scuse me? you have proof that taxes on products and materials made in the US have no bearing on the final products cost?

Of course they have some bearing, but so do minimum wages, labor laws, etc.

Get used to it. "Local economies" are going the way of the dodo bird.

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.

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 ----------

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.

Their standards are rising, though. They benefit from a burgeoning domestic industry. They make the cars they buy, etc.

Also, the personal savings rate in China is currently 30%. Compare that to 5% in the U.S. (previously zero).

China's imports are heavily weighted towards resources and commodities. They turn a lot of that over to building infrastructure, but I'm sure much of it is also turned around to exported manufactured goods...for a decent profit.

This, in addition to China also ramping up their own export industry as far as resources are concerned.

Sure, the standard of living in China ain't what it's like in North America, but it's certainly better than it has been and it's getting better.

I don't think the suppressed yuan is hurting them. I think it's helping them; that's why they're doing it.

My apology for not being clear.

There is a cost associated with China keeping the value of their currency lower than it should be. That cost is imposed on the Chinese people. That cost is only one component of a large string of variables that go into that nation's market interaction with the rest of the world and their national standard of living. They are subsidizing our consumption - those buying their products get a discount, and the people of China pay for that discount one way or another - but generally it is reflected in the national standard of living. There is no doubt their standard of living is increasing, but there are other factors in play.

China, by manipulating their currency, is making a long-term "gamble" (for lack of a better word). If they get the rest of the world "hooked" and committed to production from China as the rest of the world minimizes their ability to produce, they can effectively reduce competition and the possibility of competition gaining an exceptional ability to control prices in the markets they control, that -C turns to a +C with the rest of the world having limited or a sluggish ability to rspond. We need political leaders mindful of this kind of long-standing market penetrating strategy. We do have a few people in Washington putting pressure on China for their currency manipulation, my preference would be we put more pressure on China in this regard. I think this is a better approach to addressing outsourcing, and trade imbalances.

I'd never thought this would be that difficult to understand. No, I never said they have no bearing on the final product cost. But let's review:

Median wage in China: around 2000 dollars, year
Median wage in the US: around 39000 dollars, year

Minimum wage in China: around 124 dollars a month (this in the province with the highest minimum wage)
Minimum wage in the US: 7.25 an hour

So, again, the idea that outsourcing is caused by taxes is nonsense.

The comparison in dollars can be misleading. Chinese people don't generally buy goods and services in US dollars. On the surface it appears the median wage ratio of 19.5:1 would translate to living standards, but it may not. For example what is the cost to feed a family of 4 in China compared to the US? Is it still 19.5:1? What about the cost to shelter a family of 4, 19.5:1? Costs for other necessities? Then what are the things that are required in the US that may not be required in China. Then we could also look at taxes, perhaps after taxes (all taxes) that $39,000 per year is really $24,000 and that $2,000 may be equal $12,000 in benefits from national wealth based on the way the country distributes its wealth, I don't have exact numbers, I am just using some numbers to illustrate that the 19.5:1 ratio may be different than it appears on the surface.

Taxes is only one variable.

First, I reported the number in purchasing power parities.

Second, from the point of view of a company, what a salary does or does not buy is irrelevant. The investment decision is "x amount in the USA or Y amount in China?"

This is not true. Most companies have salary differentials based on geography and the cost of living in certain areas. In many cases it does not apply to their highest compensated people, but in order for a company to keep and retain talent in places like New York, San Francisco, LA, they have to sweeten the pot in terms of compensation and they do. When you look at the exodus of business from California the impact of the high cost of living for employees is certainly a factor among many others.

The high cost of living isn't totally due to high taxes. There are plenty of people/companies who take advantage of the high demand and short supply to create inflation as well.

The problem is that if demand goes up too fast or comes down too fast, society has more problems adjusting.

All of which make China a more desirable location, not less.

Personally, I would not live in China. If a company wanted me to work in China it would only be under short-term conditions at a very high price.

that's hardly the point ace. try to stay focused.

the fact is---again----that the fragmentation of production and its reorganization into supply pools linked by just-in-time style arrangments (which presuppose complex transportation systems) is a long-term process; it is one of the main features of "globalizing capitalism"--it is the what that is being globalized. capitalist production, capitalist exploitation if you like. which it is. all the more than previously because the brave new world of supply pools can make union busting or more repressive laws that prevent working people from organizing into a "competitive advantage" which is then justified by free marketeers in the north for whom exploitation is a good thing so long as commodities are cheap and the free marketeers themselves dont feel that they are being exploited. and it's all a force of nature in free marketeer world, not a result of choices that have and will continue to have disastrous social consequences for the metropole. which is where you and i live.

the main claim in the brenner piece i linked above is that the underlying characteristic of contemporary capitalism is quite feeble, driven nearly to inertia through over-capacity so through over production which is of course the recurrent problem with capitalism isn't it? results from the standardization of processes, yes? anyway, you have real economies that just cant motor themselves and this is a persistent feature. you have this in the context of a new spatial arrangement which is absolutely not in the interest of the metropolitan working class at all at all---the end of nation-states, the end of the politics of nation-states in some ways---it doesn't matter that alot of us conservatives have such a blinkered view of history that they do not even recognize what's been given away here without so much as a whimper--somehow they've been conned into thinking that the interests of capital and their own interests are the same, more or less, and this despite the fact that the contemporary crisis demonstrates that this is self-evidently NOT the case, just as the history of neoliberalism does.

brenner argues that in a way the first pure neoliberal administration was clintons.
one of the hallmarks of neoliberal monetarism has been a series of bubbles (dot com, credit, housing etc) that have been sold as if bubble activity represented the states of affairs in the real economy--which they in the main did not. but these bubbles resulted from actions undertaken by the fed which reassured itself (greenspan was great for this) with bromides like "the fundamentals of the economy are strong"---which of course they werent and aren't, but hey who needs reality that affects most people when you're hypnotized by the reality that affects the holders of capital. and besides, that's the only reality you see routinely on tv.

among the ideas was that these bubbles would translate somehow, trickle down, into investment in new economic activities and infrastructure....which of course they didnt. why would they?

by the end of bush 2 we had reached the end of a series of bubbles, including the epic housing one and its correlate in the mortgage-backed securities fiasco (strange how these bond rating firms still exist. how is that possible? standard and poor's? moody? what the fuck are these outfits doing still in business?) and the realities that these bubbles were either supposed to address (unlikely--didnt happen in any event) or obscure (now we're talking...republican reality management...dont like something? pretend its not there. remember what the "great communicator" did to control inflation in the 1980s? he stopped counting things that caused inflation in the index. its paradigmatic) are still here.

and conservatives STILL want to pretend there's no problem.

there was a "jobless recovery" under clinton i think...what links the two is that they both happened inside the same basic capitalist geography. american socio-economic policy has not caught up with this geography in large measure i think because the still-dominant pollyanna neoliberal ideology doesn't allow for frank confrontation with real social problems of any magnitude, particularly not if confronting them pushes you to conclude the obvious--that capitalism left to itself does not produce anything like optimized social outcomes.

there's alot more to the brenner piece, btw. it's worth reading.

Interesting. The Economist did a survey on worker happiness. Guess who placed first with an overwhelming majority? China. No western nation had above 45%.

I read the Brenner piece you cited, I have some issues with it and I do not accept some of his premises. The suggestion that there is a "contemporary" form of capitalism suggests that there is some underlying change in market behaviors in a contemporary setting as opposed to a non-contemporary setting. I agree that there are tools and methods employed currently that were not employed in the past, but in my view the "tool" is insignificant to the end result. In my view market behaviors have not changed.

The inertia of over-capacity, cycling to under-capacity, cycling to over-capacity, in my view characterizes the basic business cycle. In market behavior terms I think market participants seeking to maximize profits prefer to error on the side of wringing every available profitable dollar out of the market rather than leaving profits on the table. It takes some form of market collusion or some form of protectionism for this to be avoided - the primary problem with this is inefficiency which is a cost born by consumers or non-protected market participants.

I am not going to connect the dots to illustrate why my comment was on point contrary to your belief that it was not.

Efficiencies, productivity, drives down costs as it increases production capacity. There are risks, but the rewards have always historically proven far greater. I do not see over-capacity as the "boogey man" in an economy allowed to freely respond to changing market conditions.

How would he describe the economic policies, consumerism, and market capacity responses of the Roaring Twenties?

Let me leave it at that for the moment, by guess is that we have reached the limit, and we are about to go into...whatever you call it...but I call it looking at an issue in a broader manner to gain a better understanding of an underlying issue.

---------- Post added at 09:28 PM ---------- Previous post was at 09:17 PM ----------

Why am I the one (sorta thinking out loud here)?

Historic example: O.k., remember when a guy like Saddam Hussein would win elections with 99.9% of the vote? Why?

Current example: The issue with GOOGLE and the Chinese government is about censorship. The Chinese government controls what the Chinese people see and hear, think that might influence survey results compared to nations with free flows of information?

Do I need to continue?

Eventually people are gunna head out to the streets and start asking people if they need some work done... just like I'm doing.

I get paid pretty well =)