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rickdugan
06-11-2011, 06:26 PM
Eagle, she's only saying that her country of origin is less than perfect in certain specific ways, not that its entire ideological premise is faulty.

I agree with Melonie that things would be better here if we fixed some of the artificial drags upon our economy put in place by over-regulation, litigation and taxation. However, simply put, free market capitalism, supported by a political system relatively free from corruption and supportive of property and contract rights, is exactly what makes this country so strong as compared to most other countries.

We have seen more intrusively directed political/economic systems fail time and again in many countries across the world. As a rule of thumb, the more government tries to control how economic output is distributed, the worse off everyone in that country becomes. In these environments: (1) the producers simply don't produce to maximum capabilities; and (2) decisions on what is produced, and by whom, are inefficiently driven by political, rather than economic, motives.

In the case of countries such as the one inhabited by Melonie now, the biggest stumbling blocks are political corruption and a lack of a legal system that supports property and contract rights. Political corruption leads to politicians that just don't care about anything besides fattening their bank accounts.

Education, transportation infrastructure, and even internal security, which need some level of support from the government, are not sufficient to support heavy industry in places where politicians drain their countries' economies for their own benefit. Now add to this a system where you do not know whether you will be able to enforce your contract and property rights if a politician decides against you and the result is a place where nobody wants to do business. Many U.S. manufacturers would love to set up facilities in parts of Central America, which are much better situated for product shipping, management travel and even simply for compatibility of time zones, but they cannot for the reasons noted above.

The U.S. has established a combined economic and political system which, when operating without interference, makes the U.S. a great place to build a company. The problem in recent years, however, is that the cumulative effects of excessive litigation and over-regulation are starting to erode our natural advantages.

eagle2
06-11-2011, 07:25 PM
What Melonie has been arguing, is that unskilled workers in America shouldn't be paid more than unskilled workers in China or other third world countries ($1 - $2 an hour). If the US and other western countries were to do that, the world economy would collapse, because so much of the world economy is dependent on the large number of high-paid workers in these countries. She doesn't understand that businesses need consumers who have good paying jobs to buy their products. If the average wage rate were to go to $1 or $2 an hour, strip clubs, and countless other businesses whose customers are mostly middle class, would go out of business.

Melonie
06-12-2011, 03:38 AM
^^^ actually, what I have been arguing is that today's world economy ... as it has developed over the past two decades at least ... has indeed been based on the majority of 'western' middle class workers ( Greece, Portugal, UK, US ) earning above world market wages and having access to credit that has indeed allowed them to 'consume' at a level that is far above the actual amount of added 'value' they were / are able to create as a result of their labors. The above world market paychecks have been funded by debt accumulated by the company that employs them ( as well as exploitation of lower cost offshore opportunities by the company that subsidizes company profits ) , and a level of personal 'consumption' that has been augmented by the assumtion of ever greater levels of personal debt.

Valiant efforts have been made by various world gov'ts and world financial entities to perpetuate that faltering debt based world economy by assuming new debt themselves and 'transferring' huge amounts of borrowed money to various companies and citizens. The same world gov'ts and world financial entities also tried to perpetuate this debt based world economy even longer via deliberate intervention to force down interest rates. However, the point has finally arrived where lenders ( i.e. China, Germany, Saudi Arabia ) can no longer risk the probable losses involved with funding new loans / gov't bond purchases at current interest rates. As such, the 'money spigot' that has been allowing gov'ts to keep borrowing ever larger amounts of new money and in turn 'transfer' that new money to various companies and citizens is being turned off at the source by those lenders.

If one runs the numbers, about 40% of America's current GDP comes from new money borrowed or printed by the gov't ... which is arguably also the average amount that many US workers are 'overpaid' versus the world market. This will be forced to an end by one means or another. And indeed this will mean that the standard of living for many Americans will drop significantly and that some US businesses will go out of business. But this does NOT mean that all American financial hope will be lost ! In fact, the retirement of debt and the reduction in gov't mandated 'wealth transfer' should provide NEW economic opportunities ... for those Americans who are truly productive at least ! However, this is going to be very bad for those US businesses and individuals that are not truly productive, and have been depending on gov't 'wealth transfers' and other gov't subsidies / protections from world market competition !

Your questions prompted me to post a new 'chart of the week' thread that basically illustrates the true economic situation re American workers financing their 'inflated' standard of living over the past 20 years via the spending of ever increasing levels of borrowed money as opposed to actual 'value' their labors were able to create !


Circling back on topic, the US states with generous social welfare programs, huge state debt levels, and 'winners and losers' regulatory / subsidy policies regarding particular companies located in the state, as discussed earlier in this tread, are arguably microcosmic examples of the larger global case. There are so many similarities between Greece and California ( time lagged by a year or so IMHO ) that one must be blind not to see them.

In response to your implied question about the probable future of US strip clubs, I have posted about this in many other threads. Like the world economy in general, those clubs and dancers who are able to offer 'top shelf' image / services to 'rich and powerful' customers will continue to well ... perhaps better than ever. Also like the world economy in general, another set of clubs and dancers who are willing to provide maximum 'bang for the buck' ( i.e. extras ) are also likely to do reasonably well as 'working class' customers seek more 'value' for every consumer dollar they spend. But in another analogy to the world economy, 'middle class' clubs and dancers that provide less 'bang for the buck' at equal / higher prices are likely to have difficulty as their customer base can no longer afford to buy what they are attempting to sell.

~

minnow
06-12-2011, 06:10 PM
<< SNIPS.>>>

Education, transportation infrastructure, and even internal security, which need some level of support from the government, are not sufficient to support heavy industry in places where politicians drain their countries' economies for their own benefit. Now add to this a system where you do not know whether you will be able to enforce your contract and property rights if a politician decides against you and the result is a place where nobody wants to do business. Many U.S. manufacturers would love to set up facilities in parts of Central America, which are much better situated for product shipping, management travel and even simply for compatibility of time zones, but they cannot for the reasons noted above.
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^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

RE: Last sentence- How so, Rick? (Better situated for product shipping? Mangement travel?) Genuinely curious about your reasoning behind that.
Mainly because it is at odds with earlier lament about lack of infrastructure. Yes, that water ditch in Panama ranks up there with sliced bread, but it cannot acccomodate many modern day super ships. A good heart isn't going to realize its full potential without good arteries. Even if a real good road/rail infrastructure could be developed, canal is still very much "regulated" in that only a finite number of ships of finite size can pass through there. Very few countries can match the US in integrated road, rail, maritime, and air transportation. Could this be a contributing factor in the high US standard of living? // End of threadjack.

rickdugan
06-12-2011, 06:39 PM
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

RE: Last sentence- How so, Rick? (Better situated for product shipping? Mangement travel?) Genuinely curious about your reasoning behind that.
Mainly because it is at odds with earlier lament about lack of infrastructure. Yes, that water ditch in Panama ranks up there with sliced bread, but it cannot acccomodate many modern day super ships. A good heart isn't going to realize its full potential without good arteries. Even if a real good road/rail infrastructure could be developed, canal is still very much "regulated" in that only a finite number of ships of finite size can pass through there. Very few countries can match the US in integrated road, rail, maritime, and air transportation. Could thsi be a contributing factor in the high US standard of living? // End of threadjack.

Minnow, I meant ideally situated simply by virtue of geographic location (close to the U.S.), shipping opportunities via the Caribbean Sea to the Gulf of Mexico (which would not require the use of the Panama Canal) and the timezone similarities. For example, Belize, Guatemala, Honduras, Nicaragua and Costa Rica all have direct access to the Caribbean Sea and are situated in locations and timezones much preferable to those in most Asian countries, but my earlier lament was exactly the point. We cannot avail ourselves of these natural advantages, along with the cheap labor pools in these countries, because of the other challenges inherent in doing business in these locations.

Melonie
06-13-2011, 03:03 AM
Yes, that water ditch in Panama ranks up there with sliced bread, but it cannot acccomodate many modern day super ships. A good heart isn't going to realize its full potential without good arteries.

Funny that you should mention the Panama Canal. The funding for construction of the new locks which will be completed in 2014 and allow larger ships to pass was accomplished by international 'private' investment based on an actual cost-benefit analysis -




The funding for expansion of various US ports in order to accomodate the larger ships that will come into service in 2014 has been a bone of contention between the US federal gov't and the individual states involved. Essentially, 'blue' states got federal funding and 'red' states did not. However, this did not stop one 'red' state from doing its own funding ...



The 'gold foil hat' crowd would also point out that the Panama Canal improvements to be completed in 2014, and the much larger container ships that will thus be permitted to pass through it, will actual REDUCE the total cost of imported Asian products to the US southeast and eastern states via reducing shipping charges ! This in turn will put US domestic manufacturers at an even greater financial disadvantage versus foreign competitors. Thus US federal and state funding of deepening ports to handle 2014 sized container ships, while providing some short term project work for union construction contractors as well as long term work for union longshoremen, will actually promote the permanent loss of additional US manufacturing jobs !



We cannot avail ourselves of these natural advantages, along with the cheap labor pools in these countries, because of the other challenges inherent in doing business in these locations.

Actually being down here way south of the border, I can vouch for the fact that this is now rapidly changing in certain central American countries ... i.e. those with a democratically elected gov't, that do NOT have a large presence of armed political 'opponents', plus have a banking system that is well connected internationally but NOT linked at the hip to the US ! And for better or worse, 'foreign' business investors actually have no problem whatsoever dealing with 'corrupt' central American governments ... as long as they can be confident that their 'payola' actually buys them what they are seeking ! In fact, many vacationing US businessmen have told me that they much prefer dealing with Central American politicians than US politicians because, down here, if they 'buy themselves' political favors that politician 'stays bought' ( as opposed to US politicians now 'rolling over' with each election / negative media exposure ).

~

Eric Stoner
06-16-2011, 12:21 PM
And it keeps getting worse under Obama. The latest numbers show that almost 20 % of disposable income is now coming from the government. That's right. Handouts have almost doubled since the 1980's as a percentage of disposable income.

The more you look at it, the more we are imitating Ancient Rome as she declined.

Small farmers, craftsmen and businesses were replaced by slaves. We use illegal immigrants here and low wage labor abroad.

A citizen army was replaced with foreign mercenaries. We are not that bad. Most of our military was born here. But Rome shifted from having strong borders and imposing her will on her enemies to "accomodation". Her borders eventually became sieves as hundreds of thousands of people belonging to foreign tribes ( Goths , Vandals, Franks, Alemani etc. ) just moved in and took over parts of her empire.

Bread and circuses were used to placate the mob. We hand out welfare, food stamps, Medicaid and all sorts of aid to the "poor". Electronic entertainment has replaced gladiators, animal acts and public executions. We have a growing number of idle, able bodied people.

Rome was a huge importer. During her last 400 years or so, she didn't even grow her own grain. North Africa was her breadbasket. We have gone from exports to massive imports. Instead of grain we import oil.

As Melonie has pointed out and documented, the parallels are striking and scary.