China Now Comes to USA for Cheap Labor?

Re: China Now Comes to USA for Cheap Labor?

--- In spiers@yahoogroups.com, "Pete Holt" wrote:
>
> Response to points:
> 1) Maybe the automakers will renege on their pension plans sometime in the
future. But they have those costs today. ... We were talking about costs
today.

*** Much of what happens today is based on calculations of what will be true 10
- 30
years from now... hence bonds quoted in those terms... where China is today was
decided by Deng Xiaoping's crew back in 1980. Where we are today in USA was set
in
motion by the Bush-Clinton-Bush team of the last 15 years.***
>
> 2) Yep, taxes in Europe are high. So what. ***

*** Ireland is criticized for not charging the same high taxes as the other EU
countries, causing eurobiz to HQ in Ireland; it is a sore point and matters very
much
in the cheme of things. HK outperforms USA pound for pound becuase their taxes
are lower.***

>
> 3) You say, "Little of what USA imports has a component cost of labor more
than
5%" My point exactly. Labor costs in 3rd. world countries is very low and this
makes a
difference in the costs of production and the final pricing of goods.

***Here is the part that I find hard to communicate. The cock crows before the
sun
rises, but it has nothing to do with making the sun rise. Labor rates may in
fact be
cheaper, but it is not the reason for the trade. If you study the trade
patterns, it is
clear there is a negative correlation between cheap labor and trade. In 3rd
world
countries, where labor rates are low, in fact the component cost of labor is
high, for
say baskets. We do extremely little biz with such producers.***

>
> 4) You say, "The history of heavy rail suggests otherwise... lighter and
lighter, rail
roads, auto roads, mag-lev could follow the same trajectory if govt was to get
out of
the road biz". But railroad and road (auto) technologies are very different.
Mag-lev
may have its place in the future as one means of propulsion for heavy (and maybe
light) rail, but not as a substitute for autos unless we fundamentally change
our
settlement patterns. And that kind of change would take many decades; and
require
a fundamental change in personal preferences from those of today. Not
impossible
in the long run, but not possible in the short run.

***Agreed, we'll not see mag lev personal in USA within the next 25 years. But
elsewhere, yes.***
>
> You are good at what you do well - international small business development,
but
you get out of your depth when your Austrian economic philosophy overwhelms your
common sense.

***You made this point before, but it has an internal contradiction. If I know
what I
am talking about in int'l small biz dev , and my analysis is "Austrian" how can
I be
doing well and be wrong? For me the free market philosophy both explained what
I
was seeing in the real world and guided me out of the dead -ends the other
philosophies entrapped. But I am open to arguments that explain a better
philosophical basis for int'l trade.***

John

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