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Thread: Where is the money going?

  1. #1
    God/dess Deogol's Avatar
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    Default Where is the money going?

    There is also impact on the efficacy of US economic policy tools. Traditional methods of stimulating consumer demand are now less effective. They might cause a rebound in sales, but the follow- through to domestic employment is diluted as the response to demand is met by foreign labor. There is now a large new "leakage," as increases in domestic demand are met by offshore production.


    Moreover, as US capital and technology are shifted to the employment of labor abroad, there is less boost to US consumer demand from productivity-based growth in real income. The effect, then, of offshoring production for US markets is to weaken the effectiveness of traditional economic policy tools.
    Last edited by Melonie; 12-09-2006 at 07:05 AM.

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    Banned Melonie's Avatar
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    Default Re: Where is the money going?

    ^^^ waddayaknow ! The dumb-asses are finally figuring out that the US economy is no longer a 'closed system', that these days 'hot money' flows in and out of different countries like water, and that foreign labor costs / new manufacturing capacity costs / 'mandated' costs of doing business differences all factor into determining where that 'hot money' is going to flow next !

    (snip)"The longer economists wait until they address the new economic problem, the more the ladders of upward mobility in the US will be dismantled and the more political stability will drain from the US. In the 21st century, US job growth as been restricted to domestic services. The longer the growth of new US jobs is restricted to domestic services, the more difficult it will be to restore job growth in export and import-competitive sectors of the economy and the more the US will come to resemble a third world economy.

    I call on economists to get their heads out of the sand and to put on their thinking caps."(snip) from your link.

    The author's point is not entirely true, of course, since it neglects to mention significant job growth which has and continues to occur in the area of public sector employment. However, public sector jobs are not self-funded, being dependent on the tax money of other American workers in the private sector for their paychecks. As high paying private sector jobs are shipped offshore, at some point the public sector will crash and burn as a result of the lost tax revenue plus state and local gov'ts exhausting their ability to borrow in order to keep writing public sector paychecks.

    reminds me of the old adage about Generals preparing to fight the 'last' war ! These economists need to recognize that Ford, Amana, IBM ThinkPad, Levi Strauss and a million other US companies have already endured the pain and learning curve of moving operations offshore, thus there will be no reason whatsoever to ever consider increasing US operations unless and until the labor cost + 'mandated' cost + tax picture in America results in a lower number than the same costs do in China / Vietnam / India / Mexico (which ain't gonna happen in our lifetime). Like the physical property that applies to physical objects, corporations have 'inertia'. First they were forced into 'motion' to automate, modernize and otherwise increase productivity per American worker via capital investment in an attempt to compensate for rising labor + benefit costs of American workers. However, even though this decreased the number of workers by some percent, the labor + benefit costs of the remaining American workers increased by an even higher percent ! Now that the disparity between US costs of doing business vs offshore costs of doing the same business has become so large, and now that capital investment for automation, modernization etc. are possible in offshore locations is easily available, those corporations have again been forced into 'motion', and there's no reason to think that such 'motion' is going to stop ...

    Of course, perversely speaking, this is 'good news' for Americans who are rich enough to afford owning stocks in these companies that are now profiting handsomely from the lower costs / higher profits of offshore production (which undoubtedly includes 'Those Economists'). It is obviously bad news for Americans who used to work for Ford, Amana, IBM ThinkPad, Levi Strauss etc. who must now take 'replacement' jobs paying significantly less than their old jobs did. Thus, from the standpoint of haves vs have-nots, America is slowly being third world-ized !

    the 'tin foil hat' crowd would tell you that the next thing on the agenda of 'These Economists' will be a renunciation of their 'free trade' policy thus a call for heavy tariffs / quotas to supposedly 'level the playing field' (and punish US corporations who have moved operations offshore). However, what's much more likely to actually happen is a tanking of the US dollar, a price increase in all "world commodities' i.e. oil & gas, food, imported products that will knock the average American consumer's 'socks' off, thus a reduction in sales of both domestically produced and imported consumer products based on the typical American not being able to afford s#!t other than the basics - yet another example of America slowly being third world-ized.
    ~
    Last edited by Melonie; 12-09-2006 at 07:48 AM.

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