tariffs were a tax on foreigners wanting to do business in America. And that tariffs maximized freedom by avoiding the need to tax U.S. citizens directly.
Don't let a hatred of government blind you to the proper and necessary role of government. The founding fathers established a government for a reason.
We will never agree on this issue. Government is force and has no place in voluntary transactions between individuals and businesses, unless that business is illegal or immoral.
Government’s only legitimate function is to protect citizens from criminals and foreign enemies, and it doesn’t even do that very well.
Then why did the founding fathers give Congress authority to regulate trade with foreign countries? They thought it was important. One of the first things Washington did was sign a tariff bill. If they thought it was important, are you sure you're right on this matter?
Jefferson used to think that America should stay an agricultural economy and just trade for manufactured goods. Then in Jefferson's words "the unthinkable happened" and Europe cut us off. Jefferson changed his mind and realized that a strong manufacturing base was essential to maintain a free state.
You say "unless illegal or immoral". That covers a lot of ground, a lot of government intervention. Selling weapons of war to foreign nations is illegal. I could argue that doing business with countries engaged in economic war with the U.S. ought to be illegal. But there is a better way, and that's tariffs. They are less intrusive. They don't cut the supply of anything. But they provide an incentive to produce in America.
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