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Originally Posted by Number 3
Ok, here is the fundamental question. Macro economics says that the highest quality, lowest cost producer wins.
Is anyone in America willing to work for $40 per week?
I thought not. Therefore since America can never be (at least in my life time) competitive with China labor.........or Japanese and Chinese manipulated currency, what should we do?
Not for forcing the issue or protectionism, but the global economy will kick us in the pants until we either a) become so efficient that the costs are neurtalized or b) we let our labor rates drop significantly.
Germans buy German stuff made buy Germans. Walmart couldn't make it in Germany. When I was there a couple of years ago I asked why the Walmart was empty. "Closed.....Germans don't buy cheap stuff, they buy good stuff". It's just a mentality.
So good thread and good conversation.
And by the way, GM market share on the coasts drops to near 10% from the 40 plus % in the heartland. Explain that.............I can't.
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When looking at trade from the bird's eye view of macroeconomics it is easy to lose your way. The fact is that when China uses this form of protectionism they sell their goods at a loss. It's simply an illusion of prosperity, much like after WW2. However, this concept hurts the Chinese consumer and Chinese producer. It effectively robs the average Chinese citizen of his/her savings during the period of inflation that inevitably takes place. The producer is hurt because he is selling the same amount of product for less money. Any economic model, rather it's Keynesian, Capitalist, Socialist, Mercantile, etc. will tell you that losing money isn't the right way to run a business. However, it is in Mercantilism, Keynesianism, and Socialism that you'll find the concepts that are essentially ruining our economies.