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What Ever Happened To America?
Topic Started: Jun 29 2005, 03:59 PM (176 Views)
TBlack
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The baby killer
Grumpy Old Men
Not a single one of these jobs produces an exportable good or service. With Americans increasingly divorced from the production of the goods and services that they consume, Americans have no way to pay for their consumption except by handing over to foreigners more of their accumulated stock of wealth. The country continues to eat its seed corn.
"You would think it obvious to anyone, with a grain of intelligence, that there are far too many people born in England."
.:I'm melting!: http://alwaysautumn.etsy.com :.
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DemonLordEnigma
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And this is supposed to surprise me how? The U.S. is killing itself. Stand back and let it.
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Ecopoeia
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Grumpy Old Men
DemonLordEnigma,Jun 29 2005
04:02 PM
And this is supposed to surprise me how? The U.S. is killing itself. Stand back and let it.

Have we got the time to wait, though?
Enough is as good as a feast

To Ill-Advisedly Go!
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DemonLordEnigma
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You forget one thing: The U.S. has spent centuries on the brink of a self-destructive civil war, only leaning over the edge once. Currently, the nation is lining itself up for that final jump, though it may need a push from someone else before it goes over the edge. Then, even if the nation survives the civil war, it'll end up being destroyed by war shortly later anyway.
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Knootoss
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Stupid neocon and old democrat obsession with manufacturing. This whole article is bullocks.

The US economy has serious long-term problems, but the loss of manufacturing is just a normal part of economic development. *shrug*
~Aram Koopman, Knootian ambassador to the WA
"If the United Nations is a country unto itself, then the commodity it exports most is words."
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Knootoss
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Outsource and the Source of Growth - Alan Oxley

It is a mystery of modern times that the US continues be the world's leading economy but most Americans do not understand why this is the case. They know the US is the world leader in technology and innovation, but do not know that having the most open economy in the world is the key. To stop outsourcing would be to throw away one of the keys to growth in the US economy. "Outsourcing" means American enterprises give some tasks to workers outside the US. The controversy has been over services. Call centres in places like Mexico and India provide information to US consumers. Data processing is also contracted by US companies in similar countries. Why? Because it is cheaper.

The US is the world's best economy because it has the best services industries. These are the industries that get products to consumers (transport, wholesale, retail, marketing) connect people and businesses (telecommunications, IT), enable consumers to pay for them (finance) and educate, keep healthy and feed Americans. Most don't know this. It is still generally believed that manufacturing drives America. This hasn't been the case for a long time. Over 70 percent of the wealth in America today is generated by businesses producing services. Last year there were 134 million workers in America. Only 15.3 million worked in manufacturing. About 2.8 million worked in agriculture and mining and 8.3 million in construction. Where did the rest work? In the services industries.

In fact, in 2001 and 2002, services industries kept the US economy afloat. This has been pointed out by Harry Freeman, a former AMEX executive and Director of the Mark Twain Institute. After manufacturing went into reverse in 2001, services still expanded by 1.3 percent, holding up growth that year at 0.5 percent. Of the 2.2 percent growth in GDP in 2002, 1.7 percent was generated by services. Growth was 3.1 percent growth in 2003, 1.5 percent of that was contributed by services industries. The reason so many US businesses are bigger and more effective than competitors in other parts of the world is because they are better at working out how to be more efficient and how to produce things more cheaply. The cheaper their products, the more they sell, the bigger they grow, the more people they employ. When products and services are cheaper, more are affordable and paychecks go further. It is win win.

Evidently, not everyone understands this, including the US Senate. In January it passed a bill preventing public sector agencies from outsourcing services. Reflect on the effect of that. Take an unemployment service which had used an offshore call centre to handle calls. Delivering that service using US workers instead would cost more and take a bigger bite out of its budget. With higher costs, fewer services could be provided to help get the unemployed back to work. Was that the Senate's aim? To reduce services?

To many people this seems a new way of thinking. They will still ask "But why not keep the jobs in the US?" Wrong question. The right question is "What creates jobs in America?" The answer is services industries that keep growing by producing low cost services; trade is a significant component of that. Here the cynic will say, "Wait, right now the US is importing more than it is exporting. Not only are we giving jobs away, we are losing the trade race." When we look at the facts, we find a surprise. Outsourcing helps directly to boost exports. While the US is exporting more good than it imports, the reverse is the case with services. Last year the US exported US$70 billion more in services than it imported. This helps counterbalance the deficit in trade in goods.

The US is in fact the biggest exporter of services in the world, at around US$320 billion a year. Little wonder since it has the biggest and the best services industries. Some of those industries would be less competitive if outsourcing stopped. Britain is the second biggest exporter of services in the world. The Blair Government just considered if it should act like the US to "protect" jobs in the UK. It concluded that doing so would harm Britain's trade.

World trade in services is very much to the advantage of the United States. The World Trade Organization now encourages countries to open markets for services. This creates more markets for US companies and was the direct result of an initiative by US services businesses in the nineteen eighties. If the US blocks outsourcing, it is blocking imports of services from other countries. Before too long, those countries will start blocking exports of US services.

Outsourcing is vital for enabling important services industries in the US to grow, expand jobs, provide cheaper goods and services to US consumers and to export. Why would any sensible person want to stop that?

Alan Oxley, Former Australian Ambassador, GATT
~Aram Koopman, Knootian ambassador to the WA
"If the United Nations is a country unto itself, then the commodity it exports most is words."
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DemonLordEnigma
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Ya know, the last time I checked, having an open economy was effectively just handing those who don't like you the dildo, then bending over while pulling your pants down and yelling insults at them. Eventually, they'll get tired of being insulted and use the dildo.

Very graphic image, but it gets an important point across. With the U.S.'s increased unpopularity, sooner or later some idiot's going to get into government and convince the rest to do serious economic damage to the U.S. Then, you can kiss the American economy goodbye.

Sometimes, normal parts of economic develop are also stupid parts of economic development.
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Knootoss
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Nonsense. An open economy is the best guarantee for prosperity. The US is working good because it is an open economy.

Doing the opposite is going down the path of North Korea: futile, and for the US simply unaffordable.
~Aram Koopman, Knootian ambassador to the WA
"If the United Nations is a country unto itself, then the commodity it exports most is words."
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HotRodia
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Heh. I agree with Knoot. An open economy that outsources jobs combined with a non-interventionist foreign policy that doesn't piss people off at us rather than an interventionist foreign policy that pisses people off at us and a foreign aid policy that throws taxpayer money (money better used in our open economy that unites us with other countries and fosters economic development around the world) at the problem would be nice.
"The irrationality of a thing is no argument against its existence, rather a condition of it." -- Friedrich Nietzsche
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Ecopoeia
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Interesting essay, Knoot. I'm not going to contest it (I'm not able to, in truth, not with the gaping black hole at the centre of my economics knowledge) but simply note that there are often very good reasons for keeping some services 'in-house', especially when local knowledge comes into play.
Enough is as good as a feast

To Ill-Advisedly Go!
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DemonLordEnigma
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Knoot, do I really need to explain the obvious to you, or can I point out that you missed the entirety of my point? An open economy also opens up the nation's economy for abuse by outside powers, allowing nations to, if they decided to do it, damage the U.S. economy directly without ever having to resort to military or even international actions. Imagine how much damage would be wrought if most of the nations containing U.S. companies gave them the choice of refusing to sdell to the U.S. or being forced out. Everyone would take a hit, but the U.S. economy would collapse in a hurry. The others, having dealt with this on many occasions in the past, can adapt and survive.
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Knootoss
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The point you are missing, DLE, is that you fear for losing wealth that would not be created in the first place if it were not for having an open economy and trading and - yes - even outsourcing.

I'm not saying that you should run into such a thing blindly. There can be power imbalances that are risky (think of oil) but in an open economy these imbalances will be mutual. And mutual dependency, rather then being a threat, is the best long-term guarantee for peace. It is the basic idea behind the European Union, it was the basic idea behind the Marshall plan and Japanese post-war political economy.

You cannot expect to generate that wealth that we all want without opening your economy. The risk you speak of will be the result of callous foreign policy on behalf of the United States, on behalf of moronic spending policies by the Bush administration (which intends to increase spending, decrease taxes and cut the debt... somehow.)

These are matters you can influence. Things you should do something about. But to flee in xenophobia with some sort of resignation that you'll be hated by the world anyway is just stupid. The American open economy is the reason why it is a superpower. The worst they could do was cut off trade entirely (a ridicilous scenario) which would very quickly bring you to the situation you are advocating.

It is not just the United States, mind you, that has an open economy. My own country has a very open economy - even more open then the US but much smaller. But despite our size we are the 12th largest economy in terms of trade, the largest provider (in absolute terms) of FDI in France, the gateway to Europe for products that go on to the German ruhr and the entire Hinterland. This has brought our country wealth. I would even go so far as to say that it is our lifeblood.

To go down the path of North Korea would be political and economical suicide. Autarky does not work.
~Aram Koopman, Knootian ambassador to the WA
"If the United Nations is a country unto itself, then the commodity it exports most is words."
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DemonLordEnigma
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Knoot, I could call you an illiterate inbred Southern village idiot and it still wouldn't cover how much of my point you have missed.

Your point in that previous post? Entirely worthless and has absolutely no bearing on what I have actually said. The one item you mentioned that even comes close to addressing it glosses over the entirety of what I have said by simply referring to the U.S. foreign policy and then turns around and shoots itself in the foot by speaking of Bush's economic plans.

My primary point has been that the U.S.'s economy presents a powerful weakness. That is true of all nations, in that their biggest strengths are also their biggest weaknesses. You strike at them with the right attack, you take the nation down with ease.

Something else you need to realize: If the U.S. goes under, I'll simply move to another nation. Hell, I've certainly lived in quite a few over the years. I have no concern about the U.S.'s economic state.
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Ecopoeia
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No need. We're not stupid here and our differences in this debate are of an economic nature, mostly. I don't see any purpose in slinging around insults.
Enough is as good as a feast

To Ill-Advisedly Go!
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TBlack
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The baby killer
Grumpy Old Men
[Mod Hat] Agreed with Ecopoeia. Debate all you want but less of the insults.[/Mod Hat]
"You would think it obvious to anyone, with a grain of intelligence, that there are far too many people born in England."
.:I'm melting!: http://alwaysautumn.etsy.com :.
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