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Originally Posted by nova
Take any country thats relatively closed to foreign commerce and you're going to see a weak economy. Vietnam, Cambodia, Burma, even the red Chinese were completely stuck economically until they started trading with other countries and letting other countries do business there.
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I think you are purposely missing my point. There is a big difference between isolationism and ownership. Doing business overseas does not require selling your company to foreign owners. (In fact, when you do that, you are not really doing business overseas anymore, are you.)
I am all for doing business overseas. Opens markets are a great thing. It means having more markets open to sell your products in. But to do this, you have to have a product to sell. Having no business means nothing to sell. This is why China is booming. They own companies that are exporting to other markets.
This also requires a two way street for it to work, and we should demand reciprocity. Ironically, it is the Chinese and Japanese and Korean markets that are closed (to us). This is why our companies are suffering. Markets we are letting in are not letting us in.
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Originally Posted by nova
If GM had been sold to say the Chinese, name one thing that they could pack off to China that couldn't be replaced here by some industrious business and their ideas?
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Now this is zero-sum thinking. Why does GM have to be packed off for said industrious business and their ideas to exist? Would it not be better to have both companies here employing people?
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Originally Posted by nova
You think they're gonna pack up the Renaissance Center and move it to Beijing or what?
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Um, yes....not physically of course, but they could easily move into a new building in Beijing, and simply clear out the Renaissance center, leaving it vacant. It's not the building that matters, it is the company that lives there.
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Originally Posted by nova
This isn't going to be a popular thing to say but it is what it is. If anything, GM has spent the last 20-30 years destroying an obscene amount of wealth. Between monetary losses, depreciation and several other factors, GM made nearly $500 billion turn into a pumpkin over that period with nothing to show for it. If you're constantly pouring money into an enterprise that you don't know how to make money with, you're not doing anyone any favors. In fact, systematically destroying wealth is how you end up in Bankruptcy.
In fact thats what makes liberal bankruptcy laws so great for an economy. People can fail and the economic assets they were squandering can be transferred to someone who just might know WTF they're doing.
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Not sure about the $500 billion figure, but otherwise, agreed. No reason that those assets that were being squandered have to move off shore though, and if they are, then you are still not benefiting from them because you don't have them.
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Originally Posted by nova
That way of thinking hasn't been true since wealth was defined as gold and silver coins sitting in a chest in somebodies closet. Yeah, in 1780 when that was true, if you bought all your stuff from overseas, it was gone and not coming back but we don't operate that way and haven't in a long time.
In fact the whole value system of trade is based on the fact that wealth is created every time trade happens simply by virtue of the fact that each person is trading away something of less value than what they recieve.
We create wealth on a daily basis by the judicious use of capital to implement IDEAS. We use those ideas to find things that we do better than other people and maximize our utility and our wealth generating capability.
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Wealth has never been defined strictly as gold and silver. Those were merely forms of currency that were used to quantify wealth, no different from paper money besides the fact that it can't be counterfeited or printed (i.e. inflated). If someone had discovered a huge gold mine back during the days of the gold standard that doubled the amount of gold overnight, the wealth of the country wouldn't have doubled overnight, the gold simply would have lost half its unit value overnight. Wealth isn't a zero sum game, but there is a limit to how fast it can be produced.
Wealth is not "created" as much as it is "produced," and it is produced either by physical work (building something useful) at a fundamental level, and investing and making a profit on building and then selling something useful on a higher level. The actual wealth comes about from the process of producing what is traded. The trade itself does not produce wealth, because as far as the larger economy is concerned, what each side is trading is of equal, not unequal value. The value to each individual may be unequal (example, you pay $35,000 or a Camaro because having the Camaro is worth more to you then having the $35,000), but as far as the larger economy is concerned, 1 Camaro=$35,000. The wealth in this case goes to GM and its employees who produced it. If GM is moved overseas, the ability to produce wealth by building cars goes with it. With production goes wealth
Sure, you can buy stock in a foreign company (assuming you are allowed to trade on the foreign exchange), but the amount of the wealth investors get out of the company is small compared to the wages paid out to employees. The value of the stock is the value of the company itself, not the value of what the company produces. A GM worker makes much more money working on the assembly line than he could off owning whatever GM stock he could afford. Unless you have many millions in assets (or are working on behalf of someone who does), you can't make a living off the stock the market.
Anyway nova, hopefully you find the post and respond to it. I am actually enjoying the debate. The insights and ideas from a different point of view are making me think about my own position. I actually do agree with some of what you are saying to varying extents.
