Excellent article on Iraqi WMD backstory: 'Wilson’s House of Lies'
POSTED BY: lynchaj
UPDATED: Tuesday, November 15, 2005 03:16
VIEWED: 3925
PAGE 4 of 6
I lost you with the peanut butter cup thing, didn't I, Andrew?
Obtuse Chrisisall
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DT
I'm assuming here that quality of product remains constant much as Smith did. For example there are very few places in England where you could grow wine grapes, so in practice England couldn't choose to make the wine at home rather than trade. Smith assumed quality would be the same to simplify the argument, I didn't think I needed to explicitly state that, but if I must I must.
First let's reestablish that I am talking about two different economic segments, traditional manufacturing and more modern knowledge based industries.
For traditional industry you say that cost of workers is not the only factor and I would agree, because as I stated there are geographic factors that determine good places to operate industrial plants.
If I had several billion dollars I *could* move industry to eastern europe and exploit those cheap workers as you suggest. That high investment represents the lack of decent infrastructure and the costs of getting it to a level where I could use it. Even if that were done for traditional industry there is still "comparative advantage inertia" If I have a vacuum cleaner factory in Ohio and a US workers using that factory make me profit X per cleaner then for a Polish factory to make sense they would have to make me a considerably bigger profit Y to offset extra distribution costs and the cost of a new factory etc.
What China offered was government subsidised infrastructure improvement coupled with low worker cost. That was why I said that combined it represented a deal too good for most multinationals to pass up. If China can deliver profit Y per vacuum cleaner then that factory in Ohio is toast and that's what happened. I don't know if it's a kind of self loathing but you seem to get the idea that things are outsourced to places with better productivity. That tends not to be the case the US tends to be a world leader in productivity and if some difference did exist between say the US and S Korean it would be marginal and probably not enough to offset the additional shipping and distribution costs of manufacturing offshore. What drives manufacturing offshore is cost base, energy, raw materials and labour costs.
Most other things being similar the deciding factor tends to be labour costs.
Now let's deal with "knowledge industries."
Unlike manufacturing industry they don't need a massive infrastructure investment to get started. Yes they do need educated people, so right now you cant move R&D to subsaharan Africa. What you seem to suggest is that the US is falling behind on educating people and that is why those worthy Asians are winning. You are mistaking effect for cause. The problem is that in knowledge based industries (again assuming comparative levels of skill) the lower worker cost wins out. This is because knowledge based jobs use data as a raw material and modern datacoms technology makes this easy to move about. Chances are if you recently had a catscan your data was sent to India to be analysed. This is not a question of productivity --- I would actually hope that someone checking my medical data would check it carefully --- it is entirely a matter of cost. With modern datacoms if two equally qualified people in two different countries compete for work analysing the same data, the guy with the cheapest labour cost wins. A lot of jobs have gone to India not because it was hard to find qualified US canidates but because our Indian cousins are cheaper. It is the resulting absence of jobs and the resulting fall in pay that then makes these high tech careers less attractive to new students. If you are taking on considerable debt to get an education you want some garentee of a return on that investment.
So it is as stated labour costs. Now here's the interesting thing. Labour costs are low in part because the cost base in these places is also low. I had a friend who would go to India every year to visit relatives. At the station he would hire a man servant and a maid at two pounds a day. They would cook/clean/do his laundary and run his errands while he was there. Hi
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DT
I'm assuming here that quality of product remains constant much as Smith did. For example there are very few places in England where you could grow wine grapes, so in practice England couldn't choose to make the wine at home rather than trade. Smith assumed quality would be the same to simplify the argument, I didn't think I needed to explicitly state that, but if I must I must.
First let's reestablish that I am talking about two different economic segments, traditional manufacturing and more modern knowledge based industries.
For traditional industry you say that cost of workers is not the only factor and I would agree, because as I stated there are geographic factors that determine good places to operate industrial plants.
If I had several billion dollars I *could* move industry to eastern europe and exploit those cheap workers as you suggest. That high investment represents the lack of decent infrastructure and the costs of getting it to a level where I could use it. Even if that were done for traditional industry there is still "comparative advantage inertia" If I have a vacuum cleaner factory in Ohio and a US workers using that factory make me profit X per cleaner then for a Polish factory to make sense they would have to make me a considerably bigger profit Y to offset extra distribution costs and the cost of a new factory etc.
What China offered was government subsidised infrastructure improvement coupled with low worker cost. That was why I said that combined it represented a deal too good for most multinationals to pass up. If China can deliver profit Y per vacuum cleaner then that factory in Ohio is toast and that's what happened. I don't know if it's a kind of self loathing but you seem to get the idea that things are outsourced to places with better productivity. That tends not to be the case the US tends to be a world leader in productivity and if some difference did exist between say the US and S Korean it would be marginal and probably not enough to offset the additional shipping and distribution costs of manufacturing offshore. What drives manufacturing offshore is cost base, energy, raw materials and labour costs.
Most other things being similar the deciding factor tends to be labour costs.
Now let's deal with "knowledge industries."
Unlike manufacturing industry they don't need a massive infrastructure investment to get started. Yes they do need educated people, so right now you cant move R&D to subsaharan Africa. What you seem to suggest is that the US is falling behind on educating people and that is why those worthy Asians are winning. You are mistaking effect for cause. The problem is that in knowledge based industries (again assuming comparative levels of skill) the lower worker cost wins out. This is because knowledge based jobs use data as a raw material and modern datacoms technology makes this easy to move about. Chances are if you recently had a catscan your data was sent to India to be analysed. This is not a question of productivity --- I would actually hope that someone checking my medical data would check it carefully --- it is entirely a matter of cost. With modern datacoms if two equally qualified people in two different countries compete for work analysing the same data, the guy with the cheapest labour cost wins. A lot of jobs have gone to India not because it was hard to find qualified US canidates but because our Indian cousins are cheaper. It is the resulting absence of jobs in the US and the resulting fall in pay that then makes these high tech careers less attractive to new students. If you are taking on considerable debt to get an education you want some garentee of a return on that investment.
So it is as stated labour costs. Now here's the interesting thing. Labour costs are low in part because the cost base in these places is also low. I had a friend who would go to India every year to visit relatives. At the station he would hire a man servant and a maid at two pounds a day. They would cook/clean/do his laundary and run his errands while he was
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Lynch,
1. I stated my case
2. 98% of the world already accepts bush-liar
3. So What.
4. I gain nothing by engaging you, and waste time
5. Moving on...
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Fletch,
In general I'm faithful to the founding ideas of America, but if America isn't faithful to them, I have little loyalty.
If I were hiring, whether I hire americans or someone else depends on who has the skills.
Quote:
I don't know if it's a kind of self loathing but you seem to get the idea that things are outsourced to places with better productivity.
Oh no, but it's true.
It's a sad truth, but it's a very true truth. Koreans are better workers.
If I hire Americans, here's the deal
1. for every hour the govt. will make me pay up to $20/ worker, vs. $1 in korea, this is totally aside from wages.
2. American workers have poor education, poor test scores and drug problems.
Naturally, I'd be very selective of my Americans, but if you were to ask me right now, given a total random sampling, who would you pick, Japanaese would come first, and Koreans second, followed by E.Europeans, and Canadians (our biggest outsourcing partners) E.Indians might edge out Americans. This is just from objective studies I've read in the financial news. People care about results first.
The solution is America needs its ass in gear. People here dilly dally over whether or not it would be right or acceptable to stop the drug trade or reform the education system. From my POV it's not really an optional thing, it's an absolute necessity.
Right now, in the global free market, E. Asia is winning, and it deserves to win.
Yeah, you heard me right.
As long as America has her head burried in the sand, E. Asia deserves to win.
China has a right to subsidize its labor if it wants, so do we. It may not be "fair trade" but I'm not much for fairness. This is tooth and nail.
Re: where can you go
Right now you can't do jack in subsaharan africa because there's no infrastructure and for the most part no education. India is a different matter.
It's simply not sound to say an Indian worker isn't more effective than an American. I've watched them work, it is so, they do work harder. Many places they work harder. On average. Sure there are plenty of great workers in America. But we can't afford to rest on our laurels, or trust in our own superiority.
It's a drag out fight, and may the best man win. All I'm trying to do is give America a much needed kick in the ass.
The thing is cost of labor is totally subjective. You can hire guys in inner city America for les than you can in India. Will they have tech. skills, sure. Will they have competitive tech. skills, probably not. Does the equiv. tech. skills cost more here? Yes, sure, becuase it's rarer here.
But the reality is what we outsource to low wage markets is bottom rung labor, call centers and the stuffing of little toy dogs. Could this be outsourced to America's poor? Sure, but not if the present regulations stay in place.
So what does a corp. pay for each American it hires?
Personal Income Tax. 95% goes to defense in some form or other, so I call this War Tax. War Tax is not paid by workers, you as a worker never see this money. It is sent by the company to the govt. in your name. It's part of the price they pay for hiring an American. This is about 50% as much as your take home pay on avg.
Medical Coverage. This typically comes to $7/hr. If the US would simply institure sane and non corrupt medical market reform similar to that in east asia the current medicare budget (paid by the 6% medicare tax, not the fed inc. tax.) would more than pay to cover all americans.
State Tax or as I like to call it, Education Tax, because that's where much of this money goes. Right now because of our yes socialist, essentially, state controlled education system we have a highly innefectual, highly costly, education system. $15,000 per child per year. This is the price of college tuition. Open private sector competition could cut this cost by 2/3.
Aux. Benefits, retirement, soc. sec. etc. Most corporations are paying into two redundant and highly inefficient systems riddled with corruption for the people they hire. As much as 13% can
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I am not saying Indians are less effective, I work with a lot of them and they are very smart people. Read what I wrote again. Compare two equally qualified canidates in different parts of the world and the lower cost man wins. I'm not suggesting that lesser cost in any way infers a less capable man, just the reality of basic capitalist economics. Do they "deserve" to win, no, because what you deserve is a subjective thing, they win because they can do the same job at a lower price.
Now part of the reason they can offer lower prices is because the cost base is less. You said before that you scrape through week to week on your pay. If tomorrow your company instituted a 66% pay cut could you live on your new salary? Assuming your energy costs, housing and food costs remained constant I'm guessing that you couldn't and yet someone in India could live comfortably on that 1/3rd income because costs of living over there are lower. Property prices are lower, food prices in fact probably only energy prices would be comparable. No matter how hard an American works he can't be paid less than his cost base and still survive, If he cant make morgage/rent, if he cant pay for food/education he's toast. People in China and India are paid less than it costs just to survive in the US no matter how far you go you can't make the cost base that low. Yes a big part of that is government phantom taxes and benefits but it's also higher food prices brought on by agricultural subsidies and the cost of real estate.
Now here's your biggest problem. Most working people have most of their life incomes invested in their home, it's appreciation represents the biggest capital gain most people ever see. Part of the reason customer confidence in the US didn't tank in 2001 was that house costs remained boyant, people felt comfortable because they held considerable equity in their homes, interest rates were low enough that many refinaced. That and the "tax cut" injected capital into the US economy at a critical time.
To compete with India and China and force that cost base down real estate prices would have to be adjusted downwards. An Indian can buy a modest house on an income of less than $16,000. You would be hard pressed to do the same in the US. However if real estate falls so does people's equity and they feel poorer. That makes the adjustment unlikely to pass political muster.
For knowledge based jobs there is nothing a qualified American can do that an equally qualified Indian can't do cheaper. No new knowledge based industry you produce cant equally be developed in India or China given enough educated talent. Only three things can change this.
1) An adjustment of costbase between nations, painfull for the US to adjust down but others will adjust up in time.
2) Interlectual protectionism. US companies ride into new territory and stake IP claims before the other guys get there. This is what the current trenjd to force US style IP laws through the WTO is about -- "landlords of the information age."
3) Technical security --- basically if both contries produce equally qualified people the lower cost guy wins. So you establish "comparative advantage" by developing industries based on trade secrecy where only your guys know the secret formular and you only teach Americans certain technologies. Not workable because smart people will figure it out. The Russian's stole the A bomb but the unpublished secret that makes the H bomb work they figured out from first principles (I could tell you what that is but under US law I'd then have to kill you 
)
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Sure, granted. But I don't think cost is the principle driving force. Cost equalizes itself in the global market extremely quickly. Salaries in China for certain jobs are already up to the same as their American equivalents. Japanese people still find jobs by turning in much higher worker productivity.
Now I'm a bad example here because I'm a pretty much subsistance person, and I am self employed. If I lost my source of income, I wouldn't run into too many problems. But I get most Americans would,m particularly if they're life is debt financed.
The Bush tax cuts were pathetic. From the completely opposite perspective from the democrats, I see the tax cuts as not nearly far enough. Here would have been a good start: The Tax Abolish. That wouldn't solve the problem, but it would be a good start.
Bush's tax cuts were bonuses for his rich friends, as the dems say, but the dems are wrong that those should go away. The truth is they need to be more thoroughly spread to the working classes. Not to help the working man, the working man doesn't really pay taxes, he only thinks he does. His employer pays the taxes.
But I have some real key things to say about this:
1. The problem is so much worse than it appears. It's not just competition, but rapidfire automation and drastic increase in the globally active population will send the current economy through the floor.
2. America is nowhere near ready. If Indian wages pass American wages on the way up, tomorrow, which they probably will, over 90% of Americans will still be unemployable.
3. I don't think the solution the US will actually apply is even on the right track. I think it's about 180 degrees away from where it needs to be. The US is likely to launch on some protectionist plan. America needs to compete globally. If it shuts itself off, it is doomed.
4. What America needs to do is use good old American knowhow to hold on to the cutting edge, and to drastically realign its economy to compete with the new order.
Finally, I don't think America will really do any of these things I say, and so it will probably do yours. I feel absolutely convinced that this will doom it to certain failure. Since I think this course is pretty close to sealed in fate, and I am already certain of the outcome, I don't know where that leaves this debate.
I'm sort of coming I guess from a theoretical perspective of if anyone would pay attention to what's happening, America wouldn't have to die a horrible death. Maybe the best place to carry that is to think of how one could create a new America somewhere as a subset. That would require being free from the Tax Machine, the unltimate business killer.
You did read that stuff I posted earlier that these 'cheap labor' countries workers are actually earning more money, esp. places like Korea, they get more dollars per hour than the American workers they're replacing do. It's the absence of the auxilliary taxes and govt. mandated expenses that makes them 'cheaper.'
I agree we need to adjust our wages down, and the first place to start is getting rid of those auxilliary expenses that are attached to hiring americans, my last post i thought i laid out a detailed plan to do that.
I don't think that attempts to control the technology are even a good idea. I think it slows progress. Better to keep acrest of the wave and try to hold on to the major share of the traffic.
I think in general trade secrets will lower the information exchange, and slow the progress again. Information sharing societies will take over.
It'll be tough. I think we'll lose horribly. I think our number one problem, BTW, is drugs. A person on drugs is functionally no more intelligent, from a problem solving perspective, than some of the higher functioning animals, monkeys, mice, etc. Our second problem is education. We waste at least 90% of classroom time, and with a little help from intelligent design we can push that to 95%.
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According to Andrew, all you have to do is say anything you want, then add on "I'm told" or "I believe" or "It seems to be the case", and you're NOT lying!!
And find some old weapons and snow-cone machines or whatever, and presto! The tip of the (as yet unfound) WMD iceberg!!
Andrew can be such an idiot, I'm told.
Chrisisall, also an idiot at times, I believe
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Should I tell you again.
Actually. let's try this one.
Everything Bush says is a lie.
I'm told that can't be disproven.
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Quote:I am here to chew bubblegum and kick ass. And I'm aaaall outta bubblegum.
Originally posted by lynchaj:
Chris, do you have anything constructive to add to this discussion or are you just here to disrupt it with endless blithering?
Chrisisall:)
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