Contrary to popular opinion, shareholders of American public corporations are not the owners of the corporation, the claimants of the profit, nor investors, as in the contributors of capital. The amount needed for investment is huge with most companies, and patronizing a process which has brought some semblance of long term stability and democratization to corporate decision seems to be making a fatal error.
As someone who is not part of the 1% who is a shareholder, and has made what I feel reasonable investments, I'm kind of offended by the statement made on the podcast.
And another thing, public resources are finite and especially with the rising US debt more so in recent times. Why should companies get a free lunch just to open a few factories here? People are ultimately going to vote with their checkbook and if the Chinese good is a fraction the cost of the American good no amount of free money to businesses is going to offset that. Protectionism will just make both our countries poorer and nobody wants that. Beside that point, the US makes more in terms of GDP off it's manufacturing than the Chinese do currently, we just employ about a 1/10th of the workforce that we used to say a few decades ago. Those jobs have been replaced with machines and more efficient processes. So when a company is asking for a handout you need to realize that you aren't going to have a Foxconn open up in your district. The factory will be huge but with far less actual people in the factory.
Those jobs aren't going to come back and they shouldn't, because that's the laws economics. They were probably going to open up that factory anyways in your district so you are just giving them free money at that point.
/rant
What do you guys think? Am I blowing smoke or what? We all buy stuff that comes from China, what do you think?
We all buy stuff that comes from China, and it's disgusting. But it's the only real option we have to fully engage in the modern Western society in which we live. Also companies are scum who have no ethical dimension to their policy making when profit sits on the other side of the balancing scale, and it's disgusting. But what're you going to do? Stop buying anything, live in the woods and life off the land and local produce and step away from the modern world? Everyone has blood on their hands, some people may avoid ever thinking about it in those terms but it's not exactly a deep revelation that our good lives in the West are paid for in war, borderline slavery, and much unpleasantness that fuels the forces that give us an easy life.
But this is far from a unique issue. Every act of conspicuous consumption or wealth concentration while there are still preventable deaths going on is someone visibly boasting about the blood on their hands. It really is that simple. The answer is that rather than laud people who use their accumulated wealth and power to live up their lives, we should pity them and consider the death they could prevent but choose not to. Obviously this viewpoint is not compatible with the modern interpretation of the American Dream and the drive for self-application by unquenchable thirst for excessive reward, which makes it seems like a good counterpoint to the current prevalent Western view that wealth accumulation is a positive.
Just an alternative view of the life most of us lead (by being on the web and chatting on a tech website that's self-selecting, most people who read this will have similarly good lives to my own) and the damage we do.
@thabigred: I believe the negative view to shareholders and the board of directors of most companies comes from the fact that most of them, in general, when they are honest and not worried about looking civil and human, will say they just want profit and don't really concern themselves with whatever happens afterwards due to this only pursuit. Seeking profit, and nothing more, usually screws a lot of people and communities. It basically maimed and crippled the lower-middle class and middle class of America in the past 30 years. So why would anyone who is not an investor/shareholder give such people sympathy and an easy time based on their past track record of fucking everyone over except for their bank account?
@BaskervilleManor: Agreed, business is about making a profit and it is, for the most part, about making a profit at any cost and fuck societial or enviromental concerns. In my business class there was a discussion over two viewpoints. One where businesses are only out to make a profit; therefore, they should not be made to care about society, and the other viewpoint that says since businesses are the entities with the most resources (money, manpower, political influence, et al), they should work to improve society since they are the ones with the most capability to actually do something about the needs of the communities.
Somehow, I don't see anyone choosing to do the later because people suck and businesses are even less concerned with such trivial acts as empathy and recognizing there are other people in the world besides them... damn, I'm feeling cynical today!
@WolfOfOne: And this is why the current Republican platform of deregulation makes no sense. Government is tasked with trying to maintain the society (working for the people, with no favourites and undue influences, one vote per person) and corporations are clearly aimed down the track of profit at any cost. You need a strong Government there to protect the environment for the next generation, to prevent unchecked capitalism (if it is worth, summed, $1 more to kill a man than let him live then pure capitalism* says kill him, everything can be reduced to a sum based around money and that produces an efficient society), to keep us all working together to be better for the whole, not just fighting to maximise our own share.
* This is not classic capitalism, which is a bit of a hard definition to lock down. I'm talking the modern sales pitch for the idea that so many politicians push forward, the way the system is sold today without any talk of the natural side of regulation that prevents it all toppling over.
@BaskervilleManor: Actually the price of goods have been dropping faster than wages have been stagnating for lower and middle class, so actually they have not been maimed or crippled in the past 30 years. It's not about how much you make it's about how much you can buy. Those evil corporations are the cause of that. You can hear Will talk about it on the podcast, it's a race now to the bottom in price with most goods. You shouldn't have to give them any sympathy because it's not required in the exchange, they are pursuing their self interest and that has beneficial effects to everyone in the economy, even the poor & middle class.
And if anyone is going to argue with me that prices of goods are not been dropping steadily, I don't think you could win that argument but I'm willing to pursue it need be.
Only Americans could become wealthier from an exchange, and that's what these Chinese goods are doing for us, and we find a way to complain about it. American manufacturing is not being hollowed out, each year it's grown since the 1950's steadily. Employment though since the 1950's in manufacturing has been dropping steadily. That's what we call productivity and it's what's given you the products and modern conveniences that we all take for granted.
@thabigred: err milk is getting more and more expensive lol Prices in the grocery stores seem to keep going up year to year, yet the cost of living increases are falling behind, at least that's how it seems to be to me. Being a college student, everything seems expensive though :P
@WolfOfOne: If you look at this excel sheet you'll see that the price of milk has actually been in flux. Due the fact that many farmers operate on credit, it seems to me that they are keeping the price high even though some years they are making a great amount of product because of the price volatility. It also tells me that they have a commodity they know you are probably willing to pay for regardless the price, although that outcome seems less likely with the rise of soy and almond milks.
What is probably more likely is that they are keeping the prices just bellow the alternatives(soy & almond) and using that as leverage to make up for the bad years like 2007 and 2008 where there returns were so low.
Uh, oh. Did they get all political on the Tested Podcast again?
This It's the supply chain, not necessarily labor costs. The short version: yeah, those jobs aren't really coming back. If the US government is going to dump sh*tloads of money into something, it should be energy research not figuring out ways to subsidize a US-based electronics manufacturing industry.
@thabigred: heh, true it's like gas in that I kind of have to pay for it :P. Also, if I'm reading that right, looks like it is cheaper than in '08 but still not the cheapest it's been (for consumers anyways). Still, every time I go to buy milk, it always seems like it's gone up another few cents/gal. Wish the stuff didn't have such a short shelf life or I'd have a stockpile from when it was cheaper a few months ago :P
@thabigred: What I don't understand is why you are calling money to companies that build in America a "free lunch". The monies aren't a free lunch, they are an incentive to build in America yet provide the same costs as something built in another area. So your argument that Chinese goods are always going to be a fraction of cost is exactly what the money going to these companies would be to prevent. Believe it or not, there are companies out there that would like to produce goods in America, but don't simply due to profit. Hopefully this kind of money would be an incentive for them to choose to build here, as long as they can offset the costs. (And yes I know the labor costs vs supply chain thing, not every company is Apple, they all have their own reasons for why they outsource)
Also I actually think Protectionism isn't a bad thing. Can it be over done? Yeah certainly. However, I think a purely free market is one of the worst ideas I have ever heard, because it ignores the societal and cultural differences between regions and how those effect economic situations. In a purely free market America will always lose, because we have standards for working in America that other countries don't. We have this standards as a result of our historic, cultural, a societal norms. I am not willing to give up things like Child Labor laws and the Minimum Wage. In a purely free market everything becomes a race to the bottom, including working conditions. This is one of the reasons government exists (at least in my opinion) to force these companies to adhere to basic ethical rules that we decide as a society. So if we as a society have to pay the bill (through taxes) for government to do things that either incentivize (grants) or force companies to adhere to these norms and ethics, I am completely okay with that.
@LtSquigs: 1. When a US good costs twice the cost of an Chinese good, no amount of tax cuts or other subsidy is going to offset that huge cost. All you are doing is taking public funds that could be going to more dire programs and using it to fill the pockets of companies that probably were going to build those factories here anyways. And I don't disagree that there are companies that like to produce goods here, we are still the largest manufacturer in the world despite this myth of China being on top. They aren't even second either, Japan is.
2. Protectionists love to talk about how the US has a trade imbalance with China, the fact that we buy more goods from them than we sell back. This is the core of their argument and it's completely conjecture. California since it's creation has sold more goods to Idaho than Idaho has sold back to it, does this trade imbalance hurt either of those states. Should Idaho raise tariffs on California because California doesn't try to balance it's trade? Idaho has completely different standards of historic, cultural and societal norms from California, should either of these two states use protectionism to influence the other state to operate the way they do?
3. Companies in China are already increasing their working conditions to try to keep workers. Contrary to popular belief, it actually costs a lot of money to have a great amount of turnover in those factories. Foxconn for instance has about a 20% turnover of people voting with their feet to no longer work there. Foxconn has realized that the cost of educating 20% of their workforce again each month costs more than increasing the quality of the working conditions. No government or even public outcry needed to be involved for Foxconn to change these practices. So I don't buy this race to the bottom, and I think there are way more pressing societal problems to tackle than filling the pockets of manufacturers. Just like California and Idaho example, our two countries are getting richer from this exchange so I don't see the outcry.
@LtSquigs: 1. When a US good costs twice the cost of an Chinese good, no amount of tax cuts or other subsidy is going to offset that huge cost. All you are doing is taking public funds that could be going to more dire programs and using it to fill the pockets of companies that probably were going to build those factories here anyways. And I don't disagree that there are companies that like to produce goods here, we are still the largest manufacturer in the world despite this myth of China being on top. They aren't even second either, Japan is.
Actually, I believe China just overtook Japan in that area.
2. Protectionists love to talk about how the US has a trade imbalance with China, the fact that we buy more goods from them than we sell back. This is the core of their argument and it's completely conjecture. California since it's creation has sold more goods to Idaho than Idaho has sold back to it, does this trade imbalance hurt either of those states. Should Idaho raise tariffs on California because California doesn't try to balance it's trade? Idaho has completely different standards of historic, cultural and societal norms from California, should either of these two states use protectionism to influence the other state to operate the way they do?
Your comparing California to Idaho. Of course there is gonna be a huge difference in economic activity and output. California is the most populous state in the country and Idaho is one of the least populated (not to mention they have a very large area of land). I honestly don't think this comparison works when you try to put it abreast to the situation happening between the U.S.A and China
3. Companies in China are already increasing their working conditions to try to keep workers. Contrary to popular belief, it actually costs a lot of money to have a great amount of turnover in those factories. Foxconn for instance has about a 20% turnover of people voting with their feet to no longer work there. Foxconn has realized that the cost of educating 20% of their workforce again each month costs more than increasing the quality of the working conditions. No government or even public outcry needed to be involved for Foxconn to change these practices. So I don't buy this race to the bottom, and I think there are way more pressing societal problems to tackle than filling the pockets of manufacturers. Just like California and Idaho example, our two countries are getting richer from this exchange so I don't see the outcry.
I think working conditions in China, in general, will improve incrementally over the next two decades but don't except it to ever mirror the rights and proper working conditions you find in a country like Japan or Germany. Areas in Africa and Asia will most likely become the new, cheap China-manufacturing powerhouses when the mass of the Chinese populace starts to advance upwards a bit. Also, you are using Foxconn as a point of positive, but I believe they are unique and do not represent all manufacturers in that country. When you say Foxconn, you are basically saying Apple and a large portion of the PC market. Would the same apply for a Chinese manufacturer making something that is not as appealing, sexy, or advanced as an iPhone or a desktop PC?
@LtSquigs: 1. When a US good costs twice the cost of an Chinese good, no amount of tax cuts or other subsidy is going to offset that huge cost. All you are doing is taking public funds that could be going to more dire programs and using it to fill the pockets of companies that probably were going to build those factories here anyways. And I don't disagree that there are companies that like to produce goods here, we are still the largest manufacturer in the world despite this myth of China being on top. They aren't even second either, Japan is.
Actually, I believe China just overtook Japan in that area.
You're right about this, I forgot all the headlines earlier this year about this. America is still number one in manufacturing, I know that for sure, and I believe 2007 was the largest it had ever been previously so yeah.
@BaskervilleManor said:
@thabigred said:
2. Protectionists love to talk about how the US has a trade imbalance with China, the fact that we buy more goods from them than we sell back. This is the core of their argument and it's completely conjecture. California since it's creation has sold more goods to Idaho than Idaho has sold back to it, does this trade imbalance hurt either of those states. Should Idaho raise tariffs on California because California doesn't try to balance it's trade? Idaho has completely different standards of historic, cultural and societal norms from California, should either of these two states use protectionism to influence the other state to operate the way they do?
Your comparing California to Idaho. Of course there is gonna be a huge difference in economic activity and output. California is the most populous state in the country and Idaho is one of the least populated (not to mention they have a very large area of land). I honestly don't think this comparison works when you try to put it abreast to the situation happening between the U.S.A and China
China is the most populous country, like California their biggest advantage is human capital. Trade deficits have always existed, no manipulation on part of China was needed to create this imbalance, that was my point. If our trade was balanced that would actually require a whole lot of manipulation.
What I was getting at is protectionist always look at one side of their argument then hammer that argument home as if it's true. It's not. Trade deficits are not a bad thing, they are naturally occurring phenomenon.
@BaskervilleManor said:
3. Companies in China are already increasing their working conditions to try to keep workers. Contrary to popular belief, it actually costs a lot of money to have a great amount of turnover in those factories. Foxconn for instance has about a 20% turnover of people voting with their feet to no longer work there. Foxconn has realized that the cost of educating 20% of their workforce again each month costs more than increasing the quality of the working conditions. No government or even public outcry needed to be involved for Foxconn to change these practices. So I don't buy this race to the bottom, and I think there are way more pressing societal problems to tackle than filling the pockets of manufacturers. Just like California and Idaho example, our two countries are getting richer from this exchange so I don't see the outcry.
I think working conditions in China, in general, will improve incrementally over the next two decades but don't except it to ever mirror the rights and proper working conditions you find in a country like Japan or Germany. Areas in Africa and Asia will most likely become the new, cheap China-manufacturing powerhouses when the mass of the Chinese populace starts to advance upwards a bit. Also, you are using Foxconn as a point of positive, but I believe they are unique and do not represent all manufacturers in that country. When you say Foxconn, you are basically saying Apple and a large portion of the PC market. Would the same apply for a Chinese manufacturer making something that is not as appealing, sexy, or advanced as an iPhone or a desktop PC?
You are telling me that other manufacturers don't care about making their manufacturing lines more productive? The same thing that happened in the US will happen in China. As productivity rises, so will working conditions and wages, and slowly they will stop employing as many Chinese.
That's what happened in the United States, and I see no signs that this won't happen there. If anything the Chinese will do it faster than America. Their literacy rates are already incredibly high and women's rights are already on par with men's. I don't see any signs that working conditions won't get better in these factories.
So Even if this is no longer true then at the very least the US and china would have to be neck and neck or switching back and forth between second and first.
@CrippleCaptain: That article is misleading because it doesn't taken to account value of goods sold. I've never argued here that China is not making more goods than the United States, what I've argued is that we are still more profitable.
If America wants to become top goods manufacturer in terms of quantity again and 'take' those jobs back from the Chinese all we need is hyper inflation. If that article is correct all we need to do is make the dollar worth less so that it stops hurting our exports. In other words all we have to do is make ourselves poorer. ;)
@thabigred: "Contrary to popular opinion, shareholders of American public corporations are not the owners of the corporation, the claimants of the profit, nor investors, as in the contributors of capital."
@thabigred: "Contrary to popular opinion, shareholders of American public corporations are not the owners of the corporation, the claimants of the profit, nor investors, as in the contributors of capital."
I'm not sure I understand this. What do you mean?
The vast majority of shareholders are in the secondary market and provide no capital directly to the corporation, capital that is provided to the corporations is done so in the primary market. This is a big misunderstanding people have about shareholders, they do not provide capital to corporations as an investor.
The other two points prior to this are straight forward and don't really need to be explained. Shareholders do not own the company they have shares in nor do they have claim to the profit of the corporations they have shares in.
The whole point of this post was a rebuttal to when Gary said on the podcast these companies are 'beholden' to shareholders. People have huge misconceptions to what shareholders actually are, and demonizing them for decisions made by corporations is misguided in my opinion.
Though profit is the final goal for shareholders many understand the path to profit does not need to be a destructive one and actually sustainable growth and existence within a market is the ideal goal. People always say the Apple shareholders would be up in arms if production was in America and money could be saved by moving else where but aside from the most recent dividend payment Apple shareholders have not received a dime of profits since 1995! Of course they would still like to see big profits as this pushes up the price of the stock they hold but they aren't directly receiving a slice of these profits each year. This is not an isolated incident, many major 'corporations' don't partake in regular dividends payments. Facebook for example states their shares won't see any dividend payments in the near future.
As for moving 'everything' to China, for a start only 2.7% of US personal income was spent on Chinese goods in 2010 and other European countries are around this level too. So the thought that everything is spent on goods in China is crazy. Also manufacturing has been moving around the world for centuries. It started in Britain with the industrial revolution then moved to Germany and the US as they created more efficient production techniques and invested greater amounts in capital leaving the UK behind. The US has always been a labour scarce economy with high wages (The reason millions from around the world flocked there) and manufacturing had only functioned because of efficient organisation and a close proximity to resources. As these resources became more internationally traded production moved to East Asia where labour was cheap and could be efficiently organised. Whereas the US and Europe moved towards more value add lines of work in the 'service' sector. Manufacturing wont stay in East Asia forever either as wages rise and is likely to move to stable regions of Africa and parts of the Middle East until production of this manner becomes almost entirely autonomous.
Adaptability has been one of the defining features of US growth over the past 150 years and part of the reason why many countries like the UK seem fairly stagnant in comparison. Trying to force your way back 100 years just so you can shove a made in America sticker on the box is not the way forward.
Source: I'm a final year economic history student! :D
Contrary to popular opinion, shareholders of American public corporations are not the owners of the corporation, the claimants of the profit, nor investors, as in the contributors of capital. The amount needed for investment is huge with most companies, and patronizing a process which has brought some semblance of long term stability and democratization to corporate decision seems to be making a fatal error.
As someone who is not part of the 1% who is a shareholder, and has made what I feel reasonable investments, I'm kind of offended by the statement made on the podcast.
And another thing, public resources are finite and especially with the rising US debt more so in recent times. Why should companies get a free lunch just to open a few factories here? People are ultimately going to vote with their checkbook and if the Chinese good is a fraction the cost of the American good no amount of free money to businesses is going to offset that. Protectionism will just make both our countries poorer and nobody wants that. Beside that point, the US makes more in terms of GDP off it's manufacturing than the Chinese do currently, we just employ about a 1/10th of the workforce that we used to say a few decades ago. Those jobs have been replaced with machines and more efficient processes. So when a company is asking for a handout you need to realize that you aren't going to have a Foxconn open up in your district. The factory will be huge but with far less actual people in the factory.
Those jobs aren't going to come back and they shouldn't, because that's the laws economics. They were probably going to open up that factory anyways in your district so you are just giving them free money at that point.
/rant
What do you guys think? Am I blowing smoke or what? We all buy stuff that comes from China, what do you think?
We all buy stuff that comes from China, and it's disgusting. But it's the only real option we have to fully engage in the modern Western society in which we live. Also companies are scum who have no ethical dimension to their policy making when profit sits on the other side of the balancing scale, and it's disgusting. But what're you going to do? Stop buying anything, live in the woods and life off the land and local produce and step away from the modern world? Everyone has blood on their hands, some people may avoid ever thinking about it in those terms but it's not exactly a deep revelation that our good lives in the West are paid for in war, borderline slavery, and much unpleasantness that fuels the forces that give us an easy life.
But this is far from a unique issue. Every act of conspicuous consumption or wealth concentration while there are still preventable deaths going on is someone visibly boasting about the blood on their hands. It really is that simple. The answer is that rather than laud people who use their accumulated wealth and power to live up their lives, we should pity them and consider the death they could prevent but choose not to. Obviously this viewpoint is not compatible with the modern interpretation of the American Dream and the drive for self-application by unquenchable thirst for excessive reward, which makes it seems like a good counterpoint to the current prevalent Western view that wealth accumulation is a positive.
Just an alternative view of the life most of us lead (by being on the web and chatting on a tech website that's self-selecting, most people who read this will have similarly good lives to my own) and the damage we do.
@thabigred: I believe the negative view to shareholders and the board of directors of most companies comes from the fact that most of them, in general, when they are honest and not worried about looking civil and human, will say they just want profit and don't really concern themselves with whatever happens afterwards due to this only pursuit. Seeking profit, and nothing more, usually screws a lot of people and communities. It basically maimed and crippled the lower-middle class and middle class of America in the past 30 years. So why would anyone who is not an investor/shareholder give such people sympathy and an easy time based on their past track record of fucking everyone over except for their bank account?
Somehow, I don't see anyone choosing to do the later because people suck and businesses are even less concerned with such trivial acts as empathy and recognizing there are other people in the world besides them... damn, I'm feeling cynical today!
@WolfOfOne: And this is why the current Republican platform of deregulation makes no sense. Government is tasked with trying to maintain the society (working for the people, with no favourites and undue influences, one vote per person) and corporations are clearly aimed down the track of profit at any cost. You need a strong Government there to protect the environment for the next generation, to prevent unchecked capitalism (if it is worth, summed, $1 more to kill a man than let him live then pure capitalism* says kill him, everything can be reduced to a sum based around money and that produces an efficient society), to keep us all working together to be better for the whole, not just fighting to maximise our own share.
* This is not classic capitalism, which is a bit of a hard definition to lock down. I'm talking the modern sales pitch for the idea that so many politicians push forward, the way the system is sold today without any talk of the natural side of regulation that prevents it all toppling over.
@BaskervilleManor: Actually the price of goods have been dropping faster than wages have been stagnating for lower and middle class, so actually they have not been maimed or crippled in the past 30 years. It's not about how much you make it's about how much you can buy. Those evil corporations are the cause of that. You can hear Will talk about it on the podcast, it's a race now to the bottom in price with most goods. You shouldn't have to give them any sympathy because it's not required in the exchange, they are pursuing their self interest and that has beneficial effects to everyone in the economy, even the poor & middle class.
And if anyone is going to argue with me that prices of goods are not been dropping steadily, I don't think you could win that argument but I'm willing to pursue it need be.
Only Americans could become wealthier from an exchange, and that's what these Chinese goods are doing for us, and we find a way to complain about it. American manufacturing is not being hollowed out, each year it's grown since the 1950's steadily. Employment though since the 1950's in manufacturing has been dropping steadily. That's what we call productivity and it's what's given you the products and modern conveniences that we all take for granted.
@WolfOfOne: If you look at this excel sheet you'll see that the price of milk has actually been in flux. Due the fact that many farmers operate on credit, it seems to me that they are keeping the price high even though some years they are making a great amount of product because of the price volatility. It also tells me that they have a commodity they know you are probably willing to pay for regardless the price, although that outcome seems less likely with the rise of soy and almond milks.
What is probably more likely is that they are keeping the prices just bellow the alternatives(soy & almond) and using that as leverage to make up for the bad years like 2007 and 2008 where there returns were so low.
Uh, oh. Did they get all political on the Tested Podcast again?
This It's the supply chain, not necessarily labor costs. The short version: yeah, those jobs aren't really coming back. If the US government is going to dump sh*tloads of money into something, it should be energy research not figuring out ways to subsidize a US-based electronics manufacturing industry.
@thabigred: What I don't understand is why you are calling money to companies that build in America a "free lunch". The monies aren't a free lunch, they are an incentive to build in America yet provide the same costs as something built in another area. So your argument that Chinese goods are always going to be a fraction of cost is exactly what the money going to these companies would be to prevent. Believe it or not, there are companies out there that would like to produce goods in America, but don't simply due to profit. Hopefully this kind of money would be an incentive for them to choose to build here, as long as they can offset the costs. (And yes I know the labor costs vs supply chain thing, not every company is Apple, they all have their own reasons for why they outsource)
Also I actually think Protectionism isn't a bad thing. Can it be over done? Yeah certainly. However, I think a purely free market is one of the worst ideas I have ever heard, because it ignores the societal and cultural differences between regions and how those effect economic situations. In a purely free market America will always lose, because we have standards for working in America that other countries don't. We have this standards as a result of our historic, cultural, a societal norms. I am not willing to give up things like Child Labor laws and the Minimum Wage. In a purely free market everything becomes a race to the bottom, including working conditions. This is one of the reasons government exists (at least in my opinion) to force these companies to adhere to basic ethical rules that we decide as a society. So if we as a society have to pay the bill (through taxes) for government to do things that either incentivize (grants) or force companies to adhere to these norms and ethics, I am completely okay with that.
@LtSquigs: 1. When a US good costs twice the cost of an Chinese good, no amount of tax cuts or other subsidy is going to offset that huge cost. All you are doing is taking public funds that could be going to more dire programs and using it to fill the pockets of companies that probably were going to build those factories here anyways. And I don't disagree that there are companies that like to produce goods here, we are still the largest manufacturer in the world despite this myth of China being on top. They aren't even second either, Japan is.
2. Protectionists love to talk about how the US has a trade imbalance with China, the fact that we buy more goods from them than we sell back. This is the core of their argument and it's completely conjecture. California since it's creation has sold more goods to Idaho than Idaho has sold back to it, does this trade imbalance hurt either of those states. Should Idaho raise tariffs on California because California doesn't try to balance it's trade? Idaho has completely different standards of historic, cultural and societal norms from California, should either of these two states use protectionism to influence the other state to operate the way they do?
3. Companies in China are already increasing their working conditions to try to keep workers. Contrary to popular belief, it actually costs a lot of money to have a great amount of turnover in those factories. Foxconn for instance has about a 20% turnover of people voting with their feet to no longer work there. Foxconn has realized that the cost of educating 20% of their workforce again each month costs more than increasing the quality of the working conditions. No government or even public outcry needed to be involved for Foxconn to change these practices. So I don't buy this race to the bottom, and I think there are way more pressing societal problems to tackle than filling the pockets of manufacturers. Just like California and Idaho example, our two countries are getting richer from this exchange so I don't see the outcry.
@thabigred said:
Actually, I believe China just overtook Japan in that area.
Your comparing California to Idaho. Of course there is gonna be a huge difference in economic activity and output. California is the most populous state in the country and Idaho is one of the least populated (not to mention they have a very large area of land). I honestly don't think this comparison works when you try to put it abreast to the situation happening between the U.S.A and China
I think working conditions in China, in general, will improve incrementally over the next two decades but don't except it to ever mirror the rights and proper working conditions you find in a country like Japan or Germany. Areas in Africa and Asia will most likely become the new, cheap China-manufacturing powerhouses when the mass of the Chinese populace starts to advance upwards a bit. Also, you are using Foxconn as a point of positive, but I believe they are unique and do not represent all manufacturers in that country. When you say Foxconn, you are basically saying Apple and a large portion of the PC market. Would the same apply for a Chinese manufacturer making something that is not as appealing, sexy, or advanced as an iPhone or a desktop PC?
@BaskervilleManor said:
You're right about this, I forgot all the headlines earlier this year about this. America is still number one in manufacturing, I know that for sure, and I believe 2007 was the largest it had ever been previously so yeah.
@BaskervilleManor said:
China is the most populous country, like California their biggest advantage is human capital. Trade deficits have always existed, no manipulation on part of China was needed to create this imbalance, that was my point. If our trade was balanced that would actually require a whole lot of manipulation.
What I was getting at is protectionist always look at one side of their argument then hammer that argument home as if it's true. It's not. Trade deficits are not a bad thing, they are naturally occurring phenomenon.
@BaskervilleManor said:
You are telling me that other manufacturers don't care about making their manufacturing lines more productive? The same thing that happened in the US will happen in China. As productivity rises, so will working conditions and wages, and slowly they will stop employing as many Chinese.
That's what happened in the United States, and I see no signs that this won't happen there. If anything the Chinese will do it faster than America. Their literacy rates are already incredibly high and women's rights are already on par with men's. I don't see any signs that working conditions won't get better in these factories.
@thabigred:
March 13, 2011 10:22 pm http://www.ft.com/intl/cms/s/0/002fd8f0-4d96-11e0-85e4-00144feab49a.html#axzz1lLdlpkKY "China Noses Ahead as Top goods Producer"
--google cache link -_- http://www.google.ca/url?sa=t&rct=j&q=china%20noses%20ahead%20as%20top%20goods%20producer&source=web&cd=1&ved=0CC4QIDAA&url=http%3A%2F%2Fwebcache.googleusercontent.com%2Fsearch%3Fq%3Dcache%3AAeU5afjsH94J%3Awww.ft.com%2Fcms%2Fs%2F0%2F002fd8f0-4d96-11e0-85e4-00144feab49a.html%2BChina%2BNoses%2BAhead%2Bas%2BTop%2Bgoods%2BProducer%26cd%3D1%26hl%3Den%26ct%3Dclnk%26gl%3Dca&ei=HzgsT5jLB8u1twe0wLnfDw&usg=AFQjCNHXg9GHWk2R9WXnsjoaOnmUCJ7XqQ
So Even if this is no longer true then at the very least the US and china would have to be neck and neck or switching back and forth between second and first.
@CrippleCaptain: That article is misleading because it doesn't taken to account value of goods sold. I've never argued here that China is not making more goods than the United States, what I've argued is that we are still more profitable.
If America wants to become top goods manufacturer in terms of quantity again and 'take' those jobs back from the Chinese all we need is hyper inflation. If that article is correct all we need to do is make the dollar worth less so that it stops hurting our exports. In other words all we have to do is make ourselves poorer. ;)
Also, I can't make it set my link through words on Parchment v2, anyone else notice this?
@thabigred: "Contrary to popular opinion, shareholders of American public corporations are not the owners of the corporation, the claimants of the profit, nor investors, as in the contributors of capital."
I'm not sure I understand this. What do you mean?
@warmonked said:
The vast majority of shareholders are in the secondary market and provide no capital directly to the corporation, capital that is provided to the corporations is done so in the primary market. This is a big misunderstanding people have about shareholders, they do not provide capital to corporations as an investor.
The other two points prior to this are straight forward and don't really need to be explained. Shareholders do not own the company they have shares in nor do they have claim to the profit of the corporations they have shares in.
The whole point of this post was a rebuttal to when Gary said on the podcast these companies are 'beholden' to shareholders. People have huge misconceptions to what shareholders actually are, and demonizing them for decisions made by corporations is misguided in my opinion.
Though profit is the final goal for shareholders many understand the path to profit does not need to be a destructive one and actually sustainable growth and existence within a market is the ideal goal. People always say the Apple shareholders would be up in arms if production was in America and money could be saved by moving else where but aside from the most recent dividend payment Apple shareholders have not received a dime of profits since 1995! Of course they would still like to see big profits as this pushes up the price of the stock they hold but they aren't directly receiving a slice of these profits each year. This is not an isolated incident, many major 'corporations' don't partake in regular dividends payments. Facebook for example states their shares won't see any dividend payments in the near future.
As for moving 'everything' to China, for a start only 2.7% of US personal income was spent on Chinese goods in 2010 and other European countries are around this level too. So the thought that everything is spent on goods in China is crazy. Also manufacturing has been moving around the world for centuries. It started in Britain with the industrial revolution then moved to Germany and the US as they created more efficient production techniques and invested greater amounts in capital leaving the UK behind. The US has always been a labour scarce economy with high wages (The reason millions from around the world flocked there) and manufacturing had only functioned because of efficient organisation and a close proximity to resources. As these resources became more internationally traded production moved to East Asia where labour was cheap and could be efficiently organised. Whereas the US and Europe moved towards more value add lines of work in the 'service' sector. Manufacturing wont stay in East Asia forever either as wages rise and is likely to move to stable regions of Africa and parts of the Middle East until production of this manner becomes almost entirely autonomous.
Adaptability has been one of the defining features of US growth over the past 150 years and part of the reason why many countries like the UK seem fairly stagnant in comparison. Trying to force your way back 100 years just so you can shove a made in America sticker on the box is not the way forward.
Source: I'm a final year economic history student! :D
Edit: Google says it will never pay dividends either!