In article , Ed Huntress
says...

'Sorry if I sound a little sharp about this, bg, but I've been talking to
Congressmen, people from the Depts. of Commerce and Labor, and economists of
several philosophical stripes, and I've been bs'd up to my ears by people
who don't really understand the magnitude of what's happening here. Most of
them have only the vaguest idea of how manufacturing actually works. The
people who *do* know are deeply alarmed. Nothing like this has ever happened
to our economy before. Never. And those people who think this is something
like what we faced with Japan in the '70s and '80s are people who can't
count. Or who don't know what to count.

Uh oh. Just out of curiosity, who *are* the people who understand
how manufacturing works, and are any of them in a position of
power in the present adminstration?

The theories underlying free trade are based on something called
"comparative advantage." When the theory was developed, different countries
had different advantages in resources, capital availability, geographic
advantages and so on. We traded things they couldn't make efficiently for
things we couldn't make efficiently, and everyone benefited. Now we're down
to nothing more than a wage differential. We're not getting anything from
the Chinese that we can't make ourselves. All we're getting is the same
things we make, but a lot cheaper, because they pay their people 1/20th what
we pay ours.

Double uh oh. This sounds like the case where you connect a large
tank and a small tank up with a pipe. The small tank was nearly full
and the large tank was nearly empty at the start. Once the valve
in the pipe is opened, the small tank is nearly empty, and the large
tank went up maybe a teeny bit. According to the 'rozen hydraulic
theory' of economics all one has to do is multiply the US citizen's
present wage by 1/20, and add in the small iota based on whatever
small raise the workers in china will get, and that's how it's
gonna be in about 10 years or so. (if you use that hydraulic theory
you have to give me credit!)

That's not the way it's supposed to work. That's a travesty of the basic
free-trade theory. Until we get off our free-trade ideology and start paying
attention to what's really happening here, we're likely to sacrifice a lot
of our technological capability, and the sources of technological innovation
and development, for nothing more than a short-lived fire sale.

Fire sale? Sounds like the titanic going down. Pardon me, I have
to go fiddle the deck chairs....

Jim

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