Galt's Gulch

Subsidies?

Posted by Tbird7553 6 years, 5 months ago to Economics
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  • Posted by DeangalvinFL 6 years, 5 months ago
    I think Trump gets a bum wrap often times, but sometimes the guy is just plain stupid.

    One stupid government control which then needs another stupid government "solution" to put things back in order. Ayn Rand is laughing, I think. or crying.
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    • Posted by term2 6 years, 5 months ago
      All this would be a moot point if we stayed on the gold standard. Currencies would have assumed their market value, and the chinese yuan would be far more valuable now that we have bought so much more from them than they have bought from us.
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  • Posted by freedomforall 6 years, 5 months ago
    This is the same thing that the Chinese gov has been doing for Chinese industries that export to the US.
    In both cases it is also a way to buy support for the regime in power.
    Soybean farmers won't learn the lesson needed if the feds prop them up by increasing the federal debt.
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    • Posted by $ blarman 6 years, 5 months ago
      And that is what gets overlooked. People want to focus on what the US is doing but ignore that China has been artificially propping up their own industries for decades. Japan did it before that with the kairetsus, but their Eastern Socialism collapsed in on itself.

      We have two choices: keep allowing China to take advantage of us or do something about it. Trump has decided not to continue to ignore the problem and do something about it, and it's just about the only thing he can do short of going to war or a full trade embargo. No, it's not going to be pretty in the short term, but if the result is true trade equality in the long term, I support the move.
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      • Posted by mccannon01 6 years, 5 months ago
        Blarman, your first paragraph sums it up nicely. The same goes for the EU.

        It's about cash flow or more accurately "wealth flow". The international trading systems are currently rigged for the US wealth to flow outward and receive very little in return. Our "trading partners" have placed check balls in the wealth pipes where it all flows towards them. The sad thing is our politicians helped them rig it --- until Trump! MAGA!

        I don't like the idea of subsidies in a fair system, but this system isn't fair and we will need to protect our own for a while. Yes, the Chinese buy our soy beans, but they do it with our own money they got by virtually stealing it in the first place.
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      • Posted by term2 6 years, 5 months ago
        Putting tariffs on imports will get our government $$, raise prices of things we make and import here, all the while doing nothing to reduce IMPORTS, but it depresses EXPORTS due to higher material costs and the opposing tariffs put on by the other countries. I suppose there is some logic here, but it totally escapes me. It cant work. China's costs are 1/3 of ours, so a tariff would have to be 300% to equalize costs of making it here or buying it from china.
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        • Posted by $ AJAshinoff 6 years, 5 months ago
          unless the tariffs are a means to get other nations to the bargaining table? Art of the Deal?

          Fed gov shouldn't be subsidizing anyone long term anyway. Loans yes, subsidizing no.
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          • Posted by term2 6 years, 5 months ago
            Tariff wars might encourage countries with not so large trade imbalances to either set up free trade, or equalize tariffs. But china's prices are so low that most customers will still buy with a 20% incoming tariff anyway- rendering the whole exercise pointness except its a revenue source for OUR government at the expense of consumers.
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            • Posted by $ AJAshinoff 6 years, 5 months ago
              Well tariffs are subject to adjustment on both sides. If equilibrium or close enough isn't established then things can be adjusted, no?

              Honestly, I do not see how America's manufacturing can compete in a global marketplace aside from full automation, even agriculture so some degree. Our standard of living, wages, is just too high to manufacture cheaply using human labor.
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              • Posted by term2 6 years, 5 months ago
                And I have to say our entitled workers are no match for the Chinese workers. We are still alive as a country because we are better salesmen to the bloated American consumers. If the Chinese upped their sales game, we would be wiped out. I can tell you from personal experience that the Chinese are better to deal with than American companies that are alive today only because they buy from China and sell it for 3x what it costs them to the American cudtomers
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        • Posted by $ blarman 6 years, 5 months ago
          Yes to that, but again you are thinking short-term not long-term. China has been taking advantage of our short-term focus as a culture for 30 years. What we must concentrate on is leveling the playing field in the long-term.

          One huge step in equalizing our trade imbalance would be to force them to decouple the yuan from the US dollar. With the yuan being recently introduced as a world reserve currency, we should be pushing for it to stand on its own. As soon as that happened, its value would rise significantly and the imbalance between the two currencies would shift dramatically in our favor.

          I would also note that China's costs are the result of their protectionist government policies and their aforementioned currency manipulation, so any comparison of the two is error-prone to say the least. And when one ties in their economic system under communism, the contrast can't be more stark.
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          • Posted by term2 6 years, 5 months ago
            I understand that the trade imbalance is not a good thing. But it was caused by our getting rid of the gold standard.

            Chinese goods cost 1/3 of buying in the USA. Anything less than about 200% tariff won’t stop me from buying from them. I would say others won’t stop buying from them. So The balance of trade won’t get better and most likely will get worse as China retaliated with their own tariffs. My point is that what trump is doing isn’t going to do anything to China because the imbalance is so large

            Point #2- China isn’t going to let their Juan appreciate because that devalues their holdings of us follars

            Point#3- in the end we have to have a massive devaluation of the dollar to fix this
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            • Posted by $ blarman 6 years, 5 months ago
              I don't necessarily disagree with any of your points. I simply reiterate: your focus is on the immediate future rather than the long-term. Our options are:

              1. We do nothing - as you seem to advocate. We continue to see US assets purchased by Chinese corporations until the Chinese own more of the US economy than we do. We continue to see US intellectual property siphoned off into the hands of the Chinese. We continue to see US manufacturing capabilities degraded until the point comes that we can't even defend ourselves - or our allies - against Chinese military aggression.

              2. We implement tariffs in an attempt to force them to change their trade policies. In the short term, this will mean a hit to US exports to China. In the long run, China is forced to adopt more free market policies and stop government subsidy of their industries. Free trade ensues.

              3. We attempt to force them to devalue the yuan and change their monetary policy. This would be very painful for the Chinese because the yuan's value would skyrocket, devaluing their goods. It would in very short order address a large measure of the trade imbalance as prices reflect true market values rather than the manipulated values imposed by the peg.

              Only option three pushes the majority of the pain onto China, but as we can't really force them to do this, our options are limited to #1 and #2.

              As for your argument regarding the gold standard, again, I don't disagree. But the likelihood of us returning to that is in my estimation so remote (especially in relation to #1, #2, or #3 above) it is forced to the realm of pure speculation.
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              • Posted by term2 6 years, 5 months ago
                3 would be what would have happened IF we were both on the gold standard. But neither of our countries wanted that, so here we are. If indeed the chinese spent their hoard of dollars buying up the US assets, the price of those assets would go up a lot- and inflation of the US dollar would ensue. That would have the effect of making the JUAN more valuable (I think thats what will happen in the end.

                #2 wont fix the problem. Free trade wont fix it, since their wages are so low compared with ours, and our products are so expensive for them.

                #1 will just lead to #3 but involuntarily
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    • Posted by term2 6 years, 5 months ago
      Actually, our government comes out smelling like a rose with tariffs. THEY get the money out of OUR pockets, and then they give it to some farmers without MY consent at all. Plus, this trade war thing is never going to work, so it will continue for a long time. I say the repubs will lose in 2018 over this, and probably in 2020 also
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  • Posted by freedomforall 6 years, 5 months ago
    Does anyone have statistics on what companies actually produce most of the soybeans in the US?
    I know Monsanto provides 90% of the seeds to farmers, so they are indirect beneficiaries, and I think they are now foreign owned IIRC.
    Who else is getting paid off by this looting? Cui bono?
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  • Posted by DeangalvinFL 6 years, 5 months ago
    A trade imbalance with any one country is meaningless.
    What is the trade imbalance of Ohio to Utah? You don't know because it doesn't matter.
    What is your personal trade imbalance with your local supermarket? It is enormous, yet you benefit from the interaction!!!
    That is what matters folks. If it is a mutually beneficial interaction then allow it to continue.
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  • Posted by LibertyBelle 6 years, 5 months ago
    I don't think subsidies are right. Neither are tariffs. But as to China, I think dealing financially with a totalitarian state is wrong, period. I don't see how it can be right. Why not embargo totalitarian states, and otherwise do away with tariffs?
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  • Posted by term2 6 years, 5 months ago
    So we consumers pay the incoming tariffs on stuff we buy from overseas, and the money our government collects goes to the farmers who arent sending send overseas. That makes a LOT of (non)sense.

    Trump is right about fair trade, but this is NEVRE going to achieve it. Governments on both sides profit from the trade war, which is paid for by the citizens.
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  • Posted by DrZarkov99 6 years, 5 months ago
    The money is primarily aid to do the marketing to find replacement buyers for American produce. When you have big buyer like China, the numerous smaller buyers don't get much attention, but they are there. When the dust settles, China may have a hard time finding a seller to replace the U.S.

    It's easy to paint Trump as stupid, but my bet is on him to know better how to create a truly dynamic market less governed by politics. Anyone who reviews the "great" deals America has with our "friends" should be sensibly horrified with the tariff load that shuts us out of many world markets. The World Trade Organization is a farce, being only slightly less anti-American than other globalist-backed bureaucracies.
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    • Posted by term2 6 years, 5 months ago
      In the end, americans need to buy LESS from China, and if they have high tariffs, sell LESS to them too. China is just another country with cheap labor, at least now. If they want to make everything they need, more power to them. If we got rid of the legislation that raises us wages, and our workers get less entitled and more interested in competing in the world market, we could make what WE need right here too
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      • Posted by DrZarkov99 6 years, 5 months ago
        I notice the EU is starting to realize the current trade regulations are out of date, and benefit no one. Trump and Juncker just announced there will be significant changes in the status of U.S.-European trade, to the positive for both sides. Market control is always a bad idea that fails in the attempt, and it's a shame the President had to use the economic sledgehammer to get people's attention.

        You make an excellent point that we, probably more so than any other people, have the potential to be completely self-sufficient.
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        • Posted by term2 6 years, 5 months ago
          I am a minute microcosm of our economy, but I can make (and pretty much have made over the years) everything I buy from china. Its just that I would have to hire pricey american workers, have a larger plant, and other expenses that I dont have with china.
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          • Posted by DrZarkov99 6 years, 5 months ago
            China may produce goods cheaper, but it has an image problem. I know of at least one American firm that signed a contract with an Indian firm to provide a higher quality product, primarily because of the incessant breakdown of Chinese equipment. The American firm has heard the same story from other foreign governments: Chinese equipment is of poor quality and unreliable.

            What's happened to China is a rapid pace of industrialization that has gotten ahead of their ability to train new workers. As a result, quality control practices common to the U.S. and Japan are not exercised in Chinese industry.
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            • Posted by term2 6 years, 5 months ago
              Maybe I have bought from reliable Chinese suppliers and been lucky. Quality has been quite good and their technical designs are equal to or better than ours

              I would say that to achieve their low prices they need to push out mass appeal items where they can have high production rates. In addition, there is blistering competition aming Chinese companies (much more than here). Entrepreneurship is alive and well in China and that’s one reason they have grown so fast

              If it wasn’t for the ability to buy low cost Chinese parts that we assemble into finished goods that we design here, our 10 employees would be out of work

              We are only one infinitessimal part of the USA economy but we have found a niche. Right now, take away China and we couldn’t compete without serious automation that wouldn’t pay for itself. our customers will not be able to afford for us to hire USA workers and make the products we make.
              Cut off china or put 200% tariffs and we go the way of the dinosaurs. Half of our business is exported out of the USA. (not TO China because they don’t have the money to pay for our high wages and production costs)
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              • Posted by freedomforall 6 years, 5 months ago
                I agree with you, term. A large portion of the computers,computer accessories, cell phones, and other electronics (e.g., home entertainment) sold in the US are manufactured in China and the quality is generally good. Yes, there are some lower grade examples in those areas, but the majority is good quality. However, I have heard complaints from friends about other products being of lower quality than in the past, specifically home appliances, with new Chinese made products having much shorter lifetimes than appliances made in past decades. So the image problem does exist in some product lines, but not in others, which proves that the Chinese can produce quality products. I recently bought 5 different Chinese made electronics products (assembled printed circuit boards) sold at low cost over the internet and shipped direct from China. Four of five worked perfectly and one was DOA which was promptly refunded in full. No prediction on useful life ;^) We also ordered a custom transformer which had to be re ordered because the first example did not meet our specs. The re-order was perfect.
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                • Posted by term2 6 years, 5 months ago
                  I have found after buying about $500,000 in parts and assemblies from china that in order to get exactly what you want, you have to specify in great detail what you want (more detail than we are accustomed to here), and give them instructions how to test what they make to assure they meet your specs.

                  Otherwise, you tend to get what they THINK you want, but with the filter of the chinese culture and language. Mistakes are taken care of quickly in my experience and you dont have to go through 6 people to get it fixed.
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  • Posted by $ allosaur 6 years, 5 months ago
    Do believe me dino's original description of a Candidate Trump as a flawed well-meaning bull in a china shop is still dead on for a President Trump aka the Tangerine Tornado.
    All in a sudden~it's allegory time, y'all~me dino recalls the opening scene in the movie Troy. Brad Pitt's character, Achilles, slays the champion of another king and repeatedly yells at the enemy army, "Is there anyone else?".
    And there isn't.
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    • Posted by term2 6 years, 5 months ago
      Now, even though I voted fo him and would do so again against Hildebeast or Sanders, he IS flawed, and its coming out. He gives me a tax break, takes it away with tariffs on what I need for my business, and gives money away to the soybean farmers tht I dont even deal with.
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      • Posted by $ allosaur 6 years, 5 months ago
        Bad Hair Day never was a conservative's conservative by a long shot. We, well, at least I, knew that when he was a candidate.
        But to vote for the forlorn hope of an independent to help out Bolshevik Bernie or The Evil Hag? Nope, not me dino.
        Some day I may vote for a Libertarian Party candidate but that candidate will first show me some hope of winning.
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        • Posted by term2 6 years, 5 months ago
          The last libertarian candidate had NO chance of getting anywhere. Talk about intellectually inconsistent. Decriminalize marijjuana but no other drugs. makes not a lot of sense. if people take them willingly, they all should not carry criminal penalties

          Too bad about Trump, he is getting closer to the swamp every day it seems. These trade issues might indeed let the dems win in november.
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