Political Theory

Re: Thriving? R U KIDDING ME?

Torsten — Fri, 19 Oct 2007 18:43:28 GMT

What we are discussing is theoretical, it can however get real...

nirgrahamUK:

you point out in your earlier post that hong kong (or america) is at risk if china declares its citizens the new owners of the capital invested by foreigners into it. This would amount to nothing other than theft. we should always be watchful of theives ;-)

You can be sure they will have some nice wording for this kind of "transaction" - If they play their cards right they will even get at least some of the present owners collaborating with them. I could give you examples where this is already happening on a smaller scale. If this would happen on a global scale China and India would probably have to take the lead. At present your trading nations like Singapore benefit from the advantage that there are many potentially manufacturing countries. And if one of them would start confiscating, they could simply make use of the merchandise from other countries, while the confiscator country would get its reputation damaged. The "elites" in those emerging countries have however not much to complain about, since they are the main beneficiaries of exports from their countries. This can however change as well.

Re: Thriving? R U KIDDING ME?

nirgrahamUK — Fri, 19 Oct 2007 12:46:49 GMT

quite, right, i so agree.

you point out in your earlier post that hong kong (or america) is at risk if china declares its citizens the new owners of the capital invested by foreigners into it. This would amount to nothing other than theft. we should always be watchful of theives ;-)

Re: Thriving? R U KIDDING ME?

Torsten — Fri, 19 Oct 2007 12:12:25 GMT

nirgrahamUK:

course it can, Hong Kong, does how much manufacturing, and how much services?

90% service industry. GDP quite high too

You can add Dubai, Singapore, Luxemburg and Monacco to that list. As for HongKong - this is, while having a special status, actually part of China and the manufacturing products they use or sell does still come from there. http://en.wikipedia.org/wiki/Hong_Kong

Hong Kong is at Chinas mercy. Similar conditions apply to the other countries mentioned. They are on "good foot" with their neighbours - Basically they are the same are of political control. Health gets tested when factors for injuries or diseases are present. There are possible scenarios for something like that. They are basically of a political nature. Under the present situation. This is not a problem, but the situation can change.

Re: Thriving? R U KIDDING ME?

nirgrahamUK — Thu, 18 Oct 2007 14:02:24 GMT

>>Furthermore I would pose the question: Can a country be healthy without a strong industrial base within its own borders?

course it can, Hong Kong, does how much manufacturing, and how much services?

90% service industry. GDP quite high too

Re: Thriving? R U KIDDING ME?

Torsten — Thu, 18 Oct 2007 10:31:17 GMT

gethky:

"With your critique of the Murphy article you yourself applied a causal realist approach, which is actually very Austrian." - Torsten

Yes, I am an advocate of Austrian economics, but I am also a realist. I contend that most Austrians don't admit that China has demonstrated a glitch in the conventional theory of free trade.

Thanks for clearing this up. Proof is not in quoted figures, but in the line of argument that needs to deal with them. What you state is, that due to government contracts more jobs have been "created" in certain industries. This then adds to the employment figures, but covers also the job losses in other industries (like manufacturing). Your critique is basically the suggestion that some Austrians skew their argument in order to let favoured policies look good.

Back to the issues. While trade is usually beneficial for both sides, this is not so by necessity. But in the case of shifting manufacturing activities from the US to China the problem is actually not "free trade", but rather past financial and social policies. The financial policies being used to cover up other problems in the economy. This lead to high wage levels and high prices in the US. Additionally the result was also high purchasing power on international markets.

Furthermore I would pose the question: Can a country be healthy without a strong industrial base within its own borders?

What I mean is that lots of the manufacturing is shifted to other countries, while formally there is still ownership of capital by american companies. So they still make money in the US as well, letting the economy look good. But what if the Chinese decide to say: "Thanks for putting all your industries here, but we are the owners from now!" Then the Americans would soon find out that physical control of assets is more important than formal ownership of it. So gethky, I can see the point that you were trying to make. This being a more extreme scenario, while it is elastic in the end.

Re: Thriving? R U KIDDING ME?

Inquisitor — Thu, 18 Oct 2007 02:58:10 GMT

Well right now I don't have the PIG available. I think Skousen brings up jobs created by trade in his Economic Logic.. I'll see if there's anything relevant.

Re: Thriving? R U KIDDING ME?

gethky — Thu, 18 Oct 2007 00:46:39 GMT

"Isn't this is all a massive red herring, to look at only a small section of the labour and good markets, e..g software engineers, and software, without looking at the wide market for labour and goods." - nirgrahamUK

Sorry to have confused the issue by bringing up an example covering only a small segment of the population in question. What I was trying to do was to answer Inquisitor's (page 3) statement, "No, Murphy does analyze where the new jobs come from."

Since I don't have Murphy's PIG book (that was cited by Inquisitor on page 3, 10/13/07 at 1:49AM) I quoted from one of Murphy's articles in Mises.com and that quote just happened to be about software engineers.

My point was that Murphy, along with the other Mises.com writers (that I picked at random and cited on page 2) and such Catoist writers as Daniel J. Ikenson (cited on page 1) all exhibited the same indifference to considering the effect of wartime government spending on U.S. employment (among other factors that I listed on page 1).

Re: Thriving? R U KIDDING ME?

nirgrahamUK — Wed, 17 Oct 2007 22:19:26 GMT

inst this is all a massive red herring, to look at only a small section of the labour and good markets, e..g software engineers, and software,

without looking at the wide market for labour and goods .

Imagine one country, lets say for instance China has a comparative advantage in creating software, and thus its citizens increasingly partake in being software engineers, and lets further say that in the USA more and more software that US consumers buy comes from China. This tells us nothing about quality of life/purchasing power of citizens to buy goods they want on their wages. if we then add in we know this came about in the free market then we know its an optimal way of getting the consumers of software the software that they need. surely a boon? and now the chinese have US dollars to buy goods from the USA (in what the us has advantage in).

if you add in further that one government or the other, taxed its citizens to restructure its labourmarket and to subsidize 'software production' then we know its worse for the citizens being taxed to do the subsidizing, than the citizens who are buying the subsidised product. if you switch the words China for USA and vice versa the logic still stands, though you can argue about who is the bigger chump.

isnt this just like all the examples littering Hazlitts 'economics in one lesson'?

also im confused why in the first two pages gethky seems upset only about manufacturing, and then in the next two we are making the switch to talking about software (service),

i wonder why leave out the producers of raw materials for the same (wrong headed?) analysis.

fair play if one countries government is hellbent on making its country a forerunner in a particular market , regardless of how innefficient this is for their side, and how beneficial it is to their outer customers, this may cause dislocations for the displaced workers in the other economies, but bear in mind that all the wealth accumulating to software engineers is just to be traded for product the engineers wish to buy, else whats the point of them working? and a all those displaced workers we mentioned can get to work trying to sell things that they want to buy.

Re: Thriving? R U KIDDING ME?

gethky — Wed, 17 Oct 2007 20:26:32 GMT

"With your critique of the Murphy article you yourself applied a causal realist approach, which is actually very Austrian." - Torsten

Yes, I am an advocate of Austrian economics, but I am also a realist. I contend that most Austrians don't admit that China has demonstrated a glitch in the conventional theory of free trade.

"That government contracts played a role in the increase of software jobs is not in dispute. But I think that it is rather likely that there was a general increase in software jobs, due to the Internet being used more..." - Torsten

I think it rather likely that there was a general increase in software engineering jobs due to the following U.S. government activities: (1) NSA's (rumored) huge national/world-wide data-mining project, (2) the (newly formed) Departmant of Homeland Security's (assumed) need for ERP software, (3) DOD's (assumed) need for wartime software buildup, (4) the (newly formed) Coalition Provisional Authority's (assumed) need for ERP software, (5) secret government projects not yet disclosed.

But Murphy blithely cites only the U.S. Department of Labor Statistics, thus giving the impression that the BLS figures prove his (apparent) point that both parties in a free trade always benefit - even in the case of U.S. business outsourcing/off-shoring with present-day China (or, in the case of software engineering, with India).

I'm for free trade despite the huge reduction in the standard of living that the U.S. populace would have to endure for a period of time in order to compete with China. What I'm against is advocates of free trade ignoring that possible reduction.

Re: Thriving? R U KIDDING ME?

Torsten — Wed, 17 Oct 2007 12:27:18 GMT

gethky:

"No, Murphy does analyze where the new jobs come from." - Inquisitor

I don't have Murphy's PIG book so I found his 2006 article on outsourcing (http://www.mises.org/story/2052) in which he claims that good jobs have increased during the present era of free trade. And, like most free-trade advocates, he cites only the U.S. Bureau of Labor Statistics while apparently refusing to give the slightest attention to the fact that the increase could very well have been caused by factors not relating to free trade, namely the U.S. government and its prime contractors gearing up for the "War on Terrorism" by awarding many software contracts:
"Well, software applications are an export industry, and according to the BLS, in 1999 there were 287,600 software engineers (in applications) with a mean annual wage of $65,780, while in 2004 there were 425,890 such jobs with a mean annual wage of $77,330. That sure looks like growth to me; maybe the [Austrian] outsourcing propaganda isn't so crazy after all?"

I think I already mentioned that one shouldn't obfuscate Austrian, "free trade", outsourcing (you actually mean off-shoring) etc. With your critique of the Murphy article you yourself applied a causal realist approach, which is actually very Austrian. That government contracts played a role in the increase of software jobs is not in dispute. But I think that it is rather likely that there was a general increase in software jobs, due to the internet being used more, ERP software being used more and becoming more comlex. Ironically this ERP software might have benefited from the fact that companies outsourced of their production processes. So I would not subscribe 100% to your argument in this matter.

What one should also look into is the following:

reasons for wage discrepancies between different countries
reasons for differences in productivity
influence on government policies, contracts and central banking

There also different matters one can look into: pure economic matters of outsourcing, off-shoring, internatial trade. But also geopolitical issues like whether it is a good thing, when production activities take place in one country, while management and intellectuals work is done in the other.

Re: Thriving? R U KIDDING ME?

gethky — Tue, 16 Oct 2007 01:47:43 GMT

correction:

...slightest attention to the ~~fact~~ possibility that....

Re: Thriving? R U KIDDING ME?

gethky — Mon, 15 Oct 2007 22:02:03 GMT

"No, Murphy does analyze where the new jobs come from." - Inquisitor

I don't have Murphy's PIG book so I found his 2006 article on outsourcing (http://www.mises.org/story/2052) in which he claims that good jobs have increased during the present era of free trade. And, like most free-trade advocates, he cites only the U.S. Bureau of Labor Statistics while apparently refusing to give the slightest attention to the fact that the increase could very well have been caused by factors not relating to free trade, namely the U.S. government and its prime contractors gearing up for the "War on Terrorism" by awarding many software contracts:
"Well, software applications are an export industry, and according to the BLS, in 1999 there were 287,600 software engineers (in applications) with a mean annual wage of $65,780, while in 2004 there were 425,890 such jobs with a mean annual wage of $77,330. That sure looks like growth to me; maybe the [Austrian] outsourcing propaganda isn't so crazy after all?"

"And btw, the money for that has to come from somewhere - i.e. taxation/bond sales etc." - Inquisitor

Selling Treasury bonds to pay for present governmental expenses means the money to pay (at least) the interest on those bonds will, in part, come from your future earnings (by way of the federal income tax). BTW, the administration headed by Pres. George W. Bush increased the U.S. government's dollar debt more than the total national dollar debts of all previous U.S. administrations combined!

"So again it is curtailing money that would've been used elsewhere within the economy." - Inquisitor

Yes, that's why current statistics, being dependent in part on government spending, are rather questionable when put forward by Austrian academics to defend their free market statements. What I propose is that they add a proviso to every article they write about free markets that would go something like this:

Free markets work swell for all parties in most cases.

Re: Thriving? R U KIDDING ME?

Inquisitor — Mon, 15 Oct 2007 17:53:10 GMT

No, Murphy does analyze where the new jobs come from. And btw, the money for that has to come from somewhere - i.e. taxation/bond sales etc. So again it is curtailing money that would've been used elsewhere within the economy.

Re: Thriving? R U KIDDING ME?

Niccolò — Mon, 15 Oct 2007 00:58:34 GMT

Paleocon go home! American go home!

Re: Thriving? R U KIDDING ME?

gethky — Mon, 15 Oct 2007 00:09:29 GMT

Inquisitor:

Apparently the Austrian scholars and the statistically-bound (free-market) economists ignore the present wartime U. S. economy when considering the effects of free trade. Because of "THE WAR ON TERROR," the U. S. government has cranked up its spending astronomically. Where has all this extra spending gone? Almost all of it to U. S. businesses and their employees.