Yes, I’m aware, though I think you may be missing the point. Hedge funds frequently recruit out of the science and mathematic fields. So someone smart enough to handle differential equations can go into a lot of fields. But people who hold engineering degrees go on to engineering jobs or better paying jobs. We’re already fully utilizing our workforce. We can’t shift a lot more people into software development or other mentally demanding fields.
They’re employed by Wal-Mart. Wal-Mart pays better than the mom and pops that have been theoretically destroyed. Those mom and pops usually scratch out a meager existence and can afford only very low wages There’s a reason Wal-Mart backs minimum wage increases.
Gonna anecdotal here, but in the town where I live, storefronts have been empty since the spotted owl listing. They built a Wal-Mart in a neighboring town. That town has no real vacancies. The storefronts are full today with mom-and-pops. It doesn’t look like the world you describe.
As for labor participation, you are certain that Wal-Mart is the cause? Capitalists would normally blame bad public policy for it, minimum wage increases, various welfare programs that serve as disincentives to work.
It’s also interesting because in the economy of my state, we have vast numbers of unfilled jobs sitting empty right alongside the unemployed welfare class.
Things change. That’s the nature of an economy. That’s why we don’t’ have a thriving buggy whip industry. When jobs are no longer necessary (determined by buyers and not a government official in a capitalist economy), employees find work elsewhere (again not determined or aided by a government official). But the fact is that the number of steel jobs is growing. You can find that information toward the top of this thread.
What do our current policies on college look like? We’ve given away college tuition to encourage more folks to attend college. That in turn drives up the cost of college, leaving folks who don’t qualify for free college with massive debt. That creates a surplus of folks with college degrees.
Meanwhile a lot of well-paying dirty jobs go unfilled (Mike Rowe explains in any of a number of articles):
What I’ve opposed – consistently – is not the importance of higher education, but rather, the relentless drumbeat of “college for everyone.” That’s the real problem, and it’s worth repeating. Because this cookie-cutter approach to education presupposes that all worthwhile knowledge can only be attained from a college or a university. That’s the most dangerous myth of all, and the unintended consequences are now self-evident – the vanishing of shop class in high schools, $1.3 trillion dollars of student loans, and 6 million vacant jobs that no one is trained to do. That’s the skills gap. It’s real, and it’s a massive problem for anyone who shares my addiction to smooth roads, cool air, and indoor plumbing.
Also, is it really true that PhDs are stuck driving taxis, or is that just an anomaly?
Fortunately we don’t have to. Capitalist economies move just exactly what we need where it needs to go based on interactions between sellers and buyers.
An extra couple thoughts:
CWolf, PD, a $500 billion trade deficit doesn’t mean we’re “down.” It just means we bought stuff.
You shouldn’t fear capitalism. You should fear public officials managing your economy.
I certainly don’t “fear capitalism.” Our trade deficit with China ALONE caused GDP growth in the U.S. to be 2.9% during last year’s fourth quarter. Most REAL economists admit that, without that multi-billion-dollar deficit, our GDP growth would have been over 4%! Trade deficits HURT the U.S. economy…period.
We live in a democracy where over 50% of the voters are women. Give me one example of a country with majority female voters who have rolled back government regulation and decreased state powers to a smaller point than before suffrage.
We are going to have regulation no matter what. So it’s more a question of what type of regulation. You can get America-first regulation like Trump suggests, or we can get “My buddies from Yale will make a killing!” regulation like Bush and Clinton want. There is no laissez faire option.
Revenue and expenses. It’s not a complicated concept. Surplus is revenue, deficit is expense. Our GDP is just the combination of domestic consumption, imports, and exports. So of course higher trade deficits lead to lower GDP.
This is a major reason Trump’s focus on lowering energy cost is going to lead to substantial GDP growth. Every dollar we spend on foreign energy lowers our GDP. If we produced it domestically, all of the money we spend on energy stays here, instead of moving out. If we could produce 90% of our energy needs domestically, our GDP would consistently be above 4%.
Remember that Trump’s goal is 5% GDP growth before he leaves office. That is attainable only if we boost domestic energy production and negotiate better trade deals. You can’t have 5% GDP growth when you’re running over a half trillion dollars in combined trade deficits.
Libertarians always love to talk about Singapore when discussing lack of economic freedom. Well, let’s see how the U.S. trade balance compares to Singapore’s trade balance
You can’t grow your economy quickly with a trade deficit of 5% of your GDP. That kind of wealth exfiltration ensures a perpetually stagnant economy.
Dave, you missed the point. Even useful Phds can be left out in the cold, if the economy isn’t large enough to demand more of those skills.
This happened to Computer science majors in the early 00’s; oversupplied, let to a lot of graduates doing other things.
We all know highly-educated people can create opportunities for those with less skills, but it also works in reverse.
For the division of labor to work, you also need low-skilled people, doing things that will allow higher-skilled people to specialize in what they’re good at.
There is Federalism; limiting Federal power, and letting States bounce off each other, trying to attract businesses and citizens. This does lead to less regulation overtime. It’s happening in India right now.
No, this is more like accounting, where you debit one account, and credit another.
And this points out what was overlooked: When you import, you debit the current account, and credit the capital account.
Capital grows, and our future grows with it.
As to GDP, it’s a fragile statistic; if you actually discern how value is added in production, and who pockets the money, the difference you’re looking at as far as trade goes is much smaller than it seems:
All the while, our GDP could still be smaller, yet we aren’t actually worse off. Hence why GDP PPP has come more into use of late, but even it doesn’t fully fix how GDP can assign value, when there isn’t any.
You shouldn’t chase after a statistic like that.
Real world: Comparative advantage is a thing, and it could be that it’s better to compartmentalize; let a foreigner be our source for something, while we use our resources to do something we can do more effectively.
We and them are better off as a result. Less transfer costs for both of us in producing something, as we each pursue what it is we’re actually good at it.
Even more real world: Markets fluctuate in price, and are not completely united. Our oil markets on the West coast are more connected to the Far East, and our oil markets on the East Coast are more connected to Europe & Africa, than either of our Coasts are connected to one another.
Some days, it just make sense to buy from a foreigner, because the price is right; even if it’s coming from a place, say, somewhere in Angola, that isn’t usually competitive.
And here’s the crux of the matter, this matter’s more for the Government’s revenue, than it does for the Economy.
Hong Kong has a trade deficit. Hong Kong saw virtually all of their factories go over the line into the mainland, even before China Joined the WTO.
Hong Kong still lives, because Hong Kong both knows it can’t produce everything, and doesn’t try to. Just like all the “Free-city” states of the world. Instead, it just focuses on ease of doing business, re-export, and re-manufacturing.
And that works. The only thing that doesn’t work in Hong Kong is their Georgist land policy… that is incidentally, the main source of Government revenue, and the thing that is likely most manipulated by the CCP.
I don’t disagree that we need what you call “low skilled” workers. South Korea was plagued by this phenomenon for decades. Lots of highly-educated people, but educated in things like philosophy, literature or political theory, when what they NEEDED were engineers, doctors and scientists. Thankfully, that emphasis changed and we’ve seen the BOOM in S. Korea ever since. A Korean soldier who was a friend saw that I’d bought (one of the first) clip-on neckties and asked me for it. I bought him one, instead. I later found out that he’d taken it apart seam by seam and started a business making the clip-on mechanisms and made a fortune in a matter of a few years. I have a great deal of admiration and respect for the south Korean people. I spent over 2 years of my life living among them. I dated a Korean woman for over a year who had an IQ of 180! She spoke 7 languages fluently and was one of the most beautiful women I’ve ever known. She was a student at Seoul National University studying agriculture. She graduated with the 2nd highest academic average in the entire country, went to Denmark for her MS degree where she met and married another Korean student.
But, to my point, I don’t disagree that we need lots of plumbers, auto mechanics, air conditioning repairmen, pipeliners, even chicken-pluckers, but you don’t need a college diploma to do ANY of those things. So why push people into college???
In answer to my own last question, sometimes you “need” a college diploma just to be ELIGIBLE for some jobs. When I was first called and asked to apply for a job with Mobil Oil, my eventual boss’s first question to me was, “You DO have a degree, don’t you?” When I answered yes, he said, “Good, because I can’t even interview you without one.” I was hired and subsequently promoted 17 times in 15 years before I retired. I’d been working for a year before my boss asked what my major was in college! That piece of paper was my intro and had little to do with the work I was asked to perform.
So it’s not only undercutting our GDP, it leads to foreigners increasingly owning domestic real estate and production! Hurray!
It’s not undercutting GDP, the article goes into the equation of GDP, pointing out how this is wrong:
Also, read the Ipad article from the Economist.
Boiling down your point to GDP, is not an argument for less foreign investment, or imports.
Because it’s a statistic, it has caveats that make it vulnerable to distortion, and it’s one of those caveats you’re leaning on here without understanding it.
It does not address the question as to whether we are factually better off or not.
For instance, this Ohio town had it’s GM plant shut down; they were in a economic tailpsin, until a Chinese industry mogul came along and built a new factory out of the old GM plant, manufacturing auto-glass:
They, flesh & blood people of this town, are factually better off, thanks to this man arriving.
Meanwhile, in China, they’ve built 62 million empty apartments. GDP wise, they’re through the roof.
Factually better off? ** no.** Ghost cities, valued at prices too high for their own people to afford, is simply throwing valuable capital & resources on a bondfire.
But they do it, because local Communist affiliates have to keep their GDP figures high to be rewarded, and so they go into debt to keep the construction going.
In short; using GDP like this, takes for granted what GDP ignores; value. GDP analyzes activity, not whether the economy is doing something valuable.
GDP also tries to narrow its total to domestic activity, but that is made problematic, by how fluid foreign capital, labor and resources can integrate themselves into domestic production. When it leaves foreign involvement out, it also leave out part of our own economy.
Again, the Ipad article points this out: despite China contributing only $10 worth of labor to the Ipad’s construction, all ~$275 of its value is written off as foreign activity. There can be academic reasons to want to isolate it like that, but it does not give you an accurate picture of what the effects upon our economy are.
I feel like you’ve quickly forgotten what I just said
I was just arguing that C and G(which is mostly just a special case of C) are useless for growth in general. They at absolute best maintain existing productivity. That problem is made significantly worse when the C is an import, because we don’t even get the local spending effect if the supplier of C is not domestic.
That’s exactly what this is. Accounting does a much better job at handling profitability than Economics can.
The flaw with the C I G model is that it assumes a closed system. But what happens when C and G cause capital to move out of the country? That’s what happens in an import system. Economics does not address this.
Economics covers it from a global perspective. But it doesn’t account for the domestic situation. We lose productivity capacity when we send out capital to bring in foreign consumables.
True ONLY if foreigners have no other place to invest their dollars…and that’s no longer the case, and hasn’t been for some years now. So, your premise is false on its face.
Honestly? I was just thinking of referencing back to this; to point out how that this isn’t true.
Quality of GDP is highly scrutinized by economists, hence why we know, for example, why war production in WWII did not help the economy. Or why the Marshall plan did not help most of Europe.
Or any scrutiny you’ve ever heard in regards to bubbles; a well-known phenomenon where the economy is too hot, producing something that is absorbing more value than it produces.
What you are saying might apply to Keynesian, and perhaps even some Classical thinking, which are vulnerable to concerns of Bubbles, but it does not apply to economic thinking as a whole.
So no CWolf, what you’re actually pointing out is the weakness of GDP as a statistic, which is well understood. Hence GDP PPP, and other alternatives that are trying to estimate value more precisely.
That depends on what precisely is being consumed. If it’s a “one off” thing, like a TV, or a nice looking chair, or a consumer light bulb, then you’re right.
But what if it’s a car? What if it’s a computer loaded with software you use for work? What if it’s a pre-heater?
Then all of that is consumption that aids production, because it makes the person who buys it, more productive than they would be without those things.
And it’s this latter group that most Imports occupy; things that aid production. Capital improvement. Not just one-off consumption.
Yes, but you ignored what I just said, it is the Capital account that is being credited, the Currency Account is what is debited.
We are giving currency, in exchange for capital. We are capital richer, not poorer, as a result.
You can see the evidence for that in the Import list I gave you. What precisely is being imported? It’s mostly capital.
They do not. Please explain why you think they do.
Oh, CWolf does attempt to below:
Again, so what?
All a trade deficit shows is we bought stuff.
Women? Men are just as terrible at economics and civil liberty. Give me one example of a country with majority male voters who have rolled back government regulation and decreased state powers to a smaller point than before suffrage. Things were rolling the wrong way long before suffrage.
But you’re basically arguing that “it’s a crappy government and crappy world so let’s get on top of the crap pile.” Got it. I disagree with giving into the crap.
What?!? You mean it’s like when I’m shopping the grocery stores for steak?
Because progressives think everyone should have everything the same and should be the same, etc. and so forth – so they should take women’s studies and skin worship studies etc. But you ask a great question.
We don’t lose productive capacity. We produce less of things you and Donald Trump think we should be producing and more of the things the rest of us want. Our own individual decisions about trade tell us what we need to produce. You and Donald Trump don’t like our choices, you know, those cheap widgets we buy at Wal-Mart, so your representative designs new rules to try to stop us. It’s anti-liberty and anti-capitalist. It also comes with a high cost to the people who lose their liberty to the machinations of folks like President Trump. Needless to say, this sort of economic policy is one of the key reasons I oppose President Trump.
The TPP wasn’t simply about reinforcing trade-- it was about reinforcing American Hegemony in the Far East, through Soft Power.
With us absent, China is free to take the field, and make the nearby countries more compatible with its own economic system, something that weakens the leverage we wield over them with naval & maritime dominance.
Now, China isn’t makeing a complete route of things; many of their projects are clearly questionable as to what value they offer.
The rail line they built between themselves Europe, even after being heavily subsidized, still runs far above cost, is hazardous to its own freight, and ships items far below in volume in what shipping carries.
They also tend to ship out their own personnel to build the infrastructure projects in other countries they finance; leading to many instances of creating friction with the natives as they have in Kenya.
Even still, they’re successfully disrupting political coalitions made against them in the Far East, just as they’ve successfully undermined the EU’s capability to denounce them by making client states of their poorer, more vulnerable members.
Not everyone will love them, but it’s more than probable that a few of these countries will fall further into their sphere of influence, allowing them to break our encirclement, and leverage even more influence to turn East Asia into precisely whatever the CCP wants it to be.
Japan as I said before can’t deter them alone; it’s more likely that even they will be forced to integrate with the CCP’s plans, given time.
Not in most cases, no. Because you have an existing baseline productivity. A car only makes someone more productive if they don’t already have a car. Buying a new rig doesn’t make a company more productive if they’re just replacing an old truck in the fleet. That’s just maintaining existing productivity. It’s not leading to growth.
I can’t tell you how many times I’ve specifically recommended against software and computer hardware upgrades. In the vast majority of cases they do not lead to significant productivity increases, and they come with massive training and support costs that usually dwarf the cost of the software and hardware itself. Switching to tablets is one of the few things I’ve recommended a lot, though humorously there is more reluctance to do that despite the lower hardware costs and actual productivity increases associated with it.
Yes, that is indeed how buying physical goods works.
So to be clear, you would prefer the situation where American cars suffer large tariffs when imported into China? What was your specific objection to Trump negotiating for China to open up its markets and lower import tariffs on American goods?
Were you officially in charge of all US trade policy would your position be that all imports will be received with absolutely no restriction, and any country can do anything to our exports, and you will not any way respond beyond a verbal call for total free trade?
Would you remain in any of our trade deals, all of which have hundreds of pages of rules and regulations, or would you exit all of them?