Quote: (06-18-2015 12:00 PM)kaotic Wrote:
DeepDiver literally dove deep into this myriad.
And...there isn't much I can't disagree on his essay - I might of changed my mind.
That was a GREAT breakdown.
Quote: (06-19-2015 12:45 PM)captain_shane Wrote:
The thing I liked in his speech was adding a 35% tariff to companies making products overseas and selling them here like ford. I really like his fiscal ideas, but his foreign policy is a bit worrying.
I'm a Chinese dude educated in the states, so let me play the devil's advocate here and show you the other side of the coin.
I think people underestimate how cheap overseas products help the day to day lives of Americans.
For example, If you force Apple to make products in the US, and then tax hell out of foreign competitors like Samsung, mobile phones will be so expensive in the US people won't get to afford it. I know you guys aren't worried about that because America will have an influx of jobs for manufacturing.
But this is where it gets really tricky. People don't realize that because of the globalization, 40-50% of the revenues of many American companies (Fortune 500 and NY listed companies) are already from overseas.
Apple makes 36% of their revenues in America, rest is overseas. That's a staggering number, 64%.
If Apple iPhones are manufactured in the states, they will become more expensive. Let's say the cost of an iphone increases 20% to $1000 per phone, in the US you will just tax foreign competitors like the Samsungs and the Motorola to be $1000 too. Apple can still compete in the US.
But Apple will get absolutely destroyed in other markets Asia (25%) and Europe (25%). Samsung phones will still be manufactured in China and will remain cheap. Foreign companies will absolutely destroy American companies overseas. You're going to kill your export market. This is why economic protectionism was abolished in the 90's.
American companies will especially hammered in places where Trump starts an economic war with, like India, Japan, Mexico, or China. They will ban these companies from selling there. Don't think these guys will just keep taking punches. They are big markets with many consumer spending power. The old frame work where our countries are just slave labors isn't very true anymore. The buying power of developing countries are growing every year. In less than 10 years most big American companies will make more from overseas than the US. Globalization will make all of us interdependent to each other.
Instead of protectionism like this, I think the right way to go about this for America is fixing the corporate tax system to avoid foreign safe havens. The corporate taxes are too high and nobody ever pays it. It's ridiculous. In HKG the taxes are like 10% and everybody pays it. You can use the tax money to pay off debt.
Lastly, I've always liked Mark Cuban's economic approach of pushing for small and medium sized business owners. Give them incentives, tax breaks or subsidies and have them replace big chains, especially in the service and retail industry. More entrepreneurship is needed in this country. That in my opinion is how America can live in this era of globalization. What you want to change here are the reliance to retailers than really dont bring any innovative value.
I want to stress out too that through out history, countries closing their borders have always collapsed. In 1950, check what happened with Mao and China. See how different it is when they opened up their borders. Japan has the same story before industrialization (Tokugawa shogunate and Meiji restoration right after). If the US becomes more protectionist, I think in 10 years it will re-open its borders and it will find American companies and products subordinate to Germans, Japanese and even the Chinese.