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The Economics of Outsourcing: Americans need to understand and adapt to such developments.
National Review ^ | 08/02/2012 | W. Michael Cox & Richard Alm

Posted on 08/02/2012 7:01:12 AM PDT by SeekAndFind

Economic change unleashes powerful forces. We can stubbornly resist them and cling to the status quo, but at best, that ushers in a slow but inevitable decline. A better approach lies in understanding the forces that periodically remake the economy, so we can seize the emerging opportunities they bring. This strategy has worked in the past, and it will work today.

A significant force in recent decades has been globalization. It has brought with it a surge in outsourcing, the shorthand term for businesses’ cutting jobs in the United States and moving production overseas to gain access to lower-cost labor. Many Americans view this development as a scourge, meaning the business practices of Mitt Romney’s private-equity firm, Bain Capital, have become fodder for the presidential campaign’s mudslinging.

Outsourcing makes for perfect political posturing — a quick-jab sound bite, serving up big business and foreign workers as villains and unemployed Americans as victims. But the economic reality of outsourcing isn’t so black and white. The issue goes far beyond the simple fact of job losses and touches on the broader realities of trade, basic human rights, and economic progress.

In economic terms, outsourcing jobs differs little from importing goods. Both involve using labor abroad rather than at home — so there’s no logical consistency in cursing one while tolerating the other. In 2011, America imported $2.6 trillion in goods and services, suggesting that outsourcing has just a tiny share of the effect foreign trade overall has on American jobs.

But people also commonly consider imports bad, calling them job killers, and consider exports good because they create domestic employment. In reality, that view is incomplete. When goods and services come from overseas, foreigners work and Americans consume, so imports contribute to higher U.S. living standards. Our exports go to foreigners, so we work and they consume. Some lament America’s trade deficits, but they’re only part of the country’s international balance sheet. In 2011, our red ink in goods totaled $738.4 billion, offset by a services surplus of $178.5 billion and foreign-investment inflows of $559.8 billion. As a matter of strict accounting, all countries’ international transactions balance — so nobody is taking advantage of anyone else.

Within the overall international balance, countries have trade surpluses in the industries they’re relatively good at, and deficits in those they’re not good at. Turns out, America’s surpluses are in high-value-added manufacturing and sophisticated services, where wages are high. Our deficits are in low-skilled manufacturing, where wages are low. With or without outsourcing, the U.S. economy is exporting low-wage labor.

Once we accept that payments balance, it becomes difficult to sort out trade’s overall impact on U.S. jobs. Imports displace U.S. production and jobs, but exports and capital flows increase the country’s economic activity and stimulate employment. We shouldn’t just focus on the job losses from trade and conclude that it hurts the economy.

Moreover, trade is a question of individuals’ freedom to choose. Countries don’t trade, individuals and companies do. They buy foreign goods and services because of price, quality, availability, tastes, or any number of other reasons. These are voluntary transactions between individuals, distinguished only because the nationalities of the buyers and sellers differ. Free trade among individuals is a basic human right. Protectionist interventions that attack imports or outsourcing rob Americans of a piece of their economic freedom.

Freer trade and cheaper communications have spurred globalization in recent decades, exposing once-insulated parts of the economy to foreign competition. Americans can’t cling to the jobs of the past. We need to find the best opportunities in the global economy. In the new international division of labor, we can be the managers, consultants, and even facilitators of outsourcing.

Trade and new technologies are a lot alike. They both upset the existing economic order, undermining some products, industries, and professions while giving rise to new ones. America’s prosperity has been built on wave after wave of such upheavals, with new jobs continually replacing old ones. That’s why American workers are insurance salesmen and dentists, not blacksmiths and buggy-whip makers. We don’t have to know exactly where the new jobs are. We only need faith in the American people and the capitalist system.

Politicians’ attacks on outsourcing won’t work any better than the Luddites’ assaults on technological innovation. If their argument prevails, it is a path to decline. America will be better off if we grab the opportunities arising out of globalization. That is the only thing that will work.

— W. Michael Cox is director of the William J. O’Neil Center for Global Markets and Freedom at Southern Methodist University. Richard Alm is writer-in-residence at the center.


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: outsourcing
Navigation: use the links below to view more comments.
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1 posted on 08/02/2012 7:01:17 AM PDT by SeekAndFind
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To: SeekAndFind

A rising tide lifts all boats - except when you’re using the water from one boat to do all the lifting.


2 posted on 08/02/2012 7:16:14 AM PDT by raybbr (People who still support Obama are either a Marxist or a moron.)
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To: SeekAndFind
American workers are more productive than any other worker. Your bang for the buck is best spent here. Globalization is why we became so wealthy, people wanted American goods.

The problem with the economy is not Globalization, its Fascism and Marxism in Washington DC. Our industries moved over seas not because Americans were lazy or wanted too much money, it was because Washington wanted too much money and put up so many obstacles that it became cheaper to build it overseas without all the paperwork.

The tone of this article is accept it, get used to it.

Horse shirt. FIGHT IT. The One World Government is Tyrany.

3 posted on 08/02/2012 7:19:30 AM PDT by American in Israel (A wise man's heart directs him to the right, but the foolish mans heart directs him toward the left.)
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To: SeekAndFind

Notable quote:

“Some lament America’s trade deficits, but they’re only part of the country’s international balance sheet. In 2011, our red ink in goods totaled $738.4 billion, offset by a services surplus of $178.5 billion and foreign-investment inflows of $559.8 billion. As a matter of strict accounting, all countries’ international transactions balance — so nobody is taking advantage of anyone else.”

++++++++

This is a point that is, unfortunately, not widely recognized, even here on FR. The trade imbalance is, in fact, brought into balance by foreign investment in the US. Some of that investment flows to the stock, bond and real estate markets while I suspect a significant portion of it goes to the purchase of U. S. Government securities.

Bottom line: there is no net trade imbalance.


4 posted on 08/02/2012 7:19:39 AM PDT by InterceptPoint (.)
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To: InterceptPoint

It is long past equality time, regarding jobs.

Bring Jobs Back!


5 posted on 08/02/2012 7:21:12 AM PDT by Cringing Negativism Network (America doesn't need any new laws. America needs freedom!)
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To: American in Israel

Your post is right on.


6 posted on 08/02/2012 7:22:01 AM PDT by hedgetrimmer
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To: SeekAndFind


7 posted on 08/02/2012 7:29:09 AM PDT by Iron Munro ("Jiggle the Handle for Barry!")
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There are bigger problems with outsourcing besides potential loss of jobs: safety and national security.

There have been health issues as in the whole Chinese drywall fiasco. Engineers have found substandard steel in steel that had been supposedly tested and passed.

On the national security front, the Chinese have been accused of building backdoors into chips that go into computers that control military equipment and civil aircraft.

Not having manufacturing facilities on US soil could be a huge liability if the US is involved in any prolonged confrontation.

8 posted on 08/02/2012 7:30:44 AM PDT by Kipp
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To: SeekAndFind; raybbr; American in Israel; InterceptPoint; hedgetrimmer

Outsourcing is a win-win for everybody in the long term.

Customers and investors drive businesses, and customers demand lower prices and investors demand higher profits. In order to lower their cost structure, companies outsource non-critical activities to places where they can get the most value for their money.

This, in turn, allows them to offer their products at a lower price, and depending on what the company does, millions of customers could benefit. Likewise, the investors then receive higher profits and better returns on their investments.


9 posted on 08/02/2012 7:31:45 AM PDT by moonshot925
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To: SeekAndFind
A couple of issues here:

1) The U.S. government has crippled American companies with its taxes and regulations, particularly with all the ridiculous reporting requirements and crazy environmental and ADA mandates.

2) The U.S. is not playing on a level field---the jobs are going to places like Communist China, lawless Mexico, and Southeast Asia, where slave-like labor is common place, especially with children.

3) The unions and lawyers have driven costs of production through the roof.

I don't see any hope for this country---the factories will never return, and the U.S. will be service industry only in the future, if that.

10 posted on 08/02/2012 7:32:31 AM PDT by Timber Rattler (Just say NO! to RINOS and the GOP-E)
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To: SeekAndFind

The correct term for sending jobs out of the country is “offshoring,” not “outsourcing.” But that shows how much the supposedly smartest people know about economics.


11 posted on 08/02/2012 7:34:42 AM PDT by MissNomer
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To: SeekAndFind
"As a matter of strict accounting, all countries’ international transactions balance — so nobody is taking advantage of anyone else. "

Yeah their purchases of our companies, debt and manufacturing capacity = our purchases of their communist slave labor trinkets.

12 posted on 08/02/2012 7:41:27 AM PDT by DannyTN
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To: Timber Rattler
the factories will never return

As of 2010, the US census reported there were 336,000 factories operating in the USA.

12.5 million Americans work in manufacuring, and they produced over $1.8 trillion worth of goods in 2010.

Manufacturing productivity has skyrocketed over the past 10 years thanks to technology. We are able to produce more goods with less workers.

13 posted on 08/02/2012 7:41:38 AM PDT by moonshot925
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To: SeekAndFind

Not one word in this crap piece about national security and our ability to defend ourselves in the event of a an actual war of attrition or world war. Name a world power that off shored its industrial base.


14 posted on 08/02/2012 7:45:58 AM PDT by central_va ( I won't be reconstructed and I do not give a damn.)
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To: SeekAndFind

This article is BS on so many levels.

Weak nations import most of what they use, strong nations produce most of what they use. Do you think its wise that we have outsourced our energy production?

500 Billion a year that leaves the country and leaves us vulnerable to blackmail.

How well do you think articles like this will play out with an angry electorate? The country is short 10-20 million jobs, due to poor government policy that encourages outsourcing.

China is on the way to becoming the most powerful country in the world. Think about that...


15 posted on 08/02/2012 7:47:13 AM PDT by desertfreedom765
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To: SeekAndFind

Americans have spent the better part of 30 years filling their homes to the rafters with foreign made products.

We look silly and hypocritical sitting around lamenting “outsourcing”.

Also, our hyper-comsumption (based largely on debt) economic model was never sustainable in the long run. We are now seeing the results of putting all our eggs in one unsustainable economic basket.

Again, we look pretty silly whining and complaining now while steadfastly clining to a model that CAN NOT BE SUSTAINED.


16 posted on 08/02/2012 7:52:23 AM PDT by Lorianne (fedgov, taxporkmoney)
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To: SeekAndFind

Adapting to outsourcing: babysitting 10,000 mile long supply lines with people who will tell you flat out they understand all your issues exactly and who will then turn around and make any damn thing they can that will fit in the shipping container and look close enough to what your ordered to get you to cut a check.


17 posted on 08/02/2012 7:56:29 AM PDT by Jack of all Trades (Hold your face to the light, even though for the moment you do not see.)
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To: desertfreedom765
China is on the way to becoming the most powerful country in the world. Think about that...

The per capita GDP for China is about $5400/year. The per capita GDP for the USA is about $48,000/year.

The Chinese are not going to catch up to us in the foreseeable future if ever. The reason: they will never reach the level of productivity of the American worker. At least not in our lifetimes.

18 posted on 08/02/2012 7:58:13 AM PDT by InterceptPoint (.)
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To: Lorianne
Americans have spent the better part of 30 years filling their homes to the rafters with foreign made products.

We have always imported goods.

From the 1770s to now.

This is nothing new.

19 posted on 08/02/2012 8:02:44 AM PDT by moonshot925
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To: InterceptPoint

Your so naive.

We are giving them our know-how and factories. They will catch us economically faster than you think.

Not a single economist thinks the USA will have the worlds largest economy in 20 years. We did this to ourselves. It’s amazing to me that people are still in denial about this.

The only thing that can prevent this now is political instability, which is possible.


20 posted on 08/02/2012 8:04:00 AM PDT by desertfreedom765
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To: desertfreedom765
China is on the way to becoming the most powerful country in the world. Think about that

China's per capita GDP is at a third world level.

They will probably never catch up to us.

21 posted on 08/02/2012 8:06:10 AM PDT by moonshot925
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To: American in Israel
TAXES and REGULATIONS are the cause of OUTSOURCING
22 posted on 08/02/2012 8:08:04 AM PDT by goodnesswins (What has happened to America?)
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To: desertfreedom765
Not a single economist thinks the USA will have the worlds largest economy in 20 years.

In 1984 I read a detailed report by a CIA intelligence officer who guaranteed that Japan's GDP would surpass the USA by the year 2000.

Don't believe everything you hear or read.

23 posted on 08/02/2012 8:12:07 AM PDT by moonshot925
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To: moonshot925
We are able to produce more goods with less workers.

The key part of your argument.

And census or no census, steel, textile, automobile, electronics, etc. manufacturing is gone. How many 'Made in America' labels have you seen lately?

24 posted on 08/02/2012 8:32:25 AM PDT by Timber Rattler (Just say NO! to RINOS and the GOP-E)
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To: SeekAndFind

I think the majority of the American public is with Ross Perot on this one.

Protectionism may be crappy macroeconomic policy. But we are darned sure ready to give it a try.


25 posted on 08/02/2012 8:42:10 AM PDT by Buckeye McFrog
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To: Timber Rattler

I work for a company that makes refrigeration equipment.

Everything we produce is labeled “made in the USA”.

The machine tools I use are made in the USA.

The auto parts I buy are made in he USA.

My tractor, lawn mower and my car are made in the USA.

Most of the food I eat is made in the USA.

Et Cetera


26 posted on 08/02/2012 9:03:02 AM PDT by moonshot925
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To: moonshot925

Not to the extent we have in the last 30 years or so and NOT paid for on credit to the extent in the last 30 years or so.

Our economy is 70% based on consumption, much of that based on credit that was itself based on an unsustainable rate of asset valuation rise (namely real estate).

Not sustainable. Which is why we are in the pickle we are in now.


27 posted on 08/02/2012 9:16:02 AM PDT by Lorianne (fedgov, taxporkmoney)
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To: Buckeye McFrog

Protectionism gives the government more control of business (leaning towards socialism) and hurts the American consumer.

How could any conservative support that?


28 posted on 08/02/2012 9:16:09 AM PDT by moonshot925
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To: Jack of all Trades
Adapting to outsourcing: babysitting 10,000 mile long supply lines with people who will tell you flat out they understand all your issues exactly and who will then turn around and make any damn thing they can that will fit in the shipping container and look close enough to what your ordered to get you to cut a check.

They'll flat out lie to your face about just about anything.

The last place I worked had outsourced a lot of software development work.  We figured it took 20 Indians to equal one of our American developers, and they still couldn't deliver software components to spec. management was absolutely living in a dreamworld, and was working the domestic folk to death who had to make up for the shoddy product coming from overseas.

29 posted on 08/02/2012 9:26:55 AM PDT by zeugma (Those of us who work for a living are outnumbered by those who vote for a living.)
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To: Lorianne

Consumers are the drivers behind economies.

Consumption is the only drive for any growth in economic activities.

By buying more of a product, we allow the producer of said good to either make more of his product or increase efficiency or quality of their product. Thus, by purchasing more and more products, we promote the betterment of our products as a whole.

Look what happened to Japan.

Consumers saved too much which led to the lost decade and they are still recovering from that.


30 posted on 08/02/2012 9:47:17 AM PDT by moonshot925
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To: zeugma; Jack of all Trades
Adapting to outsourcing:
babysitting 10,000 mile long supply lines with people who will tell you flat out they understand all your issues exactly and who will then turn around and make any damn thing they can that will fit in the shipping container and look close enough to what your ordered to get you to cut a check.

They'll flat out lie to your face about just about anything.

The last place I worked had outsourced a lot of software development work. We figured it took 20 Indians to equal one of our American developers, and they still couldn't deliver software components to spec. management was absolutely living in a dreamworld, and was working the domestic folk to death who had to make up for the shoddy product coming from overseas.


Sounds like you both have had similar experiences to myself.
31 posted on 08/02/2012 10:07:52 AM PDT by khelus
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To: moonshot925

Hyperconsumption (which is the only way we can get GDP growth at the levels economists and politicians say we want e ... north of 5%) is not sustainable over the long term.


32 posted on 08/02/2012 10:11:25 AM PDT by Lorianne (fedgov, taxporkmoney)
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To: Lorianne

Rich countries consume more.

Poor countries consume less.


33 posted on 08/02/2012 10:16:14 AM PDT by moonshot925
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To: moonshot925

... forgot to add:

Moreover consumption based on debt based on unsustainable rates of asset valuation rise is not sustainable.

Our entire model is based on quicksand.
The perpetual ‘growth’ model won’t work. The only way it can work in the short term is ever increasing consumption. But to do that you have to have an ever increasing asset valuation rise ... or bubbles ... which as we have seen are not sustainable in and of themselves.


34 posted on 08/02/2012 10:16:42 AM PDT by Lorianne (fedgov, taxporkmoney)
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To: moonshot925

Rich countries consume more ... until they can’t any longer.


35 posted on 08/02/2012 10:17:54 AM PDT by Lorianne (fedgov, taxporkmoney)
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To: moonshot925

Not on this planet.

Which planet are you from, BTW?


36 posted on 08/02/2012 6:08:42 PM PDT by hedgetrimmer
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To: hedgetrimmer

In the late 1800s many American agriculture jobs were offshored to South American countries where labor was cheaper.

People did not cry about “the end of American agriculture” because they knew it was beneficial to everyone.

The Americans that lost their jobs simply moved up to higher skilled work like manufacturing of services.

The same is true today.


37 posted on 08/02/2012 7:24:25 PM PDT by moonshot925
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To: moonshot925
China is doing many things to destroy America and our American dream. China practices massive currency manipulation but that is just one of many things China does to wage war against Americans and to destroy America.This article is just one more example of how china is destroying what remains of U.S. manufacturing and so China is destroying the U.S.A. . Every American should read this article:

https://www.stlbeacon.org/?_escaped_fragment_=/content/23613/anti_dum
12:07 am on Mon, 03.26.12
WASHINGTON – Steel wheels, nails and bedsprings made in Missouri are on the list. So are pipes, paintbrushes and coat hangers from Illinois. Not to mention a host of other products, from Silicon Valley electronics to Detroit auto parts.

If it seems that the Chinese are throwing cheaper versions of everything but the kitchen sink at U.S. markets, think again. This month, an Illinois kitchen-sink manufacturer — the Elkay Cos. — asked Washington to slap an “anti-dumping” tariff on Chinese steel sinks.

Whether the product is sinks or steel wheels, the complaints by U.S. manufacturers allege that China unfairly subsidizes the plants that make such products, allowing exporters to sell them in this country at less than fair market value.

In the most recent Missouri case, executives of Hayes Lemmerz — an international steel wheels manufacturer that employs more than 300 people at its plant in Sedalia — asked the U.S. International Trade Commission on March 8 to order punitive duties against Chinese imports that they contend unfairly undercut their prices.

“Don’t let dumped Chinese wheels shut down these plants and cost these good, hardworking Americans their jobs,” said Donald Hampton Jr., who supervises the steel-wheel plants in Sedalia and Akron, Ohio.

U.S. manufacturing jobs have declined by 36% in the last decade and that is because of trade with other countries. millions of Americans have lost their jobs because of that. We have to stop China now.

China has been destroying the U.S.A. China has caused untold misery, unemployment, homelessness and killed many Americans by denying them a chance to make a living.

So by your logic we have to allow china to do anything to the U.S.A. and Americans individuals or American companies as long as they call it “trade” or economics.NO we need the military for stopping China from invading the U.S. with troops . likewise we need to stop China's economic war against the U.S.A and from what China is doing to Americans. We need the government to protect Americans against armies, against China, against immigrants, against anything foreign. By your logic then we have to allow U.S companies to import an unlimited number of immigrants also( are you for that too?)Yes we need to limit government inside the border but we need a border and to protect that border against immigrants , china , the UN, WTO, .We need a fortress America .We must be for America first and let China go to hell! I declare war against China.I am ready to give it all up and to fight in a war against China . I would enlist right away. I only hope war breaks out as China is buying up the U.S.A and the world without firing a shot.I would rather die fighting China than to live as their slave. I want war and I want vengeance against China. Pass this article on to all you know. China makes 54% of the world's steel and most of the consumer electronics 9 billion people use. We in the U.S. cannot even make our own consumer electronics. but many say U.S. produces more(ridiculous).

38 posted on 08/02/2012 7:41:37 PM PDT by rurgan (Sunset all laws at 4 years.China is destroying U.S. ability to manufacture,makes everything)
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To: rurgan
I want war and I want vengeance against China.

Is this a joke or are you really that insane?

39 posted on 08/02/2012 7:49:43 PM PDT by moonshot925
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To: moonshot925

Outsourcing and ‘free trade’ are only beneficial to the globalists, and the politicians they keep in power with their bribes.

Globalists thrive on slave labor, especially slave labor supplied by communist masters.


40 posted on 08/02/2012 10:19:32 PM PDT by hedgetrimmer
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To: moonshot925

Are you Senator Feinstein by any chance? She publicly kowtowed to the Chinese in 2001 to protect her crappy Shanghai steel mill.

It was a good bet because instead of the American people becoming nauseated by her grubbing she managed to stay in power. Now her crappy chinese steel is being used to build the san francisco bay bridge. Too bad for California taxpayers as the crappy welds on Feinsteins crappy steel have to be cut out and redone by Americans. No wonder building the bridge is taking so long.

Oh yeah, Ms Feinstein, everyone it benefiting from ‘free trade’. Uh huh, yeah right.


41 posted on 08/02/2012 10:26:12 PM PDT by hedgetrimmer
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To: hedgetrimmer

Are you Senator Feinstein by any chance?

Maybe that is Feinstien. I hear Pelosi also has made millions off of Asian investments.


42 posted on 08/02/2012 11:50:57 PM PDT by rurgan (Sunset all laws at 4 years.China is destroying U.S. ability to manufacture,makes everything)
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To: moonshot925
You attack me personally just to discredit points I make. That you don't address the issues or article I posted shows your agenda.
43 posted on 08/03/2012 10:51:23 AM PDT by rurgan (Sunset all laws at 4 years.China is destroying U.S. ability to manufacture,makes everything)
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To: Timber Rattler; Buckeye McFrog; SeekAndFind; raybbr; American in Israel; InterceptPoint; ...
China is doing many things to destroy America and our American dream. China practices massive currency manipulation but that is just one of many things China does to wage war against Americans and to destroy America.This article is just one more example of how china is destroying what remains of U.S. manufacturing and so China is destroying the U.S.A. . Every American should read this article:

https://www.stlbeacon.org/?_escaped_fragment_=/content/23613/anti_dum
12:07 am on Mon, 03.26.12
WASHINGTON – Steel wheels, nails and bedsprings made in Missouri are on the list. So are pipes, paintbrushes and coat hangers from Illinois. Not to mention a host of other products, from Silicon Valley electronics to Detroit auto parts.

If it seems that the Chinese are throwing cheaper versions of everything but the kitchen sink at U.S. markets, think again. This month, an Illinois kitchen-sink manufacturer — the Elkay Cos. — asked Washington to slap an “anti-dumping” tariff on Chinese steel sinks.

Whether the product is sinks or steel wheels, the complaints by U.S. manufacturers allege that China unfairly subsidizes the plants that make such products, allowing exporters to sell them in this country at less than fair market value.

In the most recent Missouri case, executives of Hayes Lemmerz — an international steel wheels manufacturer that employs more than 300 people at its plant in Sedalia — asked the U.S. International Trade Commission on March 8 to order punitive duties against Chinese imports that they contend unfairly undercut their prices.

“Don’t let dumped Chinese wheels shut down these plants and cost these good, hardworking Americans their jobs,” said Donald Hampton Jr., who supervises the steel-wheel plants in Sedalia and Akron, Ohio.

U.S. manufacturing jobs have declined by 36% in the last decade and that is because of trade with other countries. millions of Americans have lost their jobs because of that. We have to stop China now.

China has been destroying the U.S.A. China has caused untold misery, unemployment, homelessness and killed many Americans by denying them a chance to make a living.

WE the U.S.A can't even make our own consumer electronics nor our own clothes and many other consumer industries. China makes MOST of the consumer electronics that 9 billion people use, 54% of the world's steel. China has 10 times the number of manufacturing workers than the U.S. has. Most of these workers work in new modern factories that the U.S.A has never seen the like of. Yet many propagandists here say that the debt ridden U.S. is more productive than China: it's all lies.

So by the logic of some on here we have to allow china to do anything to the U.S.A. and Americans individuals or American companies as long as they call it “trade” or economics.NO we need the military for stopping China from invading the U.S. with troops . likewise we need to stop China's economic war against the U.S.A and from what China is doing to Americans. We need the government to protect Americans against armies, against China, against immigrants, against anything foreign. By your logic then we have to allow U.S companies to import an unlimited number of immigrants also( are you for that too?)Yes we need to limit government inside the border but we need a border and to protect that border against immigrants , china , the UN, WTO, .We need a fortress America .We must be for America first and let China go to hell! Pass this article on to all you know. China makes 54% of the world's steel and most of the consumer electronics 9 billion people use. We in the U.S. cannot even make our own consumer electronics. but many say U.S. produces more(ridiculous)

44 posted on 08/03/2012 11:13:17 AM PDT by rurgan (Sunset all laws at 4 years.China is destroying U.S. ability to manufacture,makes everything)
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To: desertfreedom765; Buckeye McFrog; SeekAndFind; raybbr; American in Israel; InterceptPoint; ...

WE the U.S.A can’t even make our own consumer electronics nor our own clothes and many other consumer industries. China makes MOST of the consumer electronics that 9 billion people use, 54% of the world’s steel. China has 10 times the number of manufacturing workers than the U.S. has. Most of these China workers work in new modern factories that the U.S.A has never seen the like of. Yet many propagandists here say that the debt ridden U.S. is more productive than China: it’s all lies.


45 posted on 08/03/2012 11:15:24 AM PDT by rurgan (Sunset all laws at 4 years.China is destroying U.S. ability to manufacture,makes everything)
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To: rurgan

We need protective tarriffs. And we will probably have to abandon the WTO to put them in place.

We need to raise import tarriffs preferably on imports that are high tech, high manufacturing knowledge, high value, or strategic for defense. And we need to raise them and keep them up, until unemployment goes down.

There is in my opinion a fundamental flaw in our capital markets. The value of a firm to the country as a whole is probably 8 times greater than the value of a firm to it’s owner.

This is because a firm’s owner only values profits, while the country as a whole values profits, all wages both direct and indirect, and all taxes. For a typical firm direct wages probably accounts for 70% of product costs, and indirect wages probably accounts for 70% of raw materials.

The capital markets work okay as long we trade only with like minded companies that have similar wages and similar tax structures and all have free markets.

But when trading with a communist company like China, that restricts ownership and has massive amounts of cheap labor, they can buy our firms for a fraction of what they are really worth, put our people out of business, and employ their people.

It’s a massive win for them and it’s a loss for us. And we better figure out how to fight this economic war and quick. The easiest way is simply to raise tarriffs and give our economy a chance to recover. We can and should take advantage of their cheap labor, but not to the extent that it causes high unemployment here.


46 posted on 08/03/2012 11:29:03 AM PDT by DannyTN
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To: InterceptPoint
"Bottom line: there is no net trade imbalance."

That's an overly simplistic way of looking at it. It ignores that if you are importing goods, and exporting your manufacturing capability, that you are liquidating your means of production. And that is "balanced trade" recipe for bankruptcy.

47 posted on 08/03/2012 11:33:52 AM PDT by DannyTN
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To: Timber Rattler
1) The U.S. government has crippled American companies with its taxes and regulations,

I disagree. They are inconvenient and so are the first things people complain about, but they are not crippling. And you could do away with all taxes and regulations and not compete with countries employing communist slave labor.

2) The U.S. is not playing on a level field---the jobs are going to places like Communist China, lawless Mexico, and Southeast Asia, where slave-like labor is common place, especially with children.

THIS is the key point. But this is easily rectified, just raise import tarriffs until our unemployment goes down. And then selective lower them, allowing high value processes to remain in the U.S. while highly competitive low value processes can be outsourced to take advantage of cheap labor.

"3) The unions and lawyers have driven costs of production through the roof."

Again, remove the unions and we still are not going to compete with slave labor from communist china. Unless our own labor markets fall that low. I don't think unions made that much impact to the labor markets, but if they did, I'd take my hat off to the unions. In fairness, the unions did warn us against lowering the tariffs. Ignoring them was all fine and good, until nobody had jobs.

I don't see any hope for this country---the factories will never return, and the U.S. will be service industry only in the future, if that.

I do, we can easily turn this around, if we raised import tarriffs. Manufacturing would come back real quick and the government would have increased revenues to pay down the debt until it did. (That's a con until we have responsible legislators, but let hope this election will change that.)

Reagan's tactic of forcing foreign manufacturers to produce here, also worked. At least the labor component of the goods and the knowledge are retained in the country even if profits are not.

48 posted on 08/03/2012 11:44:11 AM PDT by DannyTN
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To: DannyTN

But we are not exporting our manufacturing capability. It continues to grow at a faster rate than the economy in general. We are about equal to the Chinese (who have 4x our population) and way ahead of whoever is in 3rd place. Plus, as I have noted many times, we are exporting 747s and impotnrting plastic toys and clothing. Big difference.


49 posted on 08/03/2012 11:50:43 AM PDT by InterceptPoint (.)
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To: InterceptPoint
First, You need to adjust manufacturing for inflation.

Anybody who has been to wal-mart or bought consumer electronics, or bought a car lately, knows that we have indeed exported much of our manufacturing capability.

If total manufacturing dollars has continued to grow despite the amount the amount of manufacturing capability that has been transferred overseas, then that's great. But it won't last forever. We have transferred way too much manufacturing capability and the 25% real unemployment rate is evidence of that.

50 posted on 08/03/2012 12:00:33 PM PDT by DannyTN
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