Chinese Humour

[Whoha]

Originally posted by Kuciwalker
... what?

They produce stuff and sell it to us for less than the market value [would be without subsidies]. In the end, we have more stuff than we would have.

In the end they have the production, assets, debt(worthless at that point), and so on that we sold to buy all that stuff. Historically, its been a better position to be in.

The money comes back to our economy - it's called foreign investment.

Buying debt and property means its going into various liquidity traps. Which is why for all the stimulus that has been pumped into the economy, the growth has been absolutely pathetic.

And when all is said and done, the model you espouse is just obviously wrong. Take it to its logical conclusion: we should cut off all trade and have full subsidies for every industry... that's absurd and impossible.

Why are subsidies required? And by the way, if things continue as they are, all trade will be cut off. There is no such thing as a free lunch.

We could reap further benefits from cutting of trade between each state!

Our states share the same currency, culture, legal system,political system,and so on. States don't go into debt to move goods between one another since they both accept dollars as a medium of exchange.

[Kuciwalker]

In the end they have the production, assets, debt(worthless at that point), and so on that we sold to buy all that stuff. Historically, its been a better position to be in.

They have manufacturing, because that's their competitive advantage. We've got the stuff that pays better. Frankly, I'm just as happy that Americans aren't the ones doing low-paying jobs.

Why are subsidies required? And by the way, if things continue as they are, all trade will be cut off. There is no such thing as a free lunch.

... why would trade be cut off?

Our states share the same currency, culture, legal system,political system,and so on. States don't go into debt to move goods between one another since they both accept dollars as a medium of exchange.

The point is the same: there's one world economy. Dividing an economy into pieces cannot make it more efficient, because taken to its logical conclusion that leaves each and every person supplying their own needs. Outsourcing is why we aren't all still farmers.

[Whoha]

Originally posted by Kuciwalker
They have manufacturing, because that's their competitive advantage. We've got the stuff that pays better. Frankly, I'm just as happy that Americans aren't the ones doing low-paying jobs.

Darn all those people who were working in those "low paying jobs" against their will(until they got fired) because it was a clearly inferior choice to what they could have been doing all along.

... why would trade be cut off?

Because there is no such thing as a free lunch. You pay for trade goods with exports.We have the most lopsided trade balance in history with China, and approaching overall record levels world wide, so thats out. You pay for them with assets that you acquired previously. And you pay for them with debt. will they continue to supply us with debt forever?

The point is the same: there's one world economy. Dividing an economy into pieces cannot make it more efficient, because taken to its logical conclusion that leaves each and every person supplying their own needs. Outsourcing is why we aren't all still farmers.

except that there isn't a one world economy. Each country uses its own currency, has its own culture, its own national interests, and so forth. as for that "logical conclusion", no. You don't go into debt with your grocer because you accept the same currency as an exchange medium.

And of course, we aren't all farmers because demand for food is inelastic and improved methods of farming drastically increased food production.

[DanS]

Originally posted by Colonâ„¢


That is your standard Yahoo! Finance graph, there's nothing to manipulate about. I would expect anyone who reads a graph would be able to figure out he needs to read the scales but maybe because it's been a recent discovery to you that you even need to bother mentioning.

And it was in reply to Theben who was getting worked about about the seeming irrelevance of the gap between the 21st July high point and the previous high point: the graph shows a 3-4% rise from low to high, and a continuing rise of the Yuan, which is something that does matter.

So, for goodness sake, go **** elsewhere.

It's a biased graph because of the scale. I realize that it is Yahoo!'s graph, so I don't fault you for it. But I think it's worthwhile to note the fact that it's biased.

[Darius871]

I don't think the amount the graph dropped is quite as important as the way it dropped, namely the constant flatlining until the mid-July 2005 abrupt policy shift. That's notable no matter what the scale is.

[Colonâ„¢]

This is silly. There's no "standard" scale for such graphs. They always involve a scale between the high and low points in a given time period. So how can it be biased then?

[DarkCloud]

Colon- It can be biased because there are no other examples (historical or of other currencies) to compare it to. Someone who knows little about currency exchange rates might consider the drop to be far more significant than it truly is.

And someone who isn't experienced at understanding graphs might not notice the voodoo surrouding a scale that doesn't end at zero.

That being said, I fully agree with Colon that the Yahoo graph is legitimate- it just needs to be understood in context.

But there's no need for Colon to place a disclaimer- the scale speaks for itself.

[Kuciwalker]

Originally posted by Whoha
Darn all those people who were working in those "low paying jobs" against their will(until they got fired) because it was a clearly inferior choice to what they could have been doing all along.

Structural unemployment

Because there is no such thing as a free lunch.

Yes there is. The Chinese are paying for ours.

You pay for trade goods with exports.We have the most lopsided trade balance in history with China, and approaching overall record levels world wide, so thats out. You pay for them with assets that you acquired previously. And you pay for them with debt. will they continue to supply us with debt forever?

They invest USD in the US. There isn't some finite amount of assets in the US; it grows every year.

except that there isn't a one world economy. Each country uses its own currency, has its own culture, its own national interests, and so forth. as for that "logical conclusion", no. You don't go into debt with your grocer because you accept the same currency as an exchange medium.

Currency is just a means of handling transactions. It doesn't magically make things separate economies that can't be treated as a whole. All the principles of economics apply even under a barter system - there's just a lot more overhead because of the inefficiency of that exchange system.

And of course, we aren't all farmers because demand for food is inelastic and improved methods of farming drastically increased food production.

Demand for food is extremely elastic. We aren't all farmers because we outsource. If people didn't outsource, each person would grow his own food and try and produce all the other stuff he uses.

[DarkCloud]

Kuciwalker- I don't think that you understand the prime objections here.

When one party in an international market doesn't play by the rules, all other parties are disadvantaged. That is, if one nation manufactures items cheaper than another through subsidizing their industries, they can effectively out-muscle most private-owned firms due to economies of scale.

But, you may ask, why is this wrong? If the state can produce products cheaper than private industry, then why not allow the state to do so. On the surface, I would agree, allow the state to manufacture these things. Like a Corporate Board of Directors, its leaders can be voted out of office if they under-perform. However, like all large companies, States accumulate unwieldly bureaucratic structures over time and tend towards corruption.

Now, while this may lead to eventual collapse- this collapse may not occur until private producers are run out of business... And so to ensure profitibility- prices will rise... And since start-up costs will initially be prohibitive enough to discourage private industries, consumers will be fleeced.

And since most industries are not natural monopolies- this imposed monopoly will tend to overprice goods and services more and more as it becomes increasingly bureaucratized and wasteful - much like several large companies have in the past (read: slow-moving IBM which finally turned itself around). However, since these companys are controlled by a government, they will tend to be propped up longer- stealing money from their citizens in increased service fees AND IN INCREASED TAXES.

Now, you might say- heck- in that case the US is getting a free lunch and China is going to go bankrupt in a few years even if all US Manufacturing heads over there. However...

Don't think of this purely on economic terms, think of it also in political terms. If the United States loses its comparative advantage in producing, say Aluminum to the Aussies and purchases all their aluminum from Australia, then the Aussies can hold the US 'hostage' in diplomatic negotiations.

This is a great fear in both Sino-US and Sino-EU economic relations in terms of textiles and other manufactured goods.

A question is, in the future, does the US want to economically prop up a failed state that subsidizes its industries with state funds just as it and a consortium of other countries are doing for North Korea.

The answer is No. The US does not want that- simply because the dynamics of the situation would not allow it. A failed China would equal a failed US since all of America's assets- in manufacturing, human capital, and debt (as was mentioned before) will be owned by the Chinese.

However, a failed US would not necessarily mean a failed China. China can send goods to other countries as America becomes less of a wealth-creator than a wealth-distribuitor.

Ask yourself this- is America economically sustainable? Does it produce anything that the world wants?

Manufacturing- no... it's all gone to South America and Asia.

Science- increasingly that's becoming more of an Asian thing.

Service- while foreigners do come to america to train for service industries, this is a limited need.

Marketing/Culture- Yes, America does have this... But the rise of Bollywood, and African film industries do threaten it. Truth be told though, as long as America is 'powerful' its culture will be considered dominant and 'cool' so I'd say that America has a 100-300 year dominance of this. Imagine America in 300 years as being where France is now.

Entrepreneurship/Education- America certainly has some plucky inventors, but an increasing culture of litigation and red-tape in creating companies, etc. has dampened this. The future innovators will be Asians- not Americans.

--
Therefore, with a decidedly grim future awaiting America economically, it cannot afford to lose much more manufacturing without setting up some sort of wealth-generator in its place.

[Kuciwalker]

Kuciwalker- I don't think that you understand the prime objections here.

When one party in an international market doesn't play by the rules, all other parties are disadvantaged. That is, if one nation manufactures items cheaper than another through subsidizing their industries, they can effectively out-muscle most private-owned firms due to economies of scale.

A myth. All the other parties have an advantage. If China subsidizes, say, the textiles industry, then we get cheaper clothes. Now, textile workers over here may be worse off in the short run, but that's more than outweighed by the cheaper stuff everyone else gets. And in the long run the textile workers are put to work making other stuff, and we're all better off because we have more labor to put to use. Except the Chinese; they're worse off because they're giving us some extra stuff for free.

Subsidies are like bread and circuses; they're just ways for leaders to curry favor with segments of the population too ignorant to understand that they're actually worse off long-term.

[DanS]

Originally posted by Colonâ„¢
This is silly. There's no "standard" scale for such graphs. They always involve a scale between the high and low points in a given time period. So how can it be biased then?

The scale doesn't start at 0 and therefore it is biased. I realize the way you describe is how most of the stock/finance charts are given, but that doesn't make it non-biased. Rather, it just means that most of these charts accentuate small movements.

It is important. Not silly at all.

[Whoha]

Originally posted by Kuciwalker
Structural unemployment

So these workers are going to get better jobs because there are just better jobs lying around for them to take? with fewer consumers who are paid less to boot.

Yes there is. The Chinese are paying for ours.

No.

They invest USD in the US. There isn't some finite amount of assets in the US; it grows every year.

US assets only grow through US production. But that is a good idea, we'll just keep selling land and other tangible items here in the US and we'll never run out.

Currency is just a means of handling transactions. It doesn't magically make things separate economies that can't be treated as a whole. All the principles of economics apply even under a barter system - there's just a lot more overhead because of the inefficiency of that exchange system.

Whether someone will accept a currency does separate economies.

Demand for food is extremely elastic.

you eat ten meals a day? If it were true(its not) then agriculture would be much more then ~2% of our economy.

[Kuciwalker]

Originally posted by Whoha
So these workers are going to get better jobs because there are just better jobs lying around for them to take? with fewer consumers who are paid less to boot.

Yep. That's how it works. That's been the consequence of every technological

No.

If I dump my products below market value, then I'm essentially giving away stuff for free.

US assets only grow through US production. But that is a good idea, we'll just keep selling land and other tangible items here in the US and we'll never run out.

But that "production" isn't limited to factories making physical goods. It's when businesses here of any stripe are created or expand. f.e. Microsoft is an American company worth 244 billion USD. That's 244 billion USD of assets added to the US.

Whether someone will accept a currency does separate economies.

Currencies are freely convertible.

you eat ten meals a day? If it were true(its not) then agriculture would be much more then ~2% of our economy.

No, but I might go to nicer restaraunts more often, or buy more expensive food. Do you really think that a poor person in Africa will spend as much on food as a rich person in the West?

[Whoha]

Originally posted by Kuciwalker
Yep. That's how it works. That's been the consequence of every technological

I'll assume you said technological improvement. These workers were not put out of business by another group in the country that makes electronic equipment, demands machine tools, and so forth that would lead to higher paying and higher skilled jobs being available. these people were put out of business by decidedly lower tech cheap labor.

If I dump my products below market value, then I'm essentially giving away stuff for free.

and of course you will always dump your product below market value.

But that "production" isn't limited to factories making physical goods. It's when businesses here of any stripe are created or expand. f.e. Microsoft is an American company worth 244 billion USD. That's 244 billion USD of assets added to the US.

so it took over 20 years to grow Microsoft that much. We go through that much debt in 6-8 months. US assets won't grow fast enough and can not.

Currencies are freely convertible.

Which means nothing if someone won't accept a currency.

No, but I might go to nicer restaraunts more often, or buy more expensive food. Do you really think that a poor person in Africa will spend as much on food as a rich person in the West?

They don't spend as much on service and other ancillary factors. But barring a government sanctioned starvation effort, they eat 3 meals a day.

[Elok]

I don't understand economics, but I'm told that it's only a matter of time before North Korea alienates enough people to cut off foreign aid, at which point it will collapse like a house of cards and China will be flooded with refugees and crime. How well will China deal with that?

Oh, and according to the graph (assuming I read it correctly), the big news was almost a year ago, back in 9/05. This is just the latest incremental increase/decrease.