Food for thought on Manufacturing - DFWstangs Forums
 
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post #1 of 8 (permalink) Old 05-12-2005, 03:27 PM Thread Starter
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Food for thought on Manufacturing

This is not really political, except for the end, but I know the people that frequent here would understand financial information.

Quote:
Plasma Televisions are not Buggy Whips
by Peter Schiff


Last week, on my second appearance on CNBC's Squawk Box, host Mark Haines mischaracterized my position that the U.S. could not hope to pay for imports solely through reliance on the service sector, as my advocating that the U.S. return to the equivalent of a "Buggy Whip" economy. (His analogy is a reference to the classic economic example of "creative destruction," whereby the invention of a new technology, in this case the automobile, results in the displacement of a mature industry, in this case manufacturers of whips for horse-drawn buggies.)

However, as Mark should have realized, this concept has no relevance whatsoever to America's current abandonment of manufacturing. When buggy whip companies went out of business, America did not start importing foreign made buggy whips. America stopped making buggy whips because people no longer needed them!

Today, the very same highly desirable, state-of-the-art, consumer goods that were formerly produced in America are now being produced abroad. That's a big difference between the creative destruction of manufacturers of obsolete buggy whips being supplanted by manufacturers of innovative automotive supplies. Today's example is pure destruction, with nothing being created.

For all of the worship that many analysts like Haines shower on the supremacy of the "information economy," the fact remains that what Americans really want are cars, boats, consumer electronics, clothing, furniture, appliances, toys, etc. If we do not produce these products ourselves, and do not produce enough exportable services to acquire them through trade, soon we will have to live without them. Today we are able to acquiring such goods through debt. We issue our trading partners interest baring IOU's, which means that we are not really paying for our imports. We are putting them on the equivalent of a national credit card, with the final payment still due.

The position that we can pay for our imports with services alone is completely contradicted by the facts. A $60 billion dollar per month, rapidly growing, no end in sight, trade deficit, proves that we are not producing enough exportable services to pay for our growing imports.

Similarly, Haines' assertion that the U.S. manufacturing sector can no longer compete with the low wages in China is equally absurd. In the first place, during the 1940s though the 1970s, the U.S. ran consistent trade surpluses in manufactured goods despite paying the highest wages in the world. Today, despite having a higher wage scale than the U.S., Japan enjoys a surplus in manufactured goods, including a surplus with China.

This is because manufacturing is not a function of cheap labor. If it were Africa would certainly be the manufacturing center of the world. Manufacturing is a function of capital formation, which requires savings, and freedom, which necessitates low taxes and the absence of burdensome regulations. So the real reason for America's lack of manufacturing competitive is not that Americans are paid too much, but that we save too little, and are taxed and regulated too much.
http://safehaven.com/article-3059.htm
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post #2 of 8 (permalink) Old 05-12-2005, 09:02 PM
 
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Interesting....perhaps (and if someone can prove otherwise you will not offend me) alot of our money from manufactoring is going to tariffs we pay. I saw on the news today that we pay up to 40% to some countries to have our goods sent there...while they pay nothing, nada! But maybe we are the best country in the world because we pay so much to be so? We aren't perfect...but are one rung down the ladder from it.
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post #3 of 8 (permalink) Old 05-12-2005, 09:34 PM Thread Starter
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Quote:
Originally Posted by MGDMike
Interesting....perhaps (and if someone can prove otherwise you will not offend me) alot of our money from manufactoring is going to tariffs we pay. I saw on the news today that we pay up to 40% to some countries to have our goods sent there...while they pay nothing, nada! But maybe we are the best country in the world because we pay so much to be so? We aren't perfect...but are one rung down the ladder from it.
Here is some information.

http://www.usaexportimport.com/regional_tariffs.php

Some more

http://www.ita.doc.gov/td/tic/tariff...ariff_info.htm
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post #4 of 8 (permalink) Old 05-13-2005, 07:34 AM
 
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Thanks for the info-holy crap batman!
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post #5 of 8 (permalink) Old 05-13-2005, 08:29 AM
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Quote:
Originally Posted by MGDMike
Interesting....perhaps (and if someone can prove otherwise you will not offend me) alot of our money from manufactoring is going to tariffs we pay. I saw on the news today that we pay up to 40% to some countries to have our goods sent there...while they pay nothing, nada! But maybe we are the best country in the world because we pay so much to be so? We aren't perfect...but are one rung down the ladder from it.

Tarrifs aren't all they are cracked up to be. The US Government gives many tax break and incentives to US Manufacturers to keep them from sending their manufacturing overseas.

I run an Import Brokerage and Forwarding office and also source many overseas manuacturers for many US based companies.

Imports are good because of generates billions of dollars of revenue for the US Economy every year from Import Duty Tarrifs.
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post #6 of 8 (permalink) Old 05-13-2005, 06:21 PM
 
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Quote:
Originally Posted by LTP
Tarrifs aren't all they are cracked up to be. The US Government gives many tax break and incentives to US Manufacturers to keep them from sending their manufacturing overseas.

I run an Import Brokerage and Forwarding office and also source many overseas manuacturers for many US based companies.

Imports are good because of generates billions of dollars of revenue for the US Economy every year from Import Duty Tarrifs.
You are right. I thought about what you wrote. I would never buy a Honda or a Suzuki car...but those autos are keeping folks a job so they can put food on the table for their kids; in America and overseas.

P.S. Is that job fun you got?
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post #7 of 8 (permalink) Old 05-20-2005, 12:27 PM
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Just curious, are oil imports considered in trade deficit calculations?

"I have taken more out of alcohol than it has taken out of me."

"If not, by age 20, you are a liberal, then you have no heart. If not, by age 30, you are a conservative, then you have no brain.
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post #8 of 8 (permalink) Old 05-20-2005, 12:57 PM Thread Starter
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