PeakTrader.com

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PeakTrader:

JimH, globalization has benefited the U.S. tremendously, in raising domestic consumption (e.g. more shopping malls), and in raising domestic production (e.g. in the Information and Biotech revolutions). If a U.S. trading partner adopts an inferior economic policy, e.g. trade barriers or tariffs, that’s our gain. As a matter of fact, the gains in U.S. trade are larger than our trading partners “gains-in-trade.”

Globalization isn’t holding back U.S. growth. It shifted production from low-end manufacturing into high-end manufacturing and facilitated explosive growth in emerging industries, while we imported offshored goods at lower prices and higher profits. What’s holding U.S. growth back is too many anti-growth policies, e.g. excessive government regulation, excessive government spending (crowding-in some growth short-term and crowding-out growth longer-term), and excessive taxes (both progressive and regressive).

Moreover, a higher minimum wage, e.g. to $15 an hour, would go a long way to correct a market failure, since low wage income hasn’t kept up with productivity. Furthermore, a higher minimum wage will make capital relatively cheaper to increase productive investment (e.g. in capital equipment), which results in higher paying jobs.

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Coberly, mainstream economics, i.e. the Scientific Method of NeoClassical Economics, contributed enormous value to society, for the masses, not just the rich, particularly in the 20th century, in fields e.g. Macroeconomics, Microeconomics, International Trade, Money & Central Banking, Econometrics, etc., even spilling over into non-economic fields.

Mathematical models supported by rigorous empirical models explain reality, and often proved conventional wisdom wrong.

The free market is the core of moral philosophy that made Western civilization wealthy and raised living standards for the masses. The alternative is the social philosophies of the old Soviet Union, Cuba, North Korea, Venezuela, etc..

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The economic policy of some people here basically amounts to invading rich and upper middle class neighborhoods, steal their belongings, burn their houses down, and give away the loot to lower income people.

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Marko, people like you aren’t serious about helping the poor, low income workers, or the middle class. You want to bring down the rich.

Maybe, you think you’re Robin Hood wanting to take away from those who have and give away to those who don’t have (inherited or earned wealth doesn’t seem to make a difference to you).

And, where do you think that additional $5 trillion of federal debt (which isn’t pocket change), over the past few years, came from?

The future.

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JimH, it seems, the case you’ve been making is raising taxes, including tariffs. If China wants to sell its goods too cheaply and lend its dollars too cheaply, to generate a virtuous U.S. consumption-investment cycle, then why stop it with tariffs?

And, the U.S. has lots of idle capital and labor to expand. I agree, low income labor isn’t paid enough, including through the distribution of profits and compared to high-income workers. Some of that capital would be put to good use to raise low-wage income. However, capital needs to be employed in productive assets, e.g. technology, buildings, machinery, etc., to expand the economy and create jobs too.

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It’s not a bubble, unless it bursts. It’s not inevitable.

Real wage growth hasn’t kept up with productivity for low-wage workers. Many immigrant workers were willing to work harder for less. That, in itself, raises income inequality.

However, it should be noted, much of the real growth for low wage workers went into compensation, e.g. health care, which has increased much faster than inflation. If you look at heavily regulated industries, you’ll see rising and higher prices, which reduced real wages and real compensation, including through inflation and employment.

A combination of raising the minimum wage and reducing regulation will raise living standards of low-wage workers substantially, along with increasing demand and, therefore, employment.

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And, if you want to help those in poverty, faster GDP growth is needed, which will raise tax revenue and reduce spending on the unemployed, as the country moves towards full employment.

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run75441, you have seen them. The equations and the literature are in my statements. Look them up. They reflect, and support, my statements.

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JimH, international trade is balanced. The balance of payments balance. Both the U.S. and China benefit from trade through the Law of Comparative Advantage. So, both countries raise their living standards through trade.

The imbalance of goods is offet by the imbalance of capital.

So, the U.S. is able to consume more than produce, free-up limited resources to expand the economy, and cheaper capital allows the economy to expand, while China is able to raise employment, employ resources, and raise global consumption for its goods, to at least maintain employment.

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Trade with China raised both U.S. imports and exports, while U.S. capital account surpluses offset current account deficits:

China Exports to the U.S. (selected years)

1985 $3.8 billion
1990 $15.2 billion
1995 $45.5 billion
2000 $100.0 billion
2005 $243.5 billion
2010 $364.9 billion

U.S. Exports to China

1985 $3.9 billion
1990 $4.8 billion
1995 $11.8 billion
2000 $16.2 billion
2005 $41.2 billion
2010 $91.9 billion

Which is better: Raising per capita real GDP from $50,000 to $52,000, i.e. $2,000 or 4%, or raising per capita real GDP from $4,000 to $5,000, i.e. $1,000 or 25%?

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Coberly, I place my “faith” in mathematical and empirical models. You haven’t disproven anything I stated. You just make up statements that aren’t supported by anything, and your statements about me really apply to yourself. If I popped your dreams, too bad. However, I suspect, you’ll cling to your beliefs, regardless of reality.

Your statements, including about my experience, just reinforces your display of ignorance. I suggest rather than being closed minded and pounding square pegs into round holes, you should try to figure out how the pieces of the economics puzzle fit.

When you disagree with my economics statements, you’re disagreeing with mainstream, or orthodox, economics. Also, I may add, economists agree with much more than you think, although there are differences in value judgments. If you’re interested in optimizing the macroeconomy, for example, you’ll need to be unbiased.

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