Walmart

[Robert]

No matter how one looks at it, Wal-Mart makes products available to the lower classes that they would not otherwise be able to buy.

Oh, how righteous! Sell to the lower classes while holding down Chinese workers below the poverty level. Imagine, Captalism and Communism in bed together! That shows you that Corporate America would sell its own mother if a buck could be made....

Who wins? Wally World! Profits from 20 to 60%....More Americans on welfare because the US has lost 3 millions jobs to china, primarily because of Wal-Mart's practices.....

I make about $60k a year. I work in the tech side of manufacturing. There's no way I can compete with the Chinese guy making 50 cents on the hour unless I make the same. Let's see that would be $80 bucks a month. That won't even pay my light bill.

Robert

[Robert]

The losers are the American IT workers who are pricing themselves out of the market. If they would do the job for less, the job would be theirs.

Okay...you first....How does 50 cents an hour sound?

Carolina Mills, a 75-year-old North Carolina company that supplies thread, yarn, and textile finishing to apparel makers--half of which supply Wal-Mart. Carolina Mills grew steadily until 2000. But in the past three years, as its customers have gone either overseas or out of business, it has shrunk from 17 factories to 7, and from 2,600 employees to 1,200. Dobbins's customers have begun to face imported clothing sold so cheaply to Wal-Mart that they could not compete even if they paid their workers nothing.

"People ask, 'How can it be bad for things to come into the U.S. cheaply? How can it be bad to have a bargain at Wal-Mart?' Sure, it's held inflation down, and it's great to have bargains," says Dobbins. "But you can't buy anything if you're not employed. We are shopping ourselves out of jobs."

[Robert]

Any calls to "fair trade" by concerned Americans is denounced as "protectionism" by him.

Now some Bible:

5:1 Come now, you rich, weep and howl for your miseries which are coming upon you. 2 Your riches have rotted and your garments have become moth-eaten. 3 Your gold and your silver have rusted; and their rust will be a witness against you and will consume your flesh like fire. It is in the last days that you have stored up your treasure! 4 Behold, the pay of the laborers who mowed your fields, and which has been withheld by you, cries out against you; and the outcry of those who did the harvesting has reached the ears of the Lord of Sabaoth. 5 You have lived luxuriously on the earth and led a life of wanton pleasure; you have fattened your hearts in a day of slaughter.

"In the world gigantic monopolies will be formed. Men will bind themselves together in unions that will wrap them in the folds of the enemy. A few men will combine to grasp all the means to be obtained in certain lines of business." [CL 10]

[bevin]

Robert, I understanmd why you are angry, but it doesn't change the socio-economics.

IT workers here under H1 visa's are paid the same as the American's doing the same job. In fact the company has to advertise the job, and only if no American wants it are they allowed to put an H1 visa person in it. I first came to the USA on an H1 visa and went through this process.

The jobs are NOT "going overseas" because that phrase implies the jobs belong here in the first place. They don't. Walmart, Intel, etc are simply looking at their suppliers and choosing the cheapest that produces suitable goods/services.

The fundamental problem is this...

$ of goods = $ of materials + $ of labor + $ of transport + $ of profit + $ of taxes/benefits

If the government pushes up the "$ of taxes" on domestic goods and not on foreign goods, then of course the foreign goods have an edge. If further the foreign goods have a lower "$ of labor" and if the "$ of transport" is low, then the American-made is simply not competitive.

Traditionally the USA "$ of labor" has been lower because of efficiency and "$ of transportation" has been high. Now the foreigners are just as efficient in many industries and the "$ of transportation" has plummeted.

So the USA no longer has a manufacturing edge - and therefore the standards of living in the various parts of the world are converging. They are going up - and some parts of our society are probably going to go down.

It is not Walmart's fault. It is a consequence of "knowlege shall be increased".

/Bevin

[Robert]

No Bevin, it's all about money and cheap labor. Remember slavery in the South? Same thing, only now those in power couldn't get away with it now.

Corporations are bypassing labor and environmental laws here in the US and going to places such as China where they can exploit the people. This is nothing short of pure greed.

[bevin]

You are very ethnocentric USA-biased in your viewpoint

[Dr. Shane]

I mentioned before that in Mexico the government sets the labor rates for forgien factory workers - not the forgien companies. I suspect that is the same in many such countries like Taiwan, S. Korea and China. So the companies are not taking advantage of the working class in these countries. It is simply that their economies are different and so they can work for less money. In Mexico for example, $50/week is a comfortable wage.

The United States has low unemployment and the average wage continues to rise. I don't see any massive impact on it from global trade.

[Robert]

Shane,

You need to get out more.

I see why you like Bush.

Rob

[Robert]

Since the Bush Administration began, 2.8 million manufacturing jobs have been lost an average of more than 70,000 per month. There has not been a single month of the Bush Presidency with job gains in manufacturing. (BLS)

7 million jobs short of President Bush's prediction. Annual job growth projections in the 2002 Economic Report of the President implied job growth of about 5 million between January 2001 and March 2004. Instead we have lost about 2 million jobs. As a result, we are some 7 million jobs short of the prediction President Bush made after 9/11, the tech bubble, and the recession.

(BLS and Economic Report of the President, 2002)

Jobs in growing industries pay $9,000 -- or 21 percent -- less than jobs in contracting industries. A study by the Economic Policy Institute found that jobs in industries that are expanding as a share of the workforce pay $9,000 less than jobs in contracting industries -- 21 percent less. (Economic Policy Institute, "Jobs Shift From Higher-paying to Lower-paying Industries," 1/21/04)

A record $490 billion trade deficit in 2003. The trade deficit last year reached a record $490 billion -- with a $549 billion trade deficit in goods (or $401 billion excluding oil). The trade deficit was 5 percent of GDP also a record. Forty percent of our public debt is now held outside the US; more than 20 percent in Japan and China alone. (BEA & Census, Treasury)

Record $124 billion trade deficit with China -- which manipulates its currency. The United States had a $124 billion trade deficit with China in 2003, a 20 percent increase on the trade deficit last year and the largest bilateral trade deficit of any country. China's currency manipulation -- which many economists believe undervalues the Yuan by approximately 27.5 percent -- contributes to this ballooning deficit. (Census)

Exports are down under President Bush -- the first President since the Great Depression. Exports have fallen in inflation-adjusted terms under President Bush -- the first drop under any President since Herbert Hoover in the Great Depression. In contrast, most post-World War II Presidential terms have seen 15 to 30 percent real export growth. (BEA)

[Dr. Shane]

Those statistics do not give a complete picture and can well be categorized as SPIN. While the US is losing jobs in some sectors of the economy, like manufacturing, it is gaining jobs in other sectors of the economy.

Job Creation Continues - More Than 7.5 Million Jobs Created Since August 2003

"Today, The Bureau Of Labor Statistics Released New Jobs Figures – 97,000 Jobs Created In February. Since August 2003, more than 7.5 million jobs have been created, with 2 million jobs created over the last 12 months. Our economy has now added jobs for 42 straight months, and the unemployment rate remains low at 4.5 percent.

More American Workers Are Finding Jobs And Taking Home More Pay

* Real Wages Rose 2.2 Percent Over The Past 12 Months Ending In January. This is substantially faster than the average rate of the late 1990s economy, and it means an extra $1,279 in the past year for the typical family with two wage earners.

* Real After-Tax Income Per Person Has Risen By 10 Percent – More Than $2,900 – Since President Bush Took Office."

[David Koot]

But manufacturing is the engine of the economy, Shane. Growth of jobs in the service sector is parasitic, in a sense. Without manufacturing and industry driving it, a service-based economy can implode. The core is gone.

[Robert]

While the US is losing jobs in some sectors of the economy, like manufacturing, it is gaining jobs in other sectors of the economy.

Yeah...like at McDonalds!

[Robert]

Here's the bottom line: Until one of you experiences a job loss due to unfair trade, you'll keep on ranting on how everything is just wonderful. If you experienced losing a job you would be whistling a different tune. No one cares until they are effected.

[Dr. Shane]

Quote:

But manufacturing is the engine of the [global] economy, Shane.

I have added the word global. The US economy for 2006 breaks down like this:

agriculture: 0.9%

industry: 20.4%

services: 78.6%

Here is a more detailed list of economic sectors:

• Natural Resources & Mining
• Construction
• Agricultural & Livestock
• Professional & Business Services
• Education & Health Services
• Leisure & Hospitality
• Financial Activity
• Trade (whole sale & retail)
• Transportation
• Utilities
• Government
• Other Services
• Information
• Manufacturing

The US manufacturing and construction sector have both lost jobs recently although construction losses are primarily due to a slow down in new housing. Commercial construction is still doing well as all other sectors of the economy are growing, except manufacturing. The manufacturing sectors that are doing quite well are aircraft, plastics and industries gases which are exporting about 75% of their products. The sectors taking the beating are electronics and automobile which are only filling about 20% of the domestic demand.

Historically the manufacturing industry started in the US in the northeast, much of the rest of the country's economy was still agriculture. Eventually the factories began to move south to Virgina, the Corolinas and Georgia as the labor costs were less. After that the factories moved into Mississippi, Alabama, Texas and other deep southern states as the labor costs were even cheaper. Then the factories stated moving into Mexico as the labor costs there were even cheaper. Recently, many of the factories in Mexico are relocating to Hong Kong and China as the labor costs are even less.

This underscores the need for free global trade. Our service sector needs a free-trade relationship with other nations that are producing the goods which feeds the service sector.

[bevin]

And why should China or some other cheap source of labor send goods here?

/Bevin

[Dr. Shane]

A producer of goods will sell them to any market willing to buy them. The exception to that would be for political reasons such as boycotts.

[bevin]

Right. Buy them.

Which is a fancy way of saying TRADE for the them.

Which is a fancy way of saying WE GIVE THEM SOMETHING.

What are we going to give them?

/Bevin

[Dr. Shane]

China has used US dollars to manipulate their own currency, the yaun. As out of balance as our trade deficit is with China, they do not receive enough US dollars to manipulate their yaun so they have bought additional dollars on foreign exchange markets. The US Treasury has made some progress in stopping or altering this and the yaud has started to climb in value against the dollar and euro (which is what we want).

Make no mistake, the US dollar is still valuable. It can be used to purchase crude oil and is the currency in Ecuador, El Salvador, Panama, British Virgin Islands, East Timor, Pitcairn Island, Marshall Islands, Federated States of Micronesia, Palau, Turks and Caicos Islands and Northern Mariana Islands.

[bevin]

You haven't answered the question.

What are we going to give them in exchange for their goods? Up until now we have been giving them (a) things they can't produce, ( land, © shares and (d) loans.

/Bevin

[Dr. Shane]

The question has been answered however the answer seems not to have been understood.

I guess I could start with basic economics and define what money is and how it is valued. A dollar is a form of a voucher. When my mechanic does work on my car, I pay him with dollars. I could pay him with cigarettes, gasoline, clothing, food or in exchange for other services. However when I give him dollars they serve as vouchers so he can in turn exchange them for things he wants to purchase.

If I pay him with dollars, he can buy any goods and services available for sale in the United States, Ecuador, El Salvador, Panama, British Virgin Islands, East Timor, Pitcairn Island, Marshall Islands, Federated States of Micronesia, Palau, Turks and Caicos Islands and Northern Mariana Islands or he could buy crude oil from most suppliers in the world without having to purchase other currency first.

If I pay him with Mexican pesos he can only buy goods and services available for sale in Mexico. If he wants to purchase goods and services in any other market, he will first have to purchase that market's currency, which will itself cost him money.

Since there are more goods and services available with US dollars and the prices of those goods and services are cheaper in dollars than in pesos, my mechanic prefers dollars rather than pesos. While he could exchange the pesos for dollars, he would lose money in the exchange since the financial institution exchanging the money will charge for their service.

So by giving China US dollars for their goods we are giving them the world. They can purchase anything and everything with US dollars. Which is why they buy additional dollars in foreign exchange markets above and beyond what the US is paying them for their goods.

[bevin]

Quote:

If he wants to purchase goods and services in any other market, he will first have to purchase that market's currency, which will itself cost him money.

Agreed. All currencies are interchangable, and the interchange costs about 1% in small quantities, and less in big quantities.

Quote:

So by giving China US dollars for their goods we are giving them the world. They can purchase anything and everything with US dollars. Which is why they buy additional dollars in foreign exchange markets above and beyond what the US is paying them for their goods.

Agreed. So we can break the world into two groups - "USA" and "non-USA".

What is the USA going to give to the non-USA in exchange for the non-USA giving goods to the USA?

You write...

Quote:

Since there are more goods and services available with US dollars and the prices of those goods and services are cheaper in dollars than in pesos, my mechanic prefers dollars rather than pesos.

Since we have seen that the exchange of $ into pesos costs about 1% of the value, this statement needs to be explained.

Offer your mechanic in the USA a choice - does he prefer you to pay by a $ credit card, or in pesos cash. If he has any brains, he takes the pesos, because he looses about 3% of the $ to the credit card company. He takes the pesos, goes to a bank, and converts them to $ and gets 2% more $ than he would have got if he had accepted the credit card.

So, again I ask you.

Name the goods or services that someone in non-USA is better off buying from the USA than from the non-USA.

/Bevin

[Dr. Shane]

Quote:

So we can break the world into two groups - "USA" and "non-USA".

The world is not quite that simple.

Quote:

the interchange costs about 1% in small quantities, and less in big quantities.

Actually it depends greatly on which currency is being sold and which is being purchased. For ten dollars I can buy 111 pesos but if after doing so I turn around and buy dollars with that 111 pesos I will then have $9.92 so I will have lost 8¢ or .08%. That is pretty simple because Mexico and the US both have fairly stable economies so the exchange rate is nominal.

However if one of the currencies is from a country whose economy is not stable, one that is dealing with inflation, that nominal exchange rate is not too helpful. Then one must look at a corrected nominal rate. So if Country A has an inflation rate of 10% and Country B has an inflation rate of 3% the correct rate would be 7% plus the nominal rate which may be higher than 1% depending on the supply and demand for the currency being sold. This is not an uncommon circumstance in currency exchange and a principle reason why many of the countries that have decided to use the US dollar have done so.

BTW: my mechanic is in Mexico and doesn't accept credit cards. He will take pesos but will charge more. He gives me a discount if I pay in US dollars.

[bevin]

Quote:

For ten dollars I can buy 111 pesos but if after doing so I turn around and buy dollars with that 111 pesos I will then have $9.92 so I will have lost 8¢ or .08%.

Quote:

BTW: my mechanic is in Mexico and doesn't accept credit cards. He will take pesos but will charge more. He gives me a discount if I pay in US dollars.

Ok - since you have demonstrated that the conversion between $ and peso's is basically free, why does he prefer $?

You still haven't listed what the USA is producing that the non-USA wants to buy from us. Why are you avoiding such a simple question?

/Bevin

[Dr. Shane]

Quote:

You still haven't listed what the USA is producing that the non-USA wants to buy from us.

:

I have answered it exhaustively. On a personal note, your inability to grasp simple economic principles baffles me. It makes me think you actually don't want to understand the information being presented and perhaps that is the same reason you don't grasp the perspective of many creation scientists.

[Dr. Shane]

Here is an article on Wikipedia about maquiladoras. A lot of goods sold at Wal-Mart are made in maquiladoras.

Quote:

A maquiladora or maquila is a factory that imports materials and equipment on a duty-free and tariff-free basis for assembly or manufacturing and then re-exports the assembled product, usually back to the originating country...

Maquiladoras may be 100% foreign-owned (usually by U.S. companies) in most countries. The use of maquiladoras is an example of offshoring. Other countries such as Japan, Germany, and Korea have maquiladoras as well, but the majority of them are located in Mexico and are associated with United States' companies...

By the late twentieth century, the industry accounted for approximately 25 percent of Mexico’s gross domestic product, and 17 percent of total Mexican employment. However, profits generated from maquiladoras are typically sent back to the United States, or other investor-based countries, and therefore, maquiladoras do not promote direct economic development within Mexico.

However China has been taking a lot of maquiladora jobs which is in part due to their manipulation of their currency which keeps it low and thus keeps the cost of their goods cheap for nations using dollars or euros.