Here's a fascinating article by an intelligent economist, Jim Tankersly, apparently a perfectly nice fellow, puzzling over the "big mystery" of why the U.S. economy has lost so many jobs and isn't creating any more to replace them. It is rife with phrases like:
"Even now, no one really knows why."
"a critical mystery bedeviling a nation struggling to crawl out of near-double-digit unemployment"
"If we can't figure out why, we may be doomed to a future that feels like a long jobless recovery, no matter how fast our economy grows."
"It's the trillion-dollar question,"
"That's not really what's supposed to happen."
And yet this article gives only the most cursory nod to what is increasingly obvious: free trade killed the Great American Job Machine.
China has no problem displaying that and could care less about any other nation's desire to be a global leader in ANY industry!
HG Wells' time traveler originally THOUGHT the "Eloi" were advanced beings as they lived a life of leisure as others toiled to provide them with ther sustenance! When will our "for sale" politicians wake up to the fact that China has become the latest (after Japan, Germany etc.) "Morlock" in the game of industrial survival just as the time traveler witnessed the price the "Eloi" actually paid for their apathtic behavior? Only our survival is not a novel, nor a business "theory" to be followed, it is real life involving our hard fought for independence, standard of living and the sovereignty of our nation!
The fact that all four great men on MT.Rushmore were protectionists (Jefferson signed on after the war of 1812) speaks a lot for how how those who revere profits over patriotism are now in control and their strings are pulled by the lobbyists with the deepest pockets despite whatever nation they are representing! Those who push this free trade fantasy will sacrifice our independence dreaming of a theory that our own founders were against!
I ask you, are we a market or a nation?
http://www.youtube.com/watch?v=4PQrz8F0dBI
YouTube - 1. A prophetic interview with Sir James Goldsmith in 1994 Pt1
http://desip.igc.org/gatt01.html
Goldsmith on GATT: Part 1
"THE NEW UTOPIA: GATT AND GLOBAL FREE TRADE
by SIR JAMES GOLDSMITH
Federal Document Clearing House Congressional Testimony
SENATE COMMERCE GATT IMPLEMENTATION
October 5, 1994
Global free trade has become a sacred principle of modern economic theory, a sort of generally accepted moral dogma. That is why it is so difficult to persuade politician s and economists to reassess its effects on a world economy which is changing radically.
The ultimate objective of global free trade is to create a worldwide market in products, services, capital and labour. Its instrument to achieve this is GATT, the General Agreement on Tariffs and Trade.
I believe that GATT and the theories on which it is based are flawed. If it is implemented, it will impoverish and destabilize the industrial ized world while at the same time cruelly ravaging the third world..."
It's sad that we ignored warnings from Sir James.
We should be listening to people like Mr. Fletcher, Paul Craig Roberts, etc.
Do this thought experiment: if we ended free trade, would technology still eliminate jobs? The answer, of course, is yes. Technology advances no matter what we do (short of total societal collapse). But doesn't technology create more jobs, jobs that are even better? No. It creates some jobs, always fewer than it eliminates, and while the jobs are better, it's precisely because they are better that they are out of reach of most. We can't all be computer programmers.
We shouldn't oppose technological progress. We couldn't succeed anyway. But we must, as a society, find a way to accommodate the fact that there isn't enough work for people. The market, even just the domestic one, depends on people spending all their money, but the unemployed have no money to spend.
On top of that, we just came through a recession caused by the Federal Reserve's monkeying with the money supply and government incentives for home ownership.
Certainly, free trade costs jobs, but with the benefit of lower prices which allow the creation of more jobs to replace them. The question is why those new jobs aren't being created, and all the above is the answer.
The causes for limited demand are numerous. Unemployment, less discretionary dollars to spend, job insecurity, housing value loss are a few.
One thing is obvious, giving the wealthy more money does not create much demand. I would suggest giving corporations more money (tax reduction) will not create demand and will only allow them to hoard more dollars.
So, in a sense I disagree with you, although I do agree with some of your comments.
The first limitation is that demand is finite after all. Practically speaking, even at a price of zero, demand is not infinite. How many potatoes would you take home if they were free? Once you have a laptop, a desktop, a smartphone, and a pad, how many more computers do you need, even cheap ones?
The second limitation is that, over time, ever greater increases in demand are needed to restore an ever dwindling number of jobs. This is simply the way percentages work. If you cut your cost of doing business by 10%, your business must go up 11.11% before your costs return to their former self.
Just consider the effect of the health care bill. Two thousand pages that hardly anyone really understands, whose implications are impossible to know ahead of time (Pelosi's "We have to pass it so you can know whats in it"). What effect is that going to have on any business's bottom line? Will they be able to stop offering their employees health care benefits, or will those benefits become more expensive? Are the Republicans going to be able to roll it back? Abolish it in 2012? Will the Supreme Court challenges overturn it? What are you going to do? How are you supposed to decide whether or nto to hire more employees under such conditions?
And that is just ONE issue.
Have you ever tried to start a small business? How muc paperwork do you need to fill out? Who do you have to pay (or pay off)?
America has the highest corporate income tax in the developed world. And people in power like Van Jones saying nasty things about businessmen and threatening to do somethign about it.
And we have had the Fed monkeying with the money supply. Ever hear of the Austrian theory of the business cycle?
These guys really need to read your book!
There has always been cheap labor but the industrial revolution had to wait for the invention of the steam engine. And what is one of the cheapest ways to keep the steam engine running? Cheap dirty coal.
China 2009 consumed over 45% of all the coal burnt on the planet! I bet that number went up in 2010!
Any takers on the bet Mr. Economist?
Excellent point!
China’s Innovative Way of Skinning the United States!
Mark Twain is credited with an early use of the cliché "more than one way to skin a cat" in A Connecticut Yankee in King Arthur’s Court, as follows: “she was wise, subtle, and knew more than one way to skin a cat, that is, more than one way to get what she wanted”. Thefreedictionary.com defines beggar-thy-neighbor as: an international trade policy of competitive devaluations and increased protective barriers that one country institutes to gain at the expense of its trading partners. Under the guise of fostering ‘indigenous innovation’, the Chinese government has creatively used a non-conventional, subtle version of beggar-thy-neighbor. Its version doesn’t entail the competitive devaluation of its own currency, which would enhance China’s exports and inhibits its trading partners’ exports. China’s version perpetrates an over-valuation of the currencies of one or more of its trading partners. This negatively affects all the trade of the pegged trading partner(s), not just trade with China. During the recent period China pegged its currency to the U.S. Dollar, its version of beggar-thy-neighbor was 8 times as damaging to the U.S. economy as what the media refers to as “China keeping it currency undervalued”.