Except for the produce I buy at my local grocery, I doubt there’s much else I buy that is made in the U.S.

:(

Oh… and “So?”

Ian,

Another winner.

Explain this to me. The trading done is between corporations at least in this country. How does this translate into national debt or surplus?

Books

Aloha, Ian! Awesome post!

Free trade is outsourcing which makes American investors in other countries rich. While at the same time starving our own country of the money it needs to invest in the future.
But how does, or does this connect to our financial companies like Bear Stearns using 35 to 1 leverage to play the market.

Also do the Democrats have any real economic ideas to stop this from happening?

Hey Ian.

How much if any manufacturing will return to the US because of insanely high transportation costs [in dollars]? Or is this an intra-American issue of things costing too much to ship across the country?

If the corporation is in the country it doesn’t count as international trade. If it’s done externally, it’s generally given some sort of book value. There’s a lot of flexibility in that.

I think quite a bit, in time. I wouldn’t be buying big box stock for the long term at this point.

Booze

Fair trade done right (employee protections, environmental protections) is a step in the right direction. But you have to allow individuals, not just governments, the right to sue.

My ideas are

tarrifs and trade barriers
High taxes on foreign investment
Tax on wealth
nationalize major industries
break up monopolies and cartels
shell corporations are illegal
Corporations cannot do business in the USA if they are domiciled in offshore tax havens
US labor laws must apply to all offshored manufacture

Art

“One result has been a prolonged decline in the dollar’s value, because there simply isn’t much worth buying from the US except future revenue streams, and now even those are admitted to be mostly worthless. That decline in currency puts inflationary pressure on consumers, as the price of goods and commodities goes up. The price of oil doesn’t look nearly as bad in euros as it does in dollars.”
_________

Yes. USD has declined a third vis a vis the Euro (as well as other major currencies across the past five years). Nominal “price” of oil owes to production cost, supply/demand, war risk premium, and the decline in USD.

Good point Higher gas prices mean higher shipping costs. The British Empire needed cheap shipping to keep the Empire connected. The American Corporate Empire needs to get Chinese goods to Wallmart cheap or it does not function.

We need more and better Dems…

More than three dozen Democratic congressional candidates banded together yesterday to promise that, if elected, they will push for legislation calling for an immediate drawdown of troops in Iraq that would leave only a security force in place to guard the U.S. Embassy in Baghdad.

http://www.washingtonpost.com/.....63_pf.html

“But you have to allow individuals, not just governments, the right to sue.”
I thought we could sue corporations?

With all this offshoring and loss of US jobs and so forth… hasn’t corporate wealth grown?

Where are all the profits?

If not, why are corporations shooting themselves in the foot with these tactics?

Thanks for this very clear and informative post. And thanks for the links to previous posts on trade -it looks like I missed some. I will read them.

I especially like your points on the significance of the trade deficit -how foreign goods are paid for makes a lot of difference. Recently, it looks like it has made all the difference.

And looks like we might see what wonderful things those zero short term interest will do, and that McCain says would be a great idea.

Seems like the debate over whether foreign central banks are funding us are over. I read a post giving evidence that they may be ones messing up our monetary policy fix to panic by buying up short term Treasuries and driving down interest rates, while reduction in those rates produces private foreign investors to leave dollars. It was a post by Setser at RGE Monitor, I think. Do you have any thoughts on that, and if you think it is true, how it will play out?

This is a good time to ask what it is about NAFTA that made it problematic. How does it fit in this analysis?

What exactly is the USA purchasing or selling to other nations or transnational corporations?

We can sell bonds to finance our own domestic spending.

I can see how the foreigners are buying america, but not how our government is paying a price for this, unless we are losing tax revenue.

Even oil, aside from stored for the military is not a us government transaction.

How do McCain’s economic ideas help or hurt the economy.

I am also curious to hear your thoughts on magnitude or real costs of financial panic. I notice local communities are trying to jawbone lenders into delaying foreclosures out of fear of large losses in local housing capital stock, neighborhood externalities of abandoned housing, real loss in housing capital that was built but now sitting their falling apart because of financial panic, and difficulties in price adustment.

Seems like ‘money matters’ in terms of real economy. (that is not quite right metaphor for that phrase in terms of historical use, but it will do, I guess)

Do you know of any estiamtes of those costs? I know, it is boring hum drum “real economy” stuff not high finance. But providing or finding an estimate may create more push behind ideas like you set out in last post or Blinders and Frank’s proposals.

Under most free trade agreements, corporations can sue governments that break various protections against loss of money (which can mean, for example, banning the use of a pesticide because that means lost profits for the company.) In most free trade deals only other governments have the right to sue if environmental or worker protections are violated. As a practical matter they never do, since they don’t want a round of tit-for-tat.

I can see how wealth is flowing from the workers to the capitalists by their policies.

The problem I see is that wealth doesn’t use its wealth for creating jobs and fueling an economy. It seems to remain up there in leverage transactions and trades.

Capitalism used to extract value added from workers, now they make their wealth by trading financial instruments and bets. Nothing is actually being created here, and all we are doing is consuming products from other nations.

Capitalism has turned us into a 3rd world country with a small number of rich oligarchs and the rest of us landless peasants.

I once had a chat with Darrell Issa’s chief of staff about our trade imbalance with China. He assured me that all American kids would be lawyers, while the Chinese could do the assembly type work. I wondered why everone would hire a lawyer if they were a lawyer themselves, and if he’d ever heard of the bell shaped curve.

Drive by …

To tie this in with the earlier threads

John McCain, U.S. American Economist

Longer version

Revenue streams have been sold - bonds, debentures, stocks and their associated dividends, properties, mortgages etc… In principle, that shouldn’t matter, since they eventually have to use those dollars to buy something from the US. Unfortunately, they just keep buying more revenue streams, and the cost of that is paid in lost jobs and industries.

I’ve said this before here: Father Bong used to say, as relates to wealth - “Shit rolls down hill, wealth does not.”

I don’t. You’re right that I should. I’ll look around.

OK I can’t resist even though Ian should have the first and last word on NAFTA woes in this post. But I think top three are:

-NAFTA was just as much or more about overly generous international corporate investment insurance, international corporate investment subsidies than free trade in real goods,

-good outcome on Mexican side that was from growth in free trade in real goods, was very dependent on Mexican government willing to do something (anything) to assist small farmers, workers and businesspeople in dealing with new trade regime. Instead, Mexican government acted as if its prime motive should be to wipe out the small fry that might be harmed by NAFTA,

-US using all the tricks in the book to protect imports of real goods from developing and poorer countries that might assist farmers and small businesses there (mainly barriers and subsidies for food and other non-energy raw or semi-processed commodities)

there was also some currency and financial monkey business, that I am not expert on and cannot recall very accurately now.

in my last post above, I meant to type

-good outcome on Mexican side that was from growth FREE trade in REAL goods,

Seconded.

Income disparity may be a fact of life. It may grow as the smart out-perform or out-invest the dullards, the damagingly divorced or sick, the unlucky and the inconsistent.

What we don’t need to do is permit our government to worsen its effects by relieving the wealthy of their tax burden, by subsidizing their investments, by relieving the industries they control of being financial liable for their harmful products and their reckless or willful violations of the law. We can ameliorate it by spreading unavoidable risks, eg, via universal health care, and by penalizing risky behavior, eg, badly designed or poorly manufactured goods and services, eg, medical devices, cars and toys.

Inevitably, we will also have to make do with less. That’s most American families already know how to do. It’s something we should also impose on our government. Quickly. Before it spends our last ounce of goodwill, cooperation and treasure. “Voting the ba*tards out” is a good start; we also need to know who and what we want to replace them with. This conversation helps explore answers to those important questions.

NAFTA had a pile of takings rules that made it nearly impossible to do certain types of regulation (for example, California could not regulate a cancer causing gas additive or it would have had to pay billions to the company in question). It also forced de-nationalization and de-regulation of many industries (so, for example, the Mexican taco industry is mostly owned by two private companies now, and even before the corn price increases, prices had soared while nutritional content had dived.) It also got rid of a lot of tariffs. Ironically the reduction in tariffs hurt Mexico far more than it helped, because Mexican farmers were absolutely devestated by it and the industrial jobs flowed in and then back out, and because there were often done in special industrial regions under horrible conditions, did not produce sustained growth.

Ian,

I’m sure you’ve referenced former Nixon strategist Kevin Phillips’ “Wealth and Democracy” before. I can’t embed links here for some reason but I’ll provide a quote from a 2002 review by Bruce Reed that appeared in the Washington Monthly.

Phillips loses his way at times in suggesting that, like the Spanish, Dutch, and British empires before it, the United States is poised on the brink of collapse, “purple-veined with years of high living, lips curled with the insolence of great wealth.” But he is right that current Republican priorities are out of whack. When a president can promise a “new war on poverty” one day and a $1.6 trillion tax cut for the wealthy the next, as Bush did last year, no wonder the rich will always be with us…

BRUCE REED, formerly Bill Clinton’s domestic policy adviser, is now president of the Democratic Leadership Council.

Where is the politician who will stand up and say you can not have plutocracy and democracy? Why doesn’t someone make the case that we got rid of primogeniture because we understood hereditary wealth corrupts. America needs a death tax.

I wondered why everone would hire a lawyer if they were a lawyer themselves, and if he’d ever heard of the bell shaped curve.

I love that!

The truth is, an awful lot of the Chinese will be the scientists and technology wonks that will be needed to get ahead of us. They’re doing it already in many cases.

Of course the elephant in the room is that there is no such thing as “sustainable growth”.

We live in a closed system with a growing population and finite resources for fossil fuels and other consumables.

The capitalist’s addiction to growth is coming to a sad end and nothing will stop it short of radical change.

We need sustainable NON GROWTH economies and paradigms. That means NO PROFITS

This one perhaps? washingtonmonthly article

Too funny! Great analogy.

Brad DeLong describes Iowa as a huge corn and hog making machine. We owe the Iowa primaries some of the credit for making it impossible to slow the devastating effects of NAFTA on Mexican farmers as they unfolded. Man are we fouled up nine ways from Sunday.

We remain wedded to our U.S.- centric worldview, but the day is coming when the rest of the industrialized world doesn’t need us very much. We are on a course to becoming an economic backwater.

Tell that to Lee Raymond.

On my way out the door but …

What do you think of this book Ian?

Bad Samaritans: The Myth of Free Trade and the secret History of Capitalism

I haven’t had a chance to read it yet

Damn. How’d you do that? I can’t get any link to work here and I’m a linking fool elsewhere in the blogosphere.

fyi
roll call vote on the Peruvian Free Trade Agreement

Doesn’t the little “chain-link” button in your response box work?

Ian, I wanted to ask you what you thought of Barney Franks proposals and whether the bill will go thru?

I was also wondering, I have only had contact with Bear Stearns when they handled some of the paper work for a company that I worked for that had given the employees stock options on their IPO. But I knew they were a major firm, and I was quite surprised to find out that at that time they were a privately owned firm. Subsequently, they did their own IPO and got even bigger. My question is, do you think their becoming a public company somehow made them more reckless in their investment in subprime mortgages, or whether that had any effect at all? I guess I’m asking if investing your own money makes you more careful than investing other people’s money?

Haven’t read it, but I’ve argued that for years. No one except city states ever industrialized except behind trade protections of some sort.

Copy the url
highlight the text you want to link
hit the chain linky icon
delete the http in the box that comes up
hit control v to insert your link

re 31: thanks -I would appreciate it. I have been looking too and have found nothing. And I am not familiar enough with real estate to do anything on my own that would be worthwhile.

re Ian’s response to Scarecrow is more evidence that much of NAFTA was not about free trade in real goods. It was about corporate friendly subsidies, nosing around in national industrial organization and anti-trust policies, nullifying local quality standards. There are theoretical arguments, and specific cases, that can be made that anti-trust policies and quality standards can be disguised trade barriers. But NAFTA set up mechanisms to tear into anti-trust and quality standards wholesale, with the advantage given to corporate interests in making and adjudicating the case.

So we have the paradox that a free trade agreement had most impact on indirect and second and third order trade barriers, and left direct trade barriers intact, and that unfairly benefit the wealthier to the expense of the poorer in both Mexico and the US (in my opinion).

So I think the case can be made that the NAFTA and other regional free and bilateral Clinton and Bush II free trade agreements were mostly NOT about free trade in real goods at all.

Barney’s proposals are fine, though they don’t go far enough. I don’t know if they’ll go through or not. The Dems are showing more cohesiveness in the House than in the past, but the Senate is still pretty hopeless.

I don’t know if public companies are more risky than private ones. The ability to raise capital through stock does give a lot more room to do stupid things, mind you.

The joke I like to make is that ‘free trade is like free markets. I’m all for both, but I’ve never seen either’.

The problem is, once they go public it’s all about the stock price. I blame boards of directors for making so much of executive compensation stock options. This is done I suppose to avoid taxes on their salaries. But then the executives are mostly motivated to hike up the stock price, and not always in legitimate ways. Have to keep feeding the monster.

Another factor is if you’re an executive in a private company you probably know the owners and don’t want to face them if you royally screw up. It might be easier for them to walk away from enormous mistakes when the owners are random anonymous stockholders.

hi ian and pups–

tula did a post friday on american axle, who has been transferring more and more of their work to their ever-expanding plant in mexico.

they have been on strike since february 28th, over their wages being cut by more than half and benefits being cut too.

then i heard last night on the radio that GM is closing a plant, due to the lack of available parts from american axle.

so, in one month, their supply dried up? nope. all a part of the plan.

seems they could have shipped those needed parts from mexico to the GM plant, don’t you think? since they’re making them there anyway.

===========
and on the trade issue-
i think if a product is made in another country, it should be treated as a product from a foreign company.

EARTH HOUR is tonight.

Earth Hour starts at 8:00 pm, all lights our for 1 hour.

Cities around the world will turn off their lights for 1 hour starting at 8:00 pm.

First to turn off their lights was be Asia last night. Then Europe will go dark, and finally then North America.

Australia’s Opera House went black last night for 1 hour at 8pm, along with Bangkok’s famous Wat Arun Buddhist temple.
250 of 350 business in Sydney, Australia have pledged to go dark. 94 of the 100 companies on the Australian Stock exchane will turn out their lights.

Google will have a completely black page with “We’ve turned the lights out. Now it’s your turn.”

One of the last major cities to go dark will be San Francisco will turn off the lights to the Golden Gate Bridge, Bay Bridge and office towers through out the city.

Europe joins ‘lights out’ for Earth Hour

http://news.yahoo.com/s/ap/wor.....rQNwis0NUE

http://www9.earthhourus.org/

What we don’t need to do is permit our government to worsen its effects by relieving the wealthy of their tax burden, by subsidizing their investments, by relieving the industries they control of being financial liable for their harmful products and their reckless or willful violations of the law.

Well apparently, earlofhuntindon, you just don’t understand the principle of trickle down economics! s/ *G*

Yah. Warren Buffet doesn’t pay based on stock options, because he believes CEOs should have no direct effect over stock prices and doesn’t want them playing those games.

Especially when public companies’ Boards of Directors are interlocking friends of one another, as they are in America. The idea of the “outside director” is really a joke in our current corporate culture.

They are all in a pretty daisy chain.

They did say it was just going to be a trickle.

Also that the rich would trickle on us.

I’d say they told the truth on both counts. ;)

here’s what I say;

“the only free trade is fair trade, every other manifestation is not free it’s stealing”

there, I said it, now use it, it’s a perfect response to any neo con or fascist that thinks or tries to claim regulations are a bad thing

a company MUST pay it’s own bills, it CANNOT defer it’s cost of doing business and get other people to pay those bills

cost of doing business include;

paying a wage fair enough where labor can afford healthy food for their family, education from grade through college, time off for vacation, savings so they can retire

now, it is clear we all need to afford these things, so when a company pays so little the laborer cannot afford
these necessities, obviously they are stealing

when a company moves their structure to country that doesn’t enforce these obvious principles, those products must be fined, NOT TAXED, but FINED the differance between what they pay their labor force and what they owe the labor force

simple stuff here

Thanks but when I go to preview and click my links they always end up at a Firedoglake page that says 404-Page Not Found. Maybe they have me flagged as a commenter who would send you all to a porn sight or an RNC fund raising page.

I’ve observed how the motivation to focus on stock prices shapes what execs do with their brainpower, time, and energy. They’re gaming it. It’s entirely logical behaviour for them, but not very healthy for their companies or for the nation.

egregious says at 55-”The problem is, once they go public it’s all about the stock price. I blame boards of directors for making so much of executive compensation stock options. This is done I suppose to avoid taxes on their salaries. But then the executives are mostly motivated to hike up the stock price, and not always in legitimate ways. Have to keep feeding the monster.”

i used to tell people-

face it, when you own stock in a company, you are paying for someone else to do the dirty work for you to make money. cuz that’s what it’s about……when they say ’please the stockholders’, how do think they’re doing that? what do you think they’re doing to do that? you are ethical, but you own stock. you want it to make money, and turn a blind eye to what that company is doing to make you money.

noone ever considers that as part of the transaction.

you’re hiring it out. outsourcing the dirty work to someone else.

it’s true.

It just doesn’t preview correctly! Go for it!

That’s what I said… just not so eloquently.

If you read the very fine print (usually on the copyright page, or at the very end), you may see that a surprising number of your U.S.-produced books have been printed in places other than the U.S. The writing and sometimes the editing may be done here, but a lot of the production went offshore years ago.

Any idea on how long it will take the average American to realize the currency is being seriously devalued? And the government talks about its strong dollar policy.

But your “Thanks” link works just fine.

You’re right. How’d that happen? (Sorry to have interrupted the thread with my clerical problem.)

That is the finest, simplist way I have ever heard the
free trade fair trade issue. Elementary and middle school kids could understand that.

Thanks!

Don’t go to preview. You need to do that in the Leave your Response box.

Personally, I liked Obama’s new line: “Pain trickled up!”

Ian:
I especially like the fractal. Only time for a touch and go - I’ll read it all later.
Karen

If you’re pretty sure you’re typing the URL correctly, I wonder if you have neglected to first highlight the text, or title, that you want to be the visible part of the link.

If you leave this blank iirc it picks up the fdl stuff.

Perris you make sense but these will not fly in a free market economy.

And I would never own a stock in a corporation.

Making money that way is unethical.

Meanwhile, in Basra via TPM:

Water supplies have been cut off because of the fighting, and people have not been able to go out to buy food.

The caller said his father had had a heart attack and had no medication, and that the Iraqi army had raided the local market and taken all the food.

Ian, you include trade, ownership stakes, and future revenue streams as ways to pay for our consumption. What about direct labor? Is there any scenario where US workers would have to go to other countries and work there, perhaps under less than ideal conditions, say, without those pesky environmental and labor rules?

Perris you make sense but these will not fly in a free market economy.

of course they fly in the free market economy

there is no such thing as a free market without regulation, there are always regulations, manufacturers are always trying to get other people to pay their own bills, it’s government’s job to make sure they pay their own bills

there is no such thing as no regulation, that is anarchy, it does not exist

when they say “free market”

what they mean is

“we want to steal from you”

all we have to do is point out that is what they are doing and their entire marketing concept fails

Hey, Ian, is that Additional Reading at the end of the post our homework for next time? *G*

Oh, I thought it was for today. I’m halfway thru How Trade and Currency Interact.

This is a siege of a civilian population, which the Geneva Conventions prohibits.

How quaint.

Gosh, I hope he knows we’re only teasing!

let me elaborate;

the very concept of money is a regulation, law is a regulation, property is a regulation, ownership is a regulation

the “free margeteers” only want the regulations that allow them to steal from us and keep that product, they don’t want the regulations that force them to pay the bills they themselves incur

there is no such thing as a free market without regulation, there is no such thing as “free trade” without “fair trade regulations”

this is a simple debate to win, all you need to do is use the principles they think they own to point out that they are wrong

simple simple stuff

Giving huge tax incentives to very wealthy enterprises, say like WalMart, to locate in a city or town and then paying “the help” not much more than minimum wages with little or no benefits, is hardly my idea of spreading the wealth.

Perhaps the mess we’re in (the recession, forclosures, war, etc.) is the future. It will be in a word, interesting, if the countries who have bankrolled our economy for so long call in our IOU’s.

Lahoma

I posted this link in EW, and this thread is a good one to post again:

http://nord.twu.net/acl/dialectic.html#intro

Notice the authors comment about the War of 1812, with respect to Ian’s comments about the same period.

Comes down to “Step out of the Dialectic”.

And Chris Wallace thinks it’s duck soup:

“We’re going to talk about Iraq and the Iraqi offensive, which I think, in a sense, is good news. Because it’s the Iraqi government, who’s mostly Shi’ite, taking on Shi’ite outlaw militias in the southern part of the country and this is after all what the whole point of the surge and our efforts there was supposed to be all about, was to get the Iraqis to stand up and control their own country.”

sander0 at 78 says-”And I would never own a stock in a corporation.

Making money that way is unethical.”

did you see my 66?

and what people don’t think about either, is that if you are in a retirement fund, then you own stock, cuz that’s where it’s invested, in part.

so, if you have a retirement sander, you own stock. * g *

=======

thanks, looo hoo.

Did I mention that, although I thought it was very nice of my company to give us peons stock options (based on our length of time with the company and some other considerations, like position, etc.) on the IPO, but that we were the first tech company to lose money on the first day the stocks sold. It did go up later on enough for me to make a modest sum, almost like a bonus, on the money when I sold the stock. However, about a year or so later, we were acquired by another company, so I ended up losing my job (at 56 years old).

Paging KKKRove… Hot Button issues are baaack!

Two that have qualified for November’s ballot stand out: one to ban gay marriage in the presidential battleground state of Florida — where votes for Republican and Democratic candidates have been closely split in recent elections — and another in Colorado to roll back affirmative-action policies aimed at helping minorities overcome discrimination.

-snip-

In Colorado, voters will be asked to decide on a proposed amendment to the state constitution to prohibit “preferential treatment to any group or individual on the basis of race, sex, color, ethnicity or national origin in the operation of public employment, public contracting or public education.”

-snip-

In South Dakota, proponents of an initiative to restrict abortion except in cases of rape, incest or when the mother’s health or life are endangered have until April 1 to gather the almost 17,000 signatures needed to get it on the ballot.

http://www.reuters.com/article.....nnel=10112

WTF is it with these slimeballs…?

“We’re going to talk about Iraq and the Iraqi offensive, which I think, in a sense, is good news. Because it’s the Iraqi government, who’s mostly Shi’ite, taking on Shi’ite outlaw militias in the southern part of the country and this is after all what the whole point of the surge and our efforts there was supposed to be all about, was to get the Iraqis to stand up and control their own country.”

and the correct response is of course;

“so what you are saying is that if there were no violence, the surge worked, since there is violence, the surge worked, is that right?”

man, they are becomming more and more brazen with their retarded claims the more exposed their failure becomes

kayaks.

Ian and egregious, my husband owns a manufacturing company here in CA. They make gaskets, seals, o-rings and other things out of rubber, on a custom basis. IOW, the stuff you can’t find off-the-shelf at Home Despot.

This time of year is when manufacturers order the parts they will need to make the products that will be on the shelves at Christmas. In the last month, his orders have doubled over last year at this time because it’s now cheaper to have the parts made here. One big customer is an Australian company who makes swim fins for lifeguards. They came to the US after the dollar declined because it’s cheaper to have them made here now than even China.

Ouch. Do you have a job now?

These slimeballs are people who don’t have any life at all and so want to live yours….just so you will be good
:)

Wow, mommybrain. That’s incredible! (how you doing?*g*)

They’ve got to motivate their base, McBuush ain’t doing it…! 8-(

I forgot to add that it is hightly unlikely that you will be good ^.^

the last time they tried that tactic we won both houses

the real problem we are gonna have is caging, electronic vote flipping, not enough polls for the democratic precincts

Hi LooHoo!! I’m great, you?

It’s pretty cool, LooHoo. For the last two years they’ve been trying to get a bank loan or SBA loan for capital improvements and to buy a company whose parts they’ve been making for 20 years. Up until a couple of months ago, they were getting the runaround from everyone, and suddenly they have banks competing for their business.

Costs also include indirect ones that are borne by the general population and not paid for by the producer of goods services. For instance: pollution, use of highways, use of legal system, and other disproportionate uses of the infrastructure not recouped by equitable taxation.

Grege,
Countering argument is that weak doller increases exports, offsetting negative consequences of strong dollar.

T-