"Ed Huntress" wrote in message .net...
"bg" wrote in message
om...


When you see that economy grow first hand, then way I have in such a
short time, I can only think of the historic 1920's USA production
oriented economy, which eventually led to a a big bang. However,
today, institutions are more transparent then yesteryear. I dont know
any other way to find answers. It seems to me, either you are a free
trader, or a fair trader.

Only two possibilities? Perhaps that's because of the way the issue has been
framed by the ideologues, who have overwhelmed the debate for so long. And
those ideologues tend to be people who have a financial interest in the
outcome.

Actually three I know of in the same format. Fair trade is actually
middle ground between free trade and outright protectionism.


The slightest move to fair trade can have grave consequences. Just
look at the recent duty placed on steel imports in this country. Steel
prices have risen anywhere from 35-50%. To protect what? A few
outdated inefficient steel MFR's? The whole economy suffers because of
it. Corporate profits have suffered in the face of trying not to raise
prices,and many companies have been buried, especially in the
metalworking trades.

The steel industry is far from transparent. The fact is that U.S. primary
steel producers are too small to compete on world markets. Until now,
they've been unable to consolidate because they're all carrying enormous
legacy liabilities in the form of unfunded pension obligations and
retirement healthcare plans. No one with the capital to do it will touch
them.

The idea behind the tariffs was to give them some profitibility, which would
interest investors in buying them up and consolidating them. It hasn't
worked so far, and it may never work. But it's a good example of how such
things are seldom what they seem.

Lousy decision. Look at the consequences to this action. As if these
metalworkers here were not already fighting an uphill battle. Bush was
thinking of the political ramifications, not the economical. He doesnt
know better.


It is not a matter of research to find the solution. The solution is
evident. Change the paradigm or die. It is the law of nature. The
nature of the beast. The strong survive and the weak die off. Adapt
and thee will survive. What they will adapt to, is what really needs
to be researched.

"The solution is evident"? So, what's the solution?

Change or die. Its cold, but has always been true. The milkman, diaper
man, Knife sharpening truck, etc. If they didnt change the paradigm,
they starved.

What does it mean when the "strong" get there only by paying their workers
80 cents/hour?

Nothing, If you produce a different item in that same industry or
another.

What other "strength" do the Chinese have? Have they
innovated any manufacturing technologies?

Maybe. I dont see the relevance here.

Do they have geographic
advantages?

Over most countries, yes.

Resource advantages?
Over most countries, yes.

More efficient production? Is their
competitive edge explained by better schemes of industrial organization and
efficient automation, like the Japanese have innovated? No. They have low
wages, and a command-and-control economic structure that focuses on exports.
Period.

This is true for the most part.

And their low wages are attracting astronomical amounts of FDI (foreign
direct invertment). The new "paradigm" seems to be, as Alan Tonelson puts
it, a race to the bottom.

This is true.

The goals of economic development, the old "paradigm," run towards
improvements in labor productivity, economic opportunity, and innovations in
products and manufacturing. So the equation has been stood on its head.

Why hasnt it been stood on its head? You listed economic opportunity.
Moving production for certain items is good economic opportunity.
Innovation is lacking. That si the basis for my argument. It is
lacking.

The
real question now, for a country that wants its economy to grow, is what
goals they should establish. Keep cutting wages? There's a winner for you...


Goals?
Provide sound govt economic planning - we dont
Provide ample economic infrastructure - we dont
Provide money and resources for research and dev. - we need more.


I believe China knows exactly what they are doing.

It isn't a matter of belief. It's a matter of facts. And one key fact is
that the Chinese are addicted to their state-run enterprises, which are
their employment buffer that keeps a lid on unrest, even while they run
their banking system into the tank. Their banks are insolvent. If they
opened up their state banking system to competition, as they've promised the
WTO they will do, there would be a run on those banks tomorrow, and they
would collapse within a week. All of their money is loaned out in
non-performing loans, which can never be paid back. They knew they would
never be paid back when they loaned the money -- to state-run enterprises,
exclusively. There's no way to call those loans in. The money is all gone.

For both practical and ideological reasons, China's government is unable to
do anything about it. They can't get off of the merry-go-'round they've
created. They're sweating it. So is the world banking community.

Chinas banks have been in garage sale mode for the past three years
selling off bad assets in a fire sale, even to foreigners. The loans
are being written off and they are working on getting the program on
track.

But you are mistaken to think there is no competition. Froeign bnaks
now work in local currency, give loans and sell financial instruments.
I suggest you get your facts straight.


By the way, In regards to your numbers on the automotive guys buying
from China, I am really surprised they are so late. VW, audi, Peugeot,
Toyota, Honda and Nissan have all been benefitting greatly. I dont
believe all have been exporting full vehicles, but many have.

Not. VW has by far the largest market share in China, at 40%. From "The
Business Times," August 4, 2003: "China, the land of $50 VCRs and $3
haircuts, remains too uncompetitive a place to make cars for export. And it
could take up to five years before the country exports cars, according to a
top VW executive yesterday."

From Automotive News Europe, July 16, 2003: "Volkswagen, which has
complained frequently about the high cost of auto parts in China, will
follow the example of Ford Motor Co. and General Motors and begin sourcing
parts here for its global operations."

Opinion is a kind of low-level ailment, bg. The cure for it is facts.
Unfortunately, they require some effort to research.

"A shipment of 252 Xiali economy cars manufactured in north China's
port city of Tianjin is on its way to the United States market.
Tianjin is the leading manufacturing center for economy cars in China.

The cars, produced by Tianjin Auto Group in cooperation with Toyota,
are the first batch of Chinese-made economy cars to be exported. They
are part of a deal signed in April between the manufacturer and
American Automobile Network Holdings Inc., which will be the sole
agent for Xiali economy cars on the international market.

According to the deal, the American company will be responsible for
selling at least 25,000 Xiali cars during the next five years"

GM Shanghai is also exporting cars to the Phillipines (I have a
relative who recently left GM Asia to work for one of their major
parts suppliers - at least 5 factories in China now).

I suggest that you take some medicine for that ailment Ed.You need
some more research to come up with facts.

BG