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View Full Version : A question for the pro-regulation crowd



pooltchr
04-04-2011, 01:54 PM
If, on one hand, you believe that many of our economic problems are caused by the evil corporations outsourcing work to other countries, how is it possible to defend increasing regulations (increasing operating costs), supporting unions (increasing labor costs), and increasing corporate tax rates?

It seems that these three things are the root cause for much of the exodus of jobs overseas.


http://finance.yahoo.com/career-work/article/112438/5-industries-on-life-support

<span style='font-size: 14pt'>"Because labor costs and regulations are high domestically, many manufacturers send their production to foreign countries. Downward price pressure from domestic wholesalers, retailers and consumers forces U.S. producers to cut costs to offer a competitive price. Many firms that cannot outsource have a difficult time competing."</span>

The rest of the link is an interesting piece on industries that are suffering from technological advances that are bringing about their demise. (Anyone remember the Royal typewriter?)

Steve

wolfdancer
04-04-2011, 02:47 PM
Duh !!!
When you, yourself, become willing to work for foreign wages, and believe that you can then also maintain a reasonable standard of living on them....then ....and only then...pose the same question again.
Sorry, but for most of us, we couldn't eat, let alone pay the rent on that monthly take.
You also are against health care for the poor....how do you think anyone can afford health ins. on min wages?
Just because some unnamed superstore pays niggardly wages with no benefits, to it's employees, does not prove anything. Nobody can afford to raise a family on that $1.25 an hour, or whatever the min wage is...and... no benefits. People that work there can only afford to because it's usually a second income
Odd that you would bring up the royal typewriter,(actually, not odd,considering....)....did you know we have word processors and spreadsheets nowadays?

pooltchr
04-04-2011, 03:25 PM
True, we couldn't live HERE on those wages, but for the people in those countries, they are probably doing quite well. Wages alone mean nothing without comparing them with the cost of living.

And I mentioned Royal as an example of an industry much like the others listed in the link, which are on the verge of extinction due to technical advances.

Are you really that dense, or has the gin already kicked in?

The simple point is that taxes, over regulation, and high labor costs have all contributed to those jobs moving overseas. So now, those high paying jobs that the unions got for you no longer exist.

Maybe a little higher level reading (higher than what you are acoustomed to, I'm sure) would help you understand. Try google and see what you can learn about the goose that laid the golden egg.

Steve

Soflasnapper
04-04-2011, 03:54 PM
This sounds like a reasonable question, and if it were the question of profit vs. no profit, it would be closer to a reasonable question. (BTW, corporations are AMORAL more than evil, although sometimes it's difficult to draw that distinction. But it is their stated purpose to maximize profits for the shareholders, without any loyalty at all to this country or their workforce here, unless that could impact their bottom line profit situation.)

However, it is (mainly) not that question. Rather, it is a reasonable level of profit operating here, vs. a far higher level of profit operating elsewhere.

But your question is still a good one. How indeed to stop capital from seeking double or triple their returns on investment by going elsewhere compared to here?

The answer, which no one will find appealing probably, is to take away the labor and regulatory cost arbitrage available by producing overseas in a very American way-- the way in which the federal government used to finance almost all its expenditures prior to the imposition of income tax-- trade tariffs.

So, if you save $10 in costs of labor and regulations per $100 dollar retail pair of Air Jordan sneakers, you pay the difference as an import tariff, thus netting you no more money for that practice. No monetary advantage means it will not happen.

Another way it could be done is how Germany does it-- every large corporation has labor union reps in its board of directors. For the company to decide to outsource beyond the borders of the country, the union members of the board would have to go along (and won't).

I have read of many industrial plants-- steel mills, textile mills, etc.-- which were running at a profit, but which were slated to be mothballed and liquidated for the greater profit potential overseas. These came to my attention because either the unions there, or just the workers not in unions, came together to buy out the plant instead of letting the company close it down and write off that closure. The plants then continued in a profitable way, owned by their very workforce. Furthering this kind of passing over these capital assets to the workforce through legitimate value sales pricing is another possibility.

Lastly for my list, but not the last available option, is for the various governmental levels to refuse to grant contracts to vendors and companies unless they had some given percentage level of continuing capital investment and employee force in this country, relative to what they have overseas. 'Domestic content' rules are already somewhat in place for some governmental purchasing, I think, and this idea could be extended.

It's a fool's errand to try to make the US workplace competitive on wages and regulations with China or the 3rd world countries. It will never be enough, and it would just be a race to the bottom.

pooltchr
04-04-2011, 04:06 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Soflasnapper</div><div class="ubbcode-body"> Rather, it is a reasonable level of profit operating here, vs. a far higher level of profit operating elsewhere.


</div></div>

But whose job is it to decide what is reasonable? Is it the job of the government? I would have to say absolutely not.
It is the job of the government to create an environment where business can function profitably. That is the only thing government can do to help create jobs. (Well, they can hire more people, but that is really counter productive)

Business is there to make a profit. Profits are not illegal. And as you point out, the goal is to maximize profits. So what would prevent businesses from just raising prices as high as they want? Two things. One, raising prices would reduce demand, as the perceived value to the consumer would drop. And the other is competition. If you are selling pool cues for $300, and decide to raise the price to $600, I am going into the pool cue business and sell the same product for $500. You will lower your price, I will lower my price, and we will reach the point where we are both selling the same product for $300. Why? Because that is a price that has already been established as reasonable by the consumer, and is also proven by your business before the price increase, one that can produce a reasonable profit.

Free market and capitalism wins again!

Steve

Soflasnapper
04-04-2011, 08:18 PM
Huge sectors of the economy are monopolized, or cartelized, which makes for little or no competition on price, and creates large barriers to entry for potential competitors who might want to get in the biz.

The key to capitalism is to wipe out the low price companies, and it happens on its own a lot.

Do you remember People's Airlines, and what happened? (You may be too young.)

Do you think that regulated utilities, which have a given return on capital assured in law, are going broke and out of business?

wolfdancer
04-04-2011, 09:51 PM
Jesus H. Christ!!! ...you finally figured it out that American jobs are lost to overseas workers because they can afford to work for what would be sub standard pay in this country.
You really think and believe that you have made some profound statement here with your taxes, regulations, and union wages mention as cost factors that resulted in these jobs being shipped overseas. Obviously then your solution is to get American workers to work for Chinese pay....and lets do away with OSHA....bunch of bs regulations.
And you are calling me dense...Bubba??????????????????????????????

LWW
04-05-2011, 04:17 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pooltchr</div><div class="ubbcode-body">If, on one hand, you believe that many of our economic problems are caused by the evil corporations outsourcing work to other countries, how is it possible to defend increasing regulations (increasing operating costs), supporting unions (increasing labor costs), and increasing corporate tax rates?

It seems that these three things are the root cause for much of the exodus of jobs overseas.

Steve </div></div>

You hyave forced them into the doublethink mode now.

LWW
04-05-2011, 04:31 AM
Completely wrong headed interpretation of how world economics actually work.

When a company is profitable in comparison with others in the same industry, it will attempt to gain market share ... even if that means a reduction in profit per unit, because it will increase profits overall.

When foreign competition enters the market things get more complicated. First, the average consumer ... sadly ... is more concerned with being able to buy a $29 DVD player at Wally's than they are with the UE rate. Now, US companies must do one of 2 things:

1 - Move offshore to match the lower labor costs.

2 - Automate.

Both result in lower numbers employed, at least initially.

Now, unknown to most ... we manufacture more in the US than ever before, we just do it so efficiently that we need far fewer people. We have mostly learned to compete with foreigners by automation.

Now, where it gets really interesting is that the efficiency of the US worker is high enough that it more than covers it additional costs per hour in most industries.

In spite of what the regime wants us to believe for example, the US auto industry is doing quite well. It's union plants that aren't doing well.

Here in Ohio, we used to have numerous union plants.

Then came Honda.

Today Honda, non union, is running at near capacity ... other than the quake upset ... on 3 shifts. They match union wages and benefits, and in some cases exceed them.

What they also do is build cars with roughly 40% fewer man-hours of labor than GM.

Hence, GM is deceased and Honda is thriving.

It wasn't union wages that killed GM ... it was the union's refusal to match production rates, or even come close, of the competition at Honda and Toyota and BMW and Mercedes and many other US auto plants.

Qtec
04-05-2011, 06:01 AM
The race to the Bottom.

Think of America when the average wage is $5 a day.

That's what you want.

Q

pooltchr
04-05-2011, 07:05 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Qtec</div><div class="ubbcode-body">The race to the Bottom.

Think of America when the average wage is $5 a day.

That's what you want.

Q </div></div>

I don't remember $5 a day wages, but my first job out of the military paid me $110 a week. (that's about $20 a day) I owned a 3BR/2BA brick home, had 2 cars in the driveway, and we could afford to go to the grocery store every week, and even take family vacations. (It only took $5 to fill my gas tank)

Fast forward 20 years when I was making 10 times that much, and was still living in a different, but similar 3BR/2BA home and had 2 cars in the driveway, still eating, and still going on family vacations.

I didn't increase my salary by having a union negotiate for higher wages...I went to school, got a degree, went to work in a different industry, and worked my way up to a high level management position with a very good (non union) company.

So, if prices were at 1975 levels, I could be doing just as well with my 1975 wages.

Steve

LWW
04-05-2011, 08:15 AM
Actually ... America was ran by a democrook thugocracy in those days as well.

Sev
04-05-2011, 08:28 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Qtec</div><div class="ubbcode-body">The race to the Bottom.

Think of America when the average wage is $5 a day.

That's what you want.

Q </div></div>

Think about the actual buying power of the dollar when wages were at 5hr.

Here is an example closer to today. Me.

If I made 50,00 a year in NY to live. I only need 18,000 a year in TN to achieve the same lifestyle.

So if I were working by the hr. If my buying power at 18,000 a year in TN is the same as 50k a year in NY does it really matter at the end of the day if the hourly rate is lower?
The value of the dollar is actually higher in TN. If I make 50k a year in TN my lifestyle will exceed that of NY.

And after all isnt that what counts in the end?

LWW
04-05-2011, 09:27 AM
@*#&$%'ed ridge runner!