We are currently experiencing the ‘sponge’ effect due to voluntary, market-driven holding of cash by banks. However as soon as that money is used for any reason – such as to retire debt – it leaves the sponge and enters circulation.

Many people are just now starting to see that Chinese labor is not equal to that of higher OR lower wage nations. It has nothing to do with cost and everything to do with Chinese culture. There IS an anywhere-but-China market out there that could generate huge profits, but it would take a large serious investment to take advantage of it. I can only assume the only people who have that kind of money to invest are living in too much of a bubble to realize it exists.

WITHOUT DECADES OF TARIFF PROTECTION, the unions would not have been able to extort such lavish salaries and benefits from the companies in question.

TARIFFS killed the US auto industry, by providing relief from the market pressures of supply & demand – allowing US firms to stay in business while maintaining higher costs & lower quality than would be possible in a tariff-free market.

Once foreign firms realized that they could circumvent this scheme by setting up US production facilities in union-unfriendly states, tthe ‘Big 3′ were hit straight on with the full force of market competition – and they couldn’t handle it.

It’s the tariffs protecting auto-making that destroyed the US auto industry – the unions were just the instrument of said destruction.

The same applies to US steel firms, and almost every other 1920s-style vertically-integrated manufacturing concern still in business…

They’re ‘zombie firms’ kept alive by govt meddling.

It’s also one of my suggestions on how to do it right….

Banks make money by lending (classically) or investing (today, post Glass) deposited money beyond the reserve requirement.

If they cannot do this, they cannot generate revenue, and they cannot exist.

Period.

A 100% reserve-requirement would mean that banks would have to CHARGE depositors money for the ‘service’ of keeping funds on deposit. No interest would be paid, and the money would be out of circulation unless spent.

This obviously can’t compete with the *free* alternative of stuffing it in the mattress (eg, a home safe, cigar boxes, etc), ergo NO BANKS.

The US still competes WITHOUT tariffs and subsidies in some markets (such as general aviation and arms manufacturing) because those sectors require highly skilled labor – which has a market price high enough to be naturally viable in the US.

We also compete well in the production of simple goods (such as plastic dishware) that can be produced with almost no human labor – thus avoiding the issue all together.

We are not ‘wasting productivity’ by getting our workforce OUT of manufacturing and into more skill-required jobs. The actual waste of productivity, is when you manipulate the market so that people can still find jobs in unskilled fields despite having the ability to work in much more demanding and economically valuable ones.

THAT is the reason why I am against policies that favor unskilled labor.

Simply put, unskilled labor is a common skill that everyone on the planet has, and thus it is nearly economically worthless. Manipulating the labor market to shelter unskilled labor positions from competition diverts US workers from more valuable, higher-skilled positions, and harms our economy.

You claim that ‘if my tariff goes into effect, it will cost the same to buy a good made here, as one in china’.

That is BAD. That means that I have to pay MORE for products I buy, solely because the government decided to meddle in the market. It is RAISING TAXES on ME.

NO GO.

And far from being a ‘tax on the rich’ (which is wrong, anyway) it’s a tax on EVERYONE – especially the poor, who benefit the most from the low price of imported consumer goods (the bulk of our imports, after oil, is in every-day consumer products – not luxuries).

Finally, YES, I would rather people be on welfare than have a tariff protected job, because a ‘tariff protected job’ IS WELFARE disguised as work.

People who work in the jobs you think you’d create ARE ON THE DOLE just as much as those lining up for a check!

In Hamilton’s time, a tariff essentially functioned as a national sales tax on finished goods. It didn’t create an anti-competitive advantage or welfare effect, because there were very few firms in the US engaged in manufacturing goods that competed with the products of Europe.

This, along with the companion excise-tax on whiskey (one of the few major ‘finished’ domestic products of the time), was seen as an easy way to fund the government, capitalize the Bank of the US, and retire the national debt.

HOWEVER, what you advocate is entirely different from the Hamiltonian-era tariff.

In the present-day, tariffs are MARKET MANIPULATION!

Rather than being a uniform tax on manufactured goods due to a lack of domestic manufacturing, today’s tariffs are used to grant anti-competitive advantage to firms based on geography and/or political connections.

They distort the market both for finished goods AND for labor, by allowing producers of non-competitive products (both finished goods and manufacturing labor can be seen as ‘products’ here) to continue in business, where the free market would normally price them out of business without the tariff.

Accusations of ‘currency manipulation’ are just canards to avoid accepting the truth – namely that labor-based manufacturing cannot continue in the US without market-distorting government intervention.

It doesn’t matter if there are 1,000 Republic of Korea Won (KRW) to 1 USD (it’s actually a bit more than that) – all that means, in a free market, is that an item that costs $100 will cost KRW 100,000. The market takes care of ;’evening out’ currencies just fine.

What folks like you don’t like, is that the market is equally ruthless in redistributing jobs, based on cost of labor & available skills. So you demand that government interfere with the market, to keep jobs that SHOULD BE OUTSOURCED here in the USA.

The problem with this, is that people like ME – who work in jobs that are here naturally – are forced to PAY FOR THE COST OF THIS MANIPULATION. Yes, tariffs amount to the government reaching into my pocket every time I go shopping – weather I buy domestic (and pay a price that can only exist due to the tariff) or foreign (paying a price inflated by the tariff).

It’s a tax on the sucessful, to support the unsuccessful.

And thus it’s WRONG.

The RIGHT way to encourage economic development, is to reduce taxes and regulations in sectors where the US worker is naturally able to compete – specifically white-collar jobs, and the energy sector. Manufacturing is a lost cause, and, when supported by tariffs, a cancer on the US economy.

Doing this does NOT interfere with the market in any way, nor does it force successful Americans to subsidize the careers of the unsuccessful.

Credit allows for efficiency savings on personal expenditures(like a home) when its not being abused.

There’s a reason no one actually manages to ‘corner’ a market – too many competing interests balance it out…

It would take a massive conspiracy for an ‘Unscrupulous Speculator’ to get the entire Federal Reserve system – including all members of the board of directors/Open Market Committee to conspire together just to make said speculator rich…

On the other hand, it takes absolutely no conspiracy for a bunch of unscrupulous politicians to sell the economy down the river for a few more votes – see the 2008 crash as proof of this.

Congress must NEVER have control over our money supply.

NEVER!

It has nothing to do with the govt debt – the govt is actually LESS leveraged than many businesses and individuals.

With credit, it’s easy – you borrow the money and pay it back over 30 years.

Without credit? Welcome to a life of renting…

And the reason for this? Most of the cost of a house is labor – and today’s worker won’t work for low enough wages to make lower housing prices economically possible.

Unless we can figure out how to cut the human factor out of house production, this isn’t going to change any time soon…

Your ‘work hard, learn skills, save money’ scheme simply keeps you poor until you’re too old to enjoy not being poor.

It creates the sort of hidebound class-based society that Old Europe was locked into prior to the Enlightenment.

Without credit/debt, only the rich can start businesses & invent/develop new products…

It’s a fact of life that business opportunity and the funds to pursue it rarely occur at the same time…. The existence of a credit market allows those who have funds but no ideas to sell their funds to those with ideas but no funds.

It is an ABSOLUTE NECESSITY for a vibrant & growing economy!

The majority of Americans want a specific standard of living – to the point where many would rather collect welfare & unemployment than ‘settle’ for a job that doesn’t get them ‘enough’.

That ‘enough’ is well, well above the natural market-rate for unskilled factory labor these days.

Simply put, our economy is too advanced, and our people are too well educated to be a producer-nation.

It doesn’t take skill, literacy, or education to do factory work – thus the entire adult population of the world is capable of it.

It’s not just China that has entered that market, either – and China will eventually start losing production jobs to poorer countries as their economy advances. Vietnam… Bangledesh… The list is endless…

There is a never-ending list of developing nations just waiting to be discovered as cheap-labor manufacturing centers….

It is absolutely insane for the US to attempt to compete with them – unless we develop the technology to manufacture without employing floor labor.

And no amount of human productivity will ever make up for this.

Back then, in China, people were not considered into the direct cost of the product. They were a considered a fixed cost to the State because under the ?rules? of communism everyone?s food, clothing, & shelter were guaranteed by the State. Consequently, the cost of labor for a Chinese manufacturer was not included in its selling price.

I don?t know if this is still the case but it wouldn?t surprise me if it has continued. The Chinese do not change things very rapidly. My suspicions are that the artificially low currency is China?s way of compensating for this approach. But China’s approach has consequences.

I believe one of those symptomatic consequences is that the provincial banks are collapsing under incredibly unsustainable debt to the central bank. It’s like a balloon. You distort the balloon in one area and the balloon is distorted elsewhere.

Not paying for labor in the manufacturing cycle forces the labor cost some where else. Most likely into debt on the providential banks. The Chinese could inflate their way out of this problem but that would bring down its house of cards, economically.

Sooner or later the Chinese “miracle” will have tremendous problems.

Believe me when I tell you, they ain’t that good.

As a general principle, I do not favor tariffs at all. I’ll have to mull over your ideas re: China because what China is doing by manipulating its currency will eventually have dire domestic consequences.

As a side note, I would deal with China this way. I would go balls out to produce energy and become an energy exporter to China. We would re-repatriate our US debt held by them and acquire Yuan surpluses. Then the US would be in the driver’s seat.

“The reason for outsourcing, is that our economy is too advanced to be a producer-nation anymore. People want a lifestyle that requires a $30k/yr job?”

Not true, we are the most productive industrial economy. Besides we are the second largest industrial nation on Earth, we are not “post-industrial” as the BS propaganda tells us all the time.

“Manufacturing disposable goods (the bulk of manufacturing activity) is a $400-2000/yr job.”

American factory workers cost nearly as much as their Chinese counterparts when you factor in productivity differences. Even the Chinese factory worker makes $3,000 per year and that’s a conservative estimate.

“The only way to have a manufacturing based-economy is to TAX those people who can get a job by their own merit (that?s what tariffs are ? a ?stealth? tax on US CONSUMERS in the form of higher prices) so that government can ?create jobs? for the unskilled, It?s something Obama would love, if he could get away with it!”

If my tariff goes into effect, it would cost the same amount to buy a good made here as it does in China. Therefore, it would be smarter to buy it from here. Tariffs historically taxed the consumption of the rich, since they prefer to import luxury items. What is wrong with employing more unskilled labor?? Or would you prefer these people on the welfare roles??? Obama would likely agree with your trade policy because it helps his Commie buddies get rich. Plus it keeps our poor on the welfare roles voting for Barry.

“Finally, tariffs DESTROY American companies, by shielding them from foreign competition. The result is ?Zombie Giants? such as GM, that grow fat & inept, resulting in absurd wages for employees, and abysmal quality for the consumer (what market-motive is there for a tariff-protected firm to produce the best quality for the lowest price? NONE, because the govt will protect them from competition ? so why compete?). ”

Ok, you know nothing on why GM is in trouble do you? Its due to the Wagner Act that basically forced the Big Three into Unions. This has cost GM and the Big 3 their competitive advantage. Factor in the fact that the foreign competition was subsidized and protected by their governments. Do you see why we had to bailout GM & Chrysler?? Its the government’s fault as usual, not everything in the “free” market is as it seems.

Ok, well, I’m done for tonight, good luck!