[porscheguy]

(03-08-2016 06:37 PM)Samseau Wrote:  

Damn, I cannot believe I missed that. Great job on owning me here. I am mistaken, but I am shocked that with such a high peg we still have a high positive trade against Hong Kong. My bad for not double-checking.

That said, the theory presented is still sound, but there must be particulars which affect Hong Kong in such a dramatic way even with such a huge peg.

Hong Kong has traditionally been a pro western nation/territory. Even though they're technically part of China, they really do their own thing. Up until 1997 they were a British colony. China wants to roll in with their tanks and subjugate them but they can't. Hong Kong maintains their own military. And that military is a big part of our favorable trading relationship with them. China knows that if they fuck with Hong Kong, the US and Brits will intervene.

[porscheguy]

Is there an actual name for the government and economic model of China? It's not a democracy. It's not really communist although they claim to be. And since they claim to be communist, they're not really capitalists either.

And why did Nixon go there in the 70s and suck Mao's dick? Didn't we hate communists back then? Why did we open trade with them even though in 1985, they proudly proclaimed their communist status? There are several other countries in the world that we have refused to trade with due to them being communists. Why did China get a free pass?

[Liberty Sea]

(03-09-2016 06:04 AM)porscheguy Wrote:  

Is there an actual name for the government and economic model of China? It's not a democracy. It's not really communist although they claim to be. And since they claim to be communist, they're not really capitalists either.

It's typically called state-capitalism (as opposed to free-market capitalism), which is quite correct imo.

[Paracelsus]

(03-09-2016 06:04 AM)porscheguy Wrote:  

And why did Nixon go there in the 70s and suck Mao's dick? Didn't we hate communists back then? Why did we open trade with them even though in 1985, they proudly proclaimed their communist status? There are several other countries in the world that we have refused to trade with due to them being communists. Why did China get a free pass?

Because the US wanted leverage against Russia. Don't confuse Russia and China as allies simply because they were both communist: their relations deteriorated from roughly the 1960s onwards, mainly because they had different interpretations of communism, but also because Khruschev had met with Eisenhower in '59 or so in order to achieve some detente.

[Samseau]

(03-09-2016 06:04 AM)porscheguy Wrote:  

Is there an actual name for the government and economic model of China? It's not a democracy.

It's called a slavocracy.

[ElJefe]

(03-08-2016 05:27 PM)Samseau Wrote:  

Therefore, it is obvious to see that current trade deals do not benefit anyone but the elites.

Because Toyotas, even back in the 70's, are shitty, unreliable cars compared to US cars, that no one in America wanted to buy. American consumers were forced, at gunpoint, to buy that crap.

Or clothes. US consumers were much better off when shirt and trousers cost twice what they do today in terms of relative wages. Or any product for that matter, where the price has been driven down by innovation and competition. It is critical prices are kept high to prevent the exploitation of laboring classes.

[Blaster]

(03-09-2016 10:43 AM)Samseau Wrote:  

(03-09-2016 06:04 AM)porscheguy Wrote:  

Is there an actual name for the government and economic model of China? It's not a democracy.

It's called a slavocracy.

Mercantilism is an obsolete term but probably comes closest, philosophically.

[Blaster]

(03-09-2016 04:03 PM)ElJefe Wrote:  

(03-08-2016 05:27 PM)Samseau Wrote:  

Therefore, it is obvious to see that current trade deals do not benefit anyone but the elites.

Because Toyotas, even back in the 70's, are shitty, unreliable cars compared to US cars, that no one in America wanted to buy. American consumers were forced, at gunpoint, to buy that crap.

Or clothes. US consumers were much better off when shirt and trousers cost twice what they do today in terms of relative wages. Or any product for that matter, where the price has been driven down by innovation and competition. It is critical prices are kept high to prevent the exploitation of laboring classes.

Meanwhile cost of housing and food keep going up. Conspicuous consumption is easier. Buying anything with real long-term value is harder.

[ElJefe]

(03-09-2016 04:25 PM)Blaster Wrote:  

Meanwhile cost of housing and food keep going up. Conspicuous consumption is easier. Buying anything with real long-term value is harder.

Over what period?

I'm well aware housing costs have gone up in some areas, but food? Steve Sailer has some excellent ideas on this. Coastal cities seem to tend towards stronger embrace of zoning laws that artificially restrict supply. Add immigration, cultural collapse amongst the lower class and assortative mating to the mix along with preferential tax and financial regulation treatment for real estate, and you've a nice cocktail for segregation. It is, by the way, very telling in another video linked to in a different thread, that Trump believes preferential treatment of real estate is a good economic strategy: preferential treatment is PRECISELY why the financial crisis was as bad as it was. I'll still vote for him, but the man really doesn't have a clue - only good instincts, which is a helluva lot better than the alternative.

[Samseau]

(03-09-2016 04:03 PM)ElJefe Wrote:  

(03-08-2016 05:27 PM)Samseau Wrote:  

Therefore, it is obvious to see that current trade deals do not benefit anyone but the elites.

Because Toyotas, even back in the 70's, are shitty, unreliable cars compared to US cars, that no one in America wanted to buy. American consumers were forced, at gunpoint, to buy that crap.

Or clothes. US consumers were much better off when shirt and trousers cost twice what they do today in terms of relative wages. Or any product for that matter, where the price has been driven down by innovation and competition. It is critical prices are kept high to prevent the exploitation of laboring classes.

What are you talking about?

In the 70's Japan competed with American markets with a floating currency, the yen, which was still worth much less 30 years out from WW2 than the American dollar. Their cheaper production costs gave them a competitive edge and they made a great product so it sold.

There wouldn't be a need to place a tariff against Japan in those circumstances, although today they heavily manipulate their currency and it's quite literally killing their country because workers cannot accumulate savings. See: Lowest birthrates in the world.

Innovation and competition: Happens in the USA without foreign interference, for the most part. Innovation in particular. But neither innovation nor competition have anything to do with this thread. This thread is about trade.

Did you post in the wrong thread by accident?

[Space Cowboy]

(03-09-2016 06:12 AM)Liberty Sea Wrote:  

(03-09-2016 06:04 AM)porscheguy Wrote:  

Is there an actual name for the government and economic model of China? It's not a democracy. It's not really communist although they claim to be. And since they claim to be communist, they're not really capitalists either.

It's typically called state-capitalism (as opposed to free-market capitalism), which is quite correct imo.

Communism with Chinese characteristics.

[Samseau]

(03-09-2016 04:20 PM)Blaster Wrote:  

(03-09-2016 10:43 AM)Samseau Wrote:  

(03-09-2016 06:04 AM)porscheguy Wrote:  

Is there an actual name for the government and economic model of China? It's not a democracy.

It's called a slavocracy.

Mercantilism is an obsolete term but probably comes closest, philosophically.

Are you sure? Did Mercantiles devalue their currency for an export advantage? As far as I knew mercantilists relied on protective tariffs, but tariff's still allow workers to make and save money. Conversely, with strong currency devaluation, it becomes near impossible for workers to make and save money.

[Blaster]

Based on the wikipedia definition:

Quote:

Mercantilism was an economic theory and practice, dominant in Europe from the 16th to the 18th century,[1] that promoted governmental regulation of a nation's economy for the purpose of augmenting state power at the expense of rival national powers.

Another definition:

Quote:

Mercantilism is economic nationalism for the purpose of building a wealthy and powerful state.

"Mercantilism" is archaic in the sense that it's a pre-capitalist economic theory and fails to properly account for the role of currency and wealth-creation in international commerce. However, the governing philosophy is leveraging state power to advance the economic interests of the state. In that sense, using a currency peg to gain a competitive advantage with a rival state is mercantile. This is especially true if you look at China's currency manipulation in the big picture with its other blatant protectionist policies. In this context, it's not that mercantilism is specifically about exploiting workers, just that worker exploitation is more or less taken for granted. According to that wikipedia page the mercantilist view of labor was indeed quite harsh:

Quote:

One notion that mercantilists widely agreed upon was the need for economic oppression of the working population; laborers and farmers were to live at the "margins of subsistence". The goal was to maximize production, with no concern for consumption. Extra money, free time, and education for the lower classes were seen to inevitably lead to vice and laziness, and would result in harm to the economy.[18]

Mercantilists did not use anything so subtle as currency manipulation to oppress its laborers. I suspect this is because they either did not need to bother (wages were already pitifully low) or they used slaves. Ben Franklin remarks in "Observations of the increase in mankind..." that even slaves in America could not compete with the cheapness of English labor at the time (point 12).

[Blaster]

So maybe... neomercantile

[eskimobobseal]

I was so impressed with the OP that I posted it (with Samseau's permission of course) on my website - http://wethevigilant.com/2016/03/11/why-...ipulators/

We need more people who understand the damage the globalist trade deals have done but more importantly, what our solutions are. This is why (contrary to whatever garbage the MSM is peddling) Trump garners a ton of highly-educated supporters because it takes a nuanced mind to really understand this issue.

Thanks to Samseau for letting me share this content.

[Libertas]

Smoot-Hawley was trending last night after Cruz said it "caused the Great Depression."

Obviously untrue, as it was passed after the crash while liquidity was removed from the market, but what of the argument that it made it worse by even further restricting liquidity?

At any rate, I find the analogy between a Trump tariff and the Smot-Hawley/Depression era tariffs inconsistent at best. Why aren't these people talking about the other countries that have tariffs?

[porscheguy]

(03-11-2016 10:08 AM)Libertas Wrote:  

Smoot-Hawley was trending last night after Cruz said it "caused the Great Depression."

Obviously untrue, as it was passed after the crash while liquidity was removed from the market, but what of the argument that it made it worse by even further restricting liquidity?

At any rate, I find the analogy between a Trump tariff and the Smot-Hawley/Depression era tariffs inconsistent at best. Why aren't these people talking about the other countries that have tariffs?

What killed liquidity is lack of confidence in the market. If you were a player in the market prior to the crash and didn't lose everything, you're not going to be overly eager to put more back in.

These people aren't talking about countries that use tariffs, because as I said before, some people get so worked up about any hint of taxation, their little brains go into meltdown.

When Cruz mentioned that BS last night, he just denounced any plan to actually rectify the trade issue. And then he said something about his tax plan on his website would solve the problem. Pure BS. When candidates make vague generalizations like that, you know they've got no clue. His wife works for Goldman and pulls down a 7 figure salary. An outsider he is not. A lover of Chinese currency manipulation he is.

[Samseau]

(03-11-2016 10:08 AM)Libertas Wrote:  

Smoot-Hawley was trending last night after Cruz said it "caused the Great Depression."

Obviously untrue, as it was passed after the crash while liquidity was removed from the market, but what of the argument that it made it worse by even further restricting liquidity?

At any rate, I find the analogy between a Trump tariff and the Smot-Hawley/Depression era tariffs inconsistent at best. Why aren't these people talking about the other countries that have tariffs?

The Smooth-Hawley tariff was passed against countries that had floating currencies. It was protectionism and not anti-slavery currency manipulation. That act was a disaster.

[Libertas]

We might also want to go into detail about those 19th century tariffs durinc which time America rose to be the world's greatest industrial power.

How are those different from Smoot or what Trump is proposing?

[Samseau]

(03-11-2016 11:22 AM)Libertas Wrote:  

We might also want to go into detail about those 19th century tariffs durinc which time America rose to be the world's greatest industrial power.

How are those different from Smoot or what Trump is proposing?

Blaster's posts above show how it was different.

Back when America was founded, British Mercantilist policies apparently did many of the same things China is doing today:

- British workers were paid less than most slaves
- The dumping of cheap goods would kill American businesses
- The British government picked winners and losers of industry with low-interest loans and favorable regulations for big businesses but nothing for anyone else

From Blaster's Ben Franklin link above, the British worker was cheaper than American slaves:

Quote:

12. Tis an ill-grounded opinion that by the labour of slaves, America may possibly vie in cheapness of manufactures with Britain. The labour of slaves can never be so cheap here as the labour of working men is in Britain. Any one may compute it. Interest of money is in the Colonies from six to ten per Cent. Slaves one with another cost thirty . Sterling per head. Reckon then the interest of the first purchase of a slave, the Insurance or risque on his life, his cloathing and diet, expenses in his sickness and loss of time, loss by his neglect of business. (Neglect is natural to the man who is not to be benefited by his own care or diligence), Expence of a Driver to keep him at work, and his pilfering from time to time, almost every slave being by Nature a thief, and compare the whole amount with the wages of a manufacturer of iron or wool in England, you will see that labour is much cheaper there than it ever can be by negroes here. Why then will Americans purchase slaves? Because slaves may be kept as long as a man pleases, or has occasion for their labour; while hired men are continually leaving their master (often in the midst of his business,) and setting up for themselves.

So the obvious answer was tarrifs and it worked very well to protect themselves from the corrupt British markets, and the American government raised so much $$$ from tariffs they didn't even think about stuff like income taxes.

Tariffs can be used property to shield a country's market from corruption of other countries, or they can be abused to protect industries within a country and create corruption at home. Just like anything they can be used for good or bad, a distinction that classical economists never considered due to limited information they had on banking and currency manipulation in the 19th century.

If Von Mises or Hayek were alive today, I am confident I could convince either of them to revise their position on tariffs.

[Blaster]

Personally, as important as the currency peg is, I think it has to also be considered in context with China's other protectionist policies.

South Korea, although much smaller than China, is an interesting contrast. In the 1960s, they began industrializing and leveraged cheap labor to win business from the west (source). The US still runs a trade deficit with South Korea. Last year it was $28 billion (census.gov). But although US workers do compete with Korean workers, they're on a more or less level playing field. South Korean incomes have parity with the US (purchasing power parity is complex, but it's relatively safe to say that standard of living in South Korea is high and wages are pretty good). Side note: South Korea was reluctant to join the TPP. Also, the deficit ratio with South Korea is something like 2:3 (SK is at least buying 60% of what they are selling). We buy stuff from them, they buy stuff from us.

Not so with China. US companies aren't allowed to sell to China. The currency peg allows elites and government to maximize investment in economic development of key industries (energy, aerospace, research, technology) while protectionist policies ensure that development is unhindered by undesirable market forces. In other words, China is playing a long game and doing everything it can to attain a superior economic position in the world. China isn't interested in a New World Order, its interested in China.

[NASA Test Pilot]

(03-11-2016 11:33 AM)Samseau Wrote:  

(03-11-2016 11:22 AM)Libertas Wrote:  

We might also want to go into detail about those 19th century tariffs durinc which time America rose to be the world's greatest industrial power.

How are those different from Smoot or what Trump is proposing?

Blaster's posts above show how it was different.

Back when America was founded, British Mercantilist policies apparently did many of the same things China is doing today:

- British workers were paid less than most slaves
- The dumping of cheap goods would kill American businesses
- The British government picked winners and losers of industry with low-interest loans and favorable regulations for big businesses but nothing for anyone else

From Blaster's Ben Franklin link above, the British worker was cheaper than American slaves:

Quote:

12. Tis an ill-grounded opinion that by the labour of slaves, America may possibly vie in cheapness of manufactures with Britain. The labour of slaves can never be so cheap here as the labour of working men is in Britain. Any one may compute it. Interest of money is in the Colonies from six to ten per Cent. Slaves one with another cost thirty . Sterling per head. Reckon then the interest of the first purchase of a slave, the Insurance or risque on his life, his cloathing and diet, expenses in his sickness and loss of time, loss by his neglect of business. (Neglect is natural to the man who is not to be benefited by his own care or diligence), Expence of a Driver to keep him at work, and his pilfering from time to time, almost every slave being by Nature a thief, and compare the whole amount with the wages of a manufacturer of iron or wool in England, you will see that labour is much cheaper there than it ever can be by negroes here. Why then will Americans purchase slaves? Because slaves may be kept as long as a man pleases, or has occasion for their labour; while hired men are continually leaving their master (often in the midst of his business,) and setting up for themselves.

So the obvious answer was tarrifs and it worked very well to protect themselves from the corrupt British markets, and the American government raised so much $$$ from tariffs they didn't even think about stuff like income taxes.

Tariffs can be used property to shield a country's market from corruption of other countries, or they can be abused to protect industries within a country and create corruption at home. Just like anything they can be used for good or bad, a distinction that classical economists never considered due to limited information they had on banking and currency manipulation in the 19th century.

If Von Mises or Hayek were alive today, I am confident I could convince either of them to revise their position on tariffs.

Please do make a case for tariffs (customs duties) as I think that it can be made; however, the Austrian economists would probably say something to the effect that they are not directly against all tariffs, including duties collected mainly for revenue, or to keep alive industries needed for war; nor is it directed against all arguments for tariffs, but rather they are against the fallacy that a tariff on net balance “provides employment,” “raises wages,” or “protects the American standard of living.” The chief reason being they are normally considering the immediate effects of a tariff on special groups, and neglecting to consider its long-run effects on the whole community. They would challenge defenders of tariffs to state their arguments in terms of both of the people who want to trade, not just their side. They will probably argue counter in relation to labor productivity and one who defends tariffs cannot logically oppose government control of prices and profits, material allocations, subsidies, and other violations of the free-market principle.

They might use the similar rationale for import quotas, exchange controls, bilateralism, most-favored-nation agreements, bulk-buying and selling by nations, fair trade laws, subsidies, national and international give-away programs, and other devices in reducing, diverting or preventing international trade.

Adam Smith rested his case on one fundamental proposition: “In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.” “The proposition is so very manifest, that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interested sophistry of merchants and manufacturers confounded the commonsense of mankind.” It is the maxim of a prudent head of a family (group), never to make an item at home when it will cost (assuming the quality is similar) him less to buy it from another.

With a tariff there is here no net gain to industry as a whole. But as a result of the artificial barrier erected against foreign goods, labor, capital and land are deflected from what they can do more efficiently to what they do less efficiently. Therefore, as a result of the tariff wall, the average productivity of labor and capital is reduced. If we look at it now from the consumer’s point of view, we find that he can buy less with his money. Because he has to pay more for the tariffed item and other protected goods, he can buy less of everything else. The general purchasing power of his income has therefore been reduced.

It might be helpful with your examples to distinguish between an import tariff (A tariff (imposed by nation A) in reaction to nation B´s undercutting prices (for reasons of labor cost) in nation A), and an export tariff (a tariff (imposed by nation A) in the first place that is not in reaction to an action by nation B, it is an export barrier).

[Blaster]

Quote:

Therefore, as a result of the tariff wall, the average productivity of labor and capital is reduced. If we look at it now from the consumer’s point of view, we find that he can buy less with his money. Because he has to pay more for the tariffed item and other protected goods, he can buy less of everything else.

This is true. The Western democracies have advanced tremendously using those principles in the last half-century. However, the problem is that China is not playing along (and other countries like Mexico are following their lead). They are not just using tariffs, in fact they are using a host of protectionist (or mercantilist) policies. They are trying to win absolute superiority in all industries. Their goal is to be produce everything, and for no one else to produce anything. That is their goal.

In order to thwart those ambitions and force China to play fairly, it is necessary to adapt and respond quickly to their aggressive mercantilism. In some cases that may mean tariffs, but to be quite honest focusing on tariffs alone is not good enough. China's entire posture is one of Economic Nationalism. I'm sure they have a plan for what to do if we raise tariffs. We have to be ready for that too. We have to keep up with them, and always be pushing them to play fair and cooperate with the rest of the world.

[Samseau]

Quote:

Adam Smith rested his case on one fundamental proposition: “In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.” “The proposition is so very manifest, that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interested sophistry of merchants and manufacturers confounded the commonsense of mankind.” It is the maxim of a prudent head of a family (group), never to make an item at home when it will cost (assuming the quality is similar) him less to buy it from another.

And I would simply refute Mr. Smith by saying, "So it is fine to buy the cheapest even if it involves slavery of those who produce it?"

Adam Smith would probably say, "Slavery is fine because we benefit from it."

But then I would reply to him, "But who decides who gets to be a slave?"

The fact is that slavery was common in Adam Smith's day and reflects a change of moral attitudes that slavery is no longer acceptable to us, but even if were to accept slavery as morally acceptable I would still point out the fact that slavery is not just bad for the slave but also for the slave master. Slavery is a terrible evil that has killed all nations which use it; it lead to the decadence of Greece, Rome, Islam, and the American South, which is why all of these places were eventually conquered to non-slave states that were numerically superior due to having more virtuous self-reliant citizens who bred more.

Thus Adam Smith's original arguments fail the moral arguments as well as the utility arguments; is both evil and weakening of any nation which uses it.

[rudebwoy]

Aren't most products we consume in the West, made from sweatshops and slave labour in the East?

Isn't this how the Corporations gained more power!