It's the 1st time I've seen Peter Schiff dodge a point, and at the time I couldn't think of the correct economics either:
In this interview [ http://www.europac.net/Schiff-CNN-12-4-08_lg.asp ], the mayor of Detroit argues that the automakers need a government bailout because, among many other reasons, their foreign competitors are currently being subsidized by their home governments and, as a result, Detroit cannot compete with them.
Let's assume for the sake of argument that this is true. Here's what Robert P. Murphy has to say:
"Fair Trade"
"Many people deride free trade and instead champion what they call "fair trade." To the extent that this is a voluntary plea for consumers to refrain from purchasing the products of slave labor, I have no problem with the movement. But often the proponents of "fair trade" want to use the US government to penalize imports made by foreigners earning low wages or by companies receiving subsidies from their governments. Both accusations have been leveled against Chinese imports that allegedly are "unfair" to their American counterparts.
It is true that the average Chinese worker earns a lower hourly wage than the average American worker. Our workers (in general) enjoy better training, as well as the use of more capital and superior legal institutions. American laborers are hence more productive, and that's why they get paid more. It is also true that in certain industries, American firms can't stay competitive with Chinese imports if they have to pay wages attractive to US workers. Yet that is exactly what should happen when two countries trade with each other; relative prices and wages channel the workers in each country into those industries in which they have a comparative advantage. If cheap Chinese imports didn't put some US manufacturers out of business, then what would be the point of trading with China in the first place? You trade with others so you don't have to make everything yourself.
Regarding foreign governments' subsidies to their manufacturers, we must never forget that receiving gifts doesn't make one poorer. Even in the "worst case" scenario, where the Chinese government (say) completely subsidizes its TV exporters in order to ship US consumers free plasma screens, this would be a boon to the American economy. Yes, it would put US television producers out of business, but it would allow US consumers to get TVs for free. After American workers had reshuffled in response to the free goods, per capita US income would be higher; instead of using scarce resources to produce television sets, we would now be showered with them for free and could use the freed up resources to produce additional goods and services. If, instead of free imports, American consumers receive merely cheap imports, the principle is the same: Foreign governments taking money from their own people and giving it to American consumers doesn't make us poorer."
link: http://mises.org/story/1979
So, in the face of subsidies to foreign car manufacturers by foreign governments, the correct policy looks to be "Great, let's enjoy cheaper vehicles, courtesy of (whichever country). " As for Detroit, again assuming for the sake of argument that foreign competitors are being subsidized, the workers and owners of capital must suffer the individual consequences for the sake of the greater good.
In the short run this is some hard truth to face, to be sure. But the general standard of living will thus be increased.
we don't need to compete. If a foreign competitor wants to subsidize our standard of living by giving us high quality cars for cheaper than the free-market dictates, let them. We benefit.
Warren Raftshol:I would object to 'counterfeit'
How is it not counterfeit? You're creating property titles, with no property to back it!
Warren Raftshol:Scrip, furthermore, is 100% reserve.
No it is not. It's back by nothing, but a government promise that it will be accepted in the payment of taxes.
even if this 'michigan money' were based on the fed model at least it'd add a competitive dimension to the Fed's death grip. I'd rather have 51 different currencies to run to throughout the US rather than the one big monolith we have now.
"The best way to bail out the economy is with liberty, not with federal reserve notes." - pairunoyd
"The vision of the Austrian must be greater than the blindness of the sheeple." - pairunoyd
liberty student:Your plan to use scrip, is to force the public to provide credit to the private. It is a classic ripoff.
Who, exactly, is being coerced? The public isn't even being taxed, are they? Your hostility to government action is confusing you.
liberty student:Americans, and Michiganders eat more than they produce. You complain about Asians, but they are the ones lending you the money to do so, while producing goods for lower wages so you can afford more stuff.
The control of credit and investment is in the hands of a small elite. The Constitution requires credit to be regulated by Congress.
I suppose you think David Rockefeller is somehow entitled to decide these things for us?
I'm with you, pairunoyd
liberty student:No it is not. It's back by nothing, but a government promise that it will be accepted in the payment of taxes.
A government promise is a contract obligation and is sufficient backing - see Virginia Coupon Cases above
Warren Raftshol:Who, exactly, is being coerced?
Everyone who has to use scrip to pay their taxes.
Warren Raftshol:The public isn't even being taxed, are they?
Sure they are. And if they didn't accept your scrip, I'm sure you would make it the only currency that is accepted for the payment of taxes, if that was not the original plan.
Warren Raftshol:Your hostility to government action is confusing you.
LOL.
Warren Raftshol:The control of credit and investment is in the hands of a small elite.
Right, so what? I'm for total deregulation of money. You just want to become the elite.
Warren Raftshol:The Constitution requires credit to be regulated by Congress.
The Constitution is irrelevant.
Warren Raftshol:I suppose you think David Rockefeller is somehow entitled to decide these things for us?
The system is the scam, not the people in it. The system just allows it to be multi-generational. As long as you live under tyranny, and bless it as democracy, and worship the Constitution as something more than a piece of paper, you will be a slave. Whether it is to a Bush or a Rockefeller or an Obama or a member of royalty. The only rational form of government, is a voluntary society. 51%, is not voluntarism.
Warren Raftshol: I'm with you, pairunoyd
Only because it is convenient to your argument to have an ally. Not because you believe his position on money.
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
Warren Raftshol:A government promise is a contract obligation and is sufficient backing - see Virginia Coupon Cases above
Right, so it is not full reserve. Thank you for admitting that it is backed by NOTHING but the words of men.
liberty student: Right, so it is not full reserve. Thank you for admitting that it is backed by NOTHING but the words of men.
What I mean by full reserve is that the scrip is not pyramided 1,000% by banks. The courts enforce obligations.
liberty student: Warren Raftshol:Who, exactly, is being coerced? Everyone who has to use scrip to pay their taxes.
Nobody has ti use scrip - you can pay your taxes in gold if you prefer.
Well the agency that prints up script, by legal fiat, gets to take real goods and services out of the economy with paper titles it creates out of thin air.
I call that counterfeit.
liberty student:Well the agency that prints up script, by legal fiat, gets to take real goods and services out of the economy with paper titles it creates out of thin air.
Lincoln financed the Civil War with $400 million he printed out of thin air. Do you think he should have financed it
at the 36% interest he was offered from the banks?
Do you think that the government shouldn't have the power to print the money out of thin air? Why?
Warren Raftshol:Lincoln financed the Civil War with $400 million he printed out of thin air. Do you think he should have financed it at the 36% interest he was offered from the banks?
Yeah, he should have. Then at least the murder of a half million Americans in the War for Southern Independence might have at least caused the bankruptcy of the Union.
lol
Warren Raftshol:Do you think that the government shouldn't have the power to print the money out of thin air? Why?
I believe they should not have the power.
Because I believe in individual liberty, voluntary participation, and non-aggression.
Perhaps if he couldn't afford what the market was willing to sell it for, he shouldn't have financed it. Did you consider that possibility, or do you assume that government actions should be financed simply because they are government actions and therefore "special"?
You, sir, have come to the wrong place for that. I would suggest to you Murray Rothbard's book, What Has the Government Done to Our Money? as a start. The amount of literature available on this very site regarding the topic of government money is immense, look into it.