Quote:
Originally Posted by dippin
No. It's nonsense to think that the difference in production costs between china and the US is due to taxes.
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Read my words, certainly taxes are a cost, but "cost" includes much more than taxes.
First, do you believe government imposes costs on business?
If, yes, do you agree that some of those costs could be reasonable and serve a greater good?
Then do you agree that some of those costs could be unreasonable, not productive, wasteful, and not serve as a benefit to society, consumers, employees, taxpayers, or anyone? These are the costs I am talking about.
---------- Post added at 03:02 PM ---------- Previous post was at 02:55 PM ----------
Quote:
Originally Posted by Baraka_Guru
Yeah, you'd think that the bigger variance (and, therefore, concern) between U.S. prices and Chinese prices would have more to do with the variance between labour costs and currency values.
Unless, of course, you don't think the yuan is undervalued.
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The effect of a nation under-valuing their currency is to purposefully reduce the cost equation I presented earlier. If the value of labor is X and the price of labor in the US is X+Y , in my view what China does is X+y-C, with C being manipulating their currency below market values to increase export demand. However, on the other side of the "C" manipulation is the cost it imposes on the Chinese people, sure they benefit from increased export demand, but they pay for it by reduced living standards because they have to support the "C" manipulation below market.