Economic Policy: Let's Start with Trade

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OE32
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Economic Policy: Let's Start with Trade

Post by OE32 »

What are peoples' positions on the Trans-Pacific Partnership? Personally, I'm pro - as are the majority of Republicans (but not necessarily their constituents) and Obama, but not the majority of Democrats.



I think discussions about this issue are more valuable than most, because it's not nearly as easy to boil down to the positions of the parties, and so gives people a chance to show that they think independently.

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OE32
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Re: Economic Policy: Let's Start with Trade

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http://www.washingtonpost.com/opinions/ ... story.html

Some interesting statistics in here, but I doubt Obama had much leverage to pass things like job training. Infrastructure spending, perhaps, but who wants to tie up the passage of a trade deal with domestic legislation?

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Re: Economic Policy: Let's Start with Trade

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I don't know much about the trade agreement. I certainly don't know enough to to have an opinion other than to look at their quote about NAFTA.

Now, more than 20 years after NAFTA and 14 years after China joined the World Trade Organization, there is no real question among economists that expanding trade has been good for the world and has helped reduce poverty. It has also unquestionably been good for U.S. corporations as they grow their global reach. But there is equally no doubt that trade liberalization has hurt low-skill manufacturing workers and aggravated income inequality, which is now at its worst since the 1920s.

The top 1 percent of U.S. earners has seen income grow by 200 percent since the late 1970s, according to the Congressional Budget Office, but the figure is only 48 percent for the bottom 20 percent. And there is really no disputing that at least some of that growing divide between rich and poor has been caused by the regressive effects of trade.

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OE32
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Re: Economic Policy: Let's Start with Trade

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There's no doubt free trade has increased inequality here at home. It's been good for capital and good for consumers, but bad for most American workers. It's been good for foreign workers, however. It's simple: where does it make the most sense to pay people to engage in routine manufacturing? In developing countries, where a dollar of pay goes a lot further. Free trade increases the size of the pie. The problem is, we've done nothing to more fairly split it up.

Think of automation. Soon, we'll have automated cars. Every driver in the country would lose their employment. This would be cheaper, and frankly, if distribution weren't an issue, this would be seen as a clear win, because we've just liberated a bunch of people from having to engage themselves in tasks they wouldn't otherwise engage in. The problem is, the driver who loses his job doesn't get a slice of the pie. Whereas the pie was smaller when he was the driver, he got a chunk of it. Now that he's out of a job, the whole thing goes to capital and to the consumers. But of course, the consumers are the workers, so there's a paradox. You have to make sure that the workers still have money. That's the part we've failed at.

The obvious conclusion - but maybe it's not the correct one! Maybe there's something better! I'm open to it; let's hear it! - is to increase taxes on capital (probably by changing the recognition rules) so that you can build in a strong structural safety net. Personally, I think the evidence favors a basic income model, where everyone in the country is paid $1000/month just for being. Is that redistribution? Sure, in a sense. But a couple things I hate about that attack on welfare programs, at a linguistic level: was the money ever "distributed" in the first place? And, are we "done" distributing it, such that any further change in ownership is a "re"distribution?

I have more substantive attacks on the anti-taxxers, of course. But that's my basic solution: free trade plus taxes on capital to pay the domestic workers who would otherwise bear the negative consequences of globalization.

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Re: Economic Policy: Let's Start with Trade

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They seemed to kind of warn us that this was happening awhile back and their answer (politicians) was that America had to relearn new trades for a new world to compensate for all the manufacturing jobs that went overseas or got taken over by robots. We have seen Detroit go from a total car manufacturing powerhouse to being a town with no work. Republicans seem to suggest the reason for Detroit failing is because Democrats ran the city into the ground and all the residents are just lazy minority union workers feeding off of government. Appearently there are a lot of great paying jobs in Detroit if all those lazy people got off their butts and learned new trades and voted Republican.

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OE32
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Re: Economic Policy: Let's Start with Trade

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There is truth to the fact that American car manufacturers were being ruined by the trade unions - sometimes paying upward of $50/hour for manual labor. The companies couldn't plausibly compete under those circumstances. During the crisis, they renegotiated the contracts, but American labor remains expensive.

Yeah, we do have to change. The economy changes. But our political systems have to keep up, too.

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Re: Economic Policy: Let's Start with Trade

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What do they make in China to do labor?

Chinese Workers Making iPhones Work 11-Hour Shifts, 6 Days A Week, For $1.50 Per Hour
Read more: http://www.businessinsider.com/china-la ... z3YjYVhNbr

I suppose if US laborers were willing to work for $1.50 an hour we could compete.

I worked at the GM proving grounds for four years as a test driver. I am a hard worker. I was told by management that I had the best time management of any driver per my tachographs. I was certified in just about everything and was one of ten high speed certified drivers there. I was part time, had no benefits and topped out at $8 an hour. The union tried to come in right before I quit and it turned into a political mess at the Proving Grounds. GM decided then that it wasn't hot enough in Phoenix to test and moved their Proving Grounds to Mexico right after that where the weather was "hotter". Everybody knew the reason they moved to Mexico was because the union tried to come in and raise salaries. We were way too greedy I guess.
Last edited by Nodack on Sun May 03, 2015 11:23 pm, edited 1 time in total.

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Nodack
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Re: Economic Policy: Let's Start with Trade

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I think it would be cool if companies treated regular employees a little more like VPs and CEOs that get stock as bonuses. If employees received stock in the company they worked for I think it builds a bond with the company and ties their performance to their pocketbooks in a sense. When I worked at GM, too many drivers spent more time trying to get out of work than if they did the actual work. It was an us against the company type of attitude and they didn't care if the work was done right or not. Tachographs kept track of everything they did during the day and veteran drivers knew how to break them "accidently". "Where's your tachogragh?" "It was already broken when I got in the car". That attitude pissed me off. I think if you somehow tie the workers performance and the company's performance together you might get more loyal happy hard working workers.

If we could only do that with politics too.

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OE32
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Re: Economic Policy: Let's Start with Trade

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You tell a very compelling story, Nodack.

If companies thought their workers would work better if they received equity, you'd think they'd give it out. There are Securities laws and other effects on stock to consider, however. It's possible employees wouldn't value equities sufficiently due to a lack of liquidity. But I like the idea.

In Germany, every corporation is required by law to have (iirc) 1/3 representation by workers on the board of directors. In the U.S., corporations are forbidden by law from acting in any interest other than the company itself, which interest overlaps with, but is not reducible to, the interests of shareholders. You couldn't say you were putting in place a pro-consumer or pro-worker policy unless you concurrently stated that it was in the best interest of the company. Germany's approach is expressly pro-worker, to an extent. In the U.S., it's all about capital.

This would be no problem if a healthy portion of U.S. capital was owned on behalf of everyone - a public trust account, if you will, the proceeds of which accrued to the benefit of all citizens. Such a fund would operate as a public hedge against the negative effects of globalization and modernization on workers. Alas, it's also the dreaded socialism. Never mind whether it would work to the net benefit of the people.

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Nodack
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Re: Economic Policy: Let's Start with Trade

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If companies thought their workers would work better if they received equity, you'd think they'd give it out. There are Securities laws and other effects on stock to consider, however. It's possible employees wouldn't value equities sufficiently due to a lack of liquidity. But I like the idea.
I think they would value it. CEO's seem to value it. I come from some humble beginnings and I am far from wealthy like most everybody else, but have owned a few shares of stock and you get pretty attached to them fast. If I had shares that went up with the stock of the company I worked at and received more for performing well and longevity, I would would start yelling at slackers because they were hurting "my" company. What can we do to help "our" company.

A drawback I can see is if you are GM and have thousands of employees or "shareholders" that together own a significant chunk of the company's stock. They are all also in the union and their votes can be united making them dangerous in some circles. "The shareholders have voted to a motion to give all employees a 25% raise effective immediately".

Then again if they can't turn in the stock until they are fired, retired or quit they would all have a stake in the company's future. Voting to give everybody a raise at GM would probably make them go bankrupt ...again. Bankrupt company's stock isn't worth the paper it's printed on.

Then again what about a hostile takeover thing like the movie Wall Street where they shut down the company type of thing or a bankruptcy. Stocks can go south in a hurry on just rumors. 25 years down the drain in a day.

Then again say you worked at Apple and they gave you shares for every year you worked there and after 25 years of working there as a software programmer and shares as bonuses you have accumulated quite a few shares. That would be quite the extra nest egg.

In 1990, Apple peddled the Macintosh Classic for $1,500. That much cash in Apple stock would have earned you $98,606 today.

Adjusted stock price in 1990: $6.45

Stock Price on April 5, 2013: $423.20

Read more: http://www.businessinsider.com/what-com ... z3Z9W7zIf5

Can you imagine getting a couple thousand dollars a year in Apple stock and you worked there that long? Mathematically it's way too hard for me, but I'm guessing it would be worth a LOT today, like in the millions. What regular Joe wouldn't want a few extra million at retirement?

Companies like GM and Apple decide when the split their stock to keep the price of their stock down to a price a normal Joe can afford.

Those are two extremes, but I can see employees thinking a little more team orientated with a stake in the company. That can't be a bad thing.

I reread my last posts and didn't clarify in my story that I worked at GM for a sub contractor company that supplied drivers to GM and several other car maker proving grounds in the PHX area. Most of the employees there like the mechanics, security, janitorial were subcontractors too. The only ones that weren't subcontracted were the engineers, traffic safety and upper management.

I think they had an idea to get cheaper labor, but the Union eventually was all over it and attacked. GM quickly countered with a right hook and moved to another country with cheaper labor like everybody else did.

It was the Union against GM and GM against the Union. They were on the same team, but adversaries. Democrats and Republicans. Same team, adversaries. The model needs fixing to where we can all be on the same team. The official car of the NBA is a KIA?

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Nodack
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Re: Economic Policy: Let's Start with Trade

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In Germany, every corporation is required by law to have (iirc) 1/3 representation by workers on the board of directors. In the U.S., corporations are forbidden by law from acting in any interest other than the company itself, which interest overlaps with, but is not reducible to, the interests of shareholders. You couldn't say you were putting in place a pro-consumer or pro-worker policy unless you concurrently stated that it was in the best interest of the company. Germany's approach is expressly pro-worker, to an extent. In the U.S., it's all about capital.
I think Germany puts high tariffs on foreign goods making them real expensive. We seemed to have lowered tariffs against other countries to the point where they are cheaper than our own and have put some of America out of business. I was in Germany not that long ago and stayed with a family there and we got to talking about out door BBQ's. They had a real nice house, but a modest BBQ. We mentioned how we BBQ all the time on ours. They said one like we had would cost twice as much in Germany.

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