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.
Juan: You're proposing to back the scrip with assets which already have an owner : the car companies, which, by the way, are nearly bankrupt so it's doubtful they own anything. Your plan amounts to mortgaging assets which already have been mortgaged...
You're introducing additional assumptions. the prior discussion assumes that the automakers have mortgagable assets.
liberty student: 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.
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.
Here is a simple question for a hard money advocate: If the issuance of credit requires the backing of gold,
then how do you avoid an oligarchy, where the oligarchs control all the credit, since they will own all the gold
(or at least they will own it eventually)? Or do you advocate an oligarchy system?
The point I'm getting at is there are 3 types of money systems -1) hard money, 2) debt money fiat, and 3) interest
free fiat. The first 2 types lead to oligarchy. I contend that only 3) will allow a libertarian society,
where the credit is managed for the common good.
Warren Raftshol:You're introducing additional assumptions. the prior discussion assumes that the automakers have mortgagable assets.
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:Here is a simple question for a hard money advocate: If the issuance of credit requires the backing of gold, then how do you avoid an oligarchy, where the oligarchs control all the credit, since they will own all the gold (or at least they will own it eventually)? Or do you advocate an oligarchy system? The point I'm getting at is there are 3 types of money systems -1) hard money, 2) debt money fiat, and 3) interest free fiat. The first 2 types lead to oligarchy. I contend that only 3) will allow a libertarian society, where the credit is managed for the common good.
First, I am not a hard money advocate. I am a free market advocate, and thus I advocate a free market in money.
Second, you presume the issuance of a currency must be centralized, and thus how all common bills of credit are backed would be uniform.
Third, the presumption that all of the money would be hoarded, is based upon people being unable to choose what to use as money. If some jackhole wants to hoard all the gold, people will use silver. Unless someone thinks it's a good idea to make a law against that.
Fourth, you use the word libertarian, without embracing libertarianism. Libertarians are for freedom and decentralization, not democratic centralization vs. oligarchical centralization. What you're proposing is, slavery vs. slavery. Try incorporating freedom into your paradigms. Your insistence that there must be a monopoly in law, money etc is where your argument is failing.
Check your premises.
Morty:ou, 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.
When I clicked on the link, my adobe reader said there was an error in transferring the file. Too bad, as I would have
gladly read the book. However, I can critique the title - It is not the government that has done anything
to our money. The government has defaulted on its responsibility to regulate credit issuance. The private bank
Federal Reserve has created the damaging debt fiat system which creates the depressions.
Juan:I'm not introducing an assumption. I'm introducing a fact. The automakers don't have enough money to pay their debts that's why they are going broke. They have no equity left.
If in fact the automakers have no mortgagable assets, the loan couldn't be made. I'm not aware that the companies are
presently in receivership, however.
Warren Raftshol:When I clicked on the link, my adobe reader said there was an error in transferring the file. Too bad, as I would have gladly read the book. However, I can critique the title - It is not the government that has done anything to our money. The government has defaulted on its responsibility to regulate credit issuance. The private bank Federal Reserve has created the damaging debt fiat system which creates the depressions.
Here it is online.
http://mises.org/money.asp
Please read it. It will clear up a lot of the misunderstandings in this discussion.
If in fact the automakers have no mortgagable assets, the loan couldn't be made. I'm not aware that the companies are presently in receivership, however.
liberty student:I am a free market advocate, and thus I advocate a free market in money.
What does this mean, exactly ? Do you mean privately issued commodity money? Say almond money issued
by an almond growers consortium? I believe such money is presently legal. Perhaps the coming depression
will give impetus to this type of money. However. you still have not answered the question regarding Michigan scrip -
while you've claimed there is theft, you've not identified any robbery victims - why not?
nazgulnarsil: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.
When you say we, I presume you mean we the consumers rather than we the American car companies, right?
What about we the disinterested non-car-buyers who would like to see our fellow Michiganders fully employed?
What position should we, the latter group, take - rationally speaking wise?
Warren Raftshol:What does this mean, exactly ? Do you mean privately issued commodity money? Say almond money issued by an almond growers consortium? I believe such money is presently legal.
It's not legal because you must pay capital gains when converting it into FRNs for tax purposes.
Warren Raftshol:However. you still have not answered the question regarding Michigan scrip - while you've claimed there is theft, you've not identified any robbery victims - why not?
TAXES ARE THEFT!
Juan:Well, if the companies were credit-worthy they could raise the money themselves through the voluntary system known as "the market", no ?
Yes, of course. And they could build their new car making facilities in China, or Sudan or other poverty pesthole.
I'm saying a scrip loan would be beneficial to the people of Michigan generally. While you supposed liberty advocates have carped about
theft and centralization, you haven't identified any parties that would be harmed by this transaction.
Warren Raftshol:What about we the disinterested non-car-buyers who would like to see our fellow Michiganders fully employed?
Buy their more expensive, lower quality cars (ie. put YOUR money where your mouth is) or hire them to work in your industry..
Warren Raftshol:Yes, of course. And they could build their new car making facilities in China, or Sudan or other poverty pesthole.
What about all of the plants in Tennessee and Alabama? The auto industry is growing in those states. Why? Why are they succeeding where Michigan has failed?