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.
GilesStratton:And what the hell is a scrip?
In this hypothetical example, it is a tax coupon.
Warren Raftshol: The Federal Reserve is a private corporation. The names of its shareholders is, by law, a secret.
The Federal Reserve is a private corporation. The names of its shareholders is, by law, a secret.
Again, you are just appealing to the government's own definition. What makes the Fed "private"?
The US auto industry is a net negative. Theyre taking inputs from the economy (employees, materials, etc) and creating outputs (cars) that are of less value than the total value of inputs. Therefore, the 'big' 3 are a DRAIN upon the economy.
"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
The Fed chairman takes instruction from a banking cabal. Congress has no control of it.
What about the Fed is public?
Just another in the endless list of half-baked interventionist fantasies.
Warren Raftshol:The Fed chairman takes instruction from a banking cabal. Congress has no control of it
Is that so? I gather then that I am merely imagining the fact that the Senate must approve all members of the Board of Governors.
The President appoints the Board of Governors, it was created by an act of Congress, it survives due to federal legal tender laws and taxation, it is a legal monopoly, it primarily serves to carry out the President's monetary policy, it engages in taxation (through inflation), etc.
Now I ask again, how exactly does the Fed qualify as "private"?
Austroglide: GilesStratton:And what the hell is a scrip? Just another in the endless list of half-baked interventionist fantasies.
Huey Long used Louisiana state scrip to build modern roads in Louisiana in the 1920s. Then,
he became so popular that somebody had him assassinated. You can look it up.
Morty:it primarily serves to carry out the President's monetary policy
The president is a puppet who dances to the banker's tune. Raftshol for Governor 2010
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: Morty:it primarily serves to carry out the President's monetary policy The president is a puppet who dances to the banker's tune.
The president is a puppet who dances to the banker's tune.
Excellent dodge. You should consider becoming a politi-
Raftshol for Governor 2010
Way ahead of me, I see.
Juan:You want to be a puppet too ?
All governments will be puppets until money is democratized.