Posted on 04/08/2009 10:14:57 PM PDT by JoeProBono
Communities across America are bypassing the dollar and creating their own currencies in an attempt to help both consumers and businesses struggling in the recession. The idea, borrowed from the Depression era when the currencies were known as "scrip", is designed to boost local spending and keep money circulating within the community.
(Excerpt) Read more at telegraph.co.uk ...
Thank you for the first laugh I have had all day.
as far as i’m concerned, beyond natural resources we import, i see no reason whatsoever to export goods to countries where the average yearly salary is under $2000/yr. the only thing we ‘export’ to those countries are materials to be used in the manufacturing of goods which end up ‘imported’ back into the US and sold here. we get $1 in exported cotton, they get $25 for the shirt they exported to the US.
yea, that helps the US. we lose jobs, get cheaper quality goods, AND the money leaves the local economy and ends up in the pockets of the corporate exec running the offshore manufacturing facility. he pays his workers $0.50-1.00/hr and keeps the rest.
yup... globalists helping the US.. into an early grave
These communities should “bundle” their local currencies together and sell them to Wall Street as scrip backed securities. AIG can then sell more credit default swaps against these securities.
But your (rather expensive) shirt cost you $25 rather than $50.
You just got an effective raise because you can buy your shirts and other stuff so much cheaper.
actually, the shirt imported to the US would retail for $50-75+
and yes, $25 from the manufacturer would be expensive. i know shirt makers in Jamaica only get about $10 per shirt that retail like a normal dress shirt... $50-90
Competitive advantage is a major key factor in global trade. Sure, if the US really wanted to, it could become more or less self-sufficient. Most things needed (or, with a stretch, all things needed ...and 'needed' is a tad different from 'wanted') could be made/produced/built here. However, that would come with certain (and deep) associated costs, and resources that could be used for better/higher purposes. For instance, the person who would be making rubber soles for cheap shoes would be making/doing something different, and instead we could have Indonesia or Pakistan or whatever deal with the rubber soles.
Furthermore, there is something that many people leave out that is called economic profit. Most people know about accounting profit ...for instance, let's say you make a widget that costs 15 bucks to make, but when you sell it you get 20 bucks in revenue. You just made an accounting profit of 5 Dollars.
Alright, your next door competitor also does the same thing, and for the same costs, and the same revenue ...thus he also gets 5 Dollars profit.
However, your competitor then decides that he could send his widget production to Ghana, where (all costs included) they could do it for 2 Dollars in costs. So, his profit is now 20-2, making it 18 bucks.
Alright.
However, you decided that your are not moving from your block, so you continue making them at the same cost (10 bucks). After all, you are making 5 Dollars in profit, and that is enough for you. However, while your accounting profit is 5 Dollars, you are actually making an economic LOSS of 13 Dollars! How? Well, economic profit/loss looks at opportunity costs ...it looks at what you could have earned had you outsourced (18 bucks), and thus looks at the economic value added.
That is something most people miss out on.
Now, YOU may be alright with that. After all, you are looking at the accounting profit of 5 bucks, and saying that's alright with you. Problem is, if you are a publicly listed company, your shareholders will not stand for it. Also, let's say you are a private company (and thus don't have the same quarterly pressures ....well, at least on the reporting front with analysts and media and shareholders pounding at your door) you are still at a MAJOR disadvantage to your next-door neighbor who decided to move to Ghana. For instance, look at pure US manufacturers ...for instance in electronics. All those who targeted the mass market are out of business (yes, they may be present in name ...but they either outsourced, or they went bust). The ones who survive are mostly very high end manufacturers, who can afford to add premium on top Dollar (and I mean excessively priced, for instance 60,000 Dollar US home theater entertainment systems).
Does that suck? Well, for the local manufacturer who decides to stay, it does ...and it also sucks for those who used to work for manufacturers who left. However, no manufacturer who does not service a very top-echelon niche (top Dollar market) would survive. Oh ...well, it could survive, if the consumers decided that they would pay extra and buy American (or Canadian for Canadians, Togolese for Togolese, etc) ....and while there are some who would, the vast majority do not. Many talk the talk, but few would even think of taking baby steps.
However, even moving away from economic value added (economic profits) vs simple accounting profits, there is still the whole issue of competitive advantage.
Simply put, the US would not be as wealthy as it is (as bad as things might be) if it simply chose to be totally self sufficient. It would simply be like a democratic China (before China opened up economically)
Anyways, the US is one of several countries that could be more or less self-sufficient. However, doing so would be like dipping yourself in magma flow just because you feel cold.
everything you describe is nothing new. we could have been doing just this ever since the cost of living in the US was higher then some third world nation. the main reason we didn't was due to the impact on the local business market. by going along with what you say, you end up with a hollywood set for an economy... all hollow store fronts.
prior to the 70s, we minimized the offshoring of production by enforcing tariffs to level the playing field. this is the exact reason we still have an auto-industry in this country. when lee iacocca went to congress in the 80s, it was to help protect the American auto industry from foreign companies dumping their goods on the market which were manufactured at close to slave wages. as a result, the tariffs brought in more tax revenue, protected jobs within the US, and gave the American car manufacturer the ability to compete. it was also the reason toyota has manufacturing facilities within the US. without the tariff barrier, ALL industries would be forced to offshore... as we have seen since the 90s when the clintons and walmart worked together to move our production to china.
i never said a business couldn't make more money by using the slave labor from another country. of course they can. it is just a stupid strategic move to base your existence on the shoulders of countries that would like to see you perish. it will also undermine the strength of the domestic job market and our ability to produce.
on a side note... when we moved off the gold standard, what was the dollar supposed to be based on? do you remember? it was supposed to be based on the ability of the American worker to produce. if that is the case, what happens to the value of the dollar as you move all production to other countries?
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