How many people understand the economic and political implications of the newest addition to isolationism and porking GDP numbers?

 

nope. I would like to

 

Understand that all politicians use whatever is at hand in their efforts to gain election or re-election. This isn't an unusual occurrence, just more in the limelight due to our fragile economy.

Bush initially enacted steel tariffs to appease the steelworker's unions. A simple matter of buying votes, done by most presidents. Flag waving to ‘save’ American jobs always plays well in the press.

When imported products are reduced, it reduces the trade deficit. As the trade deficit is subtracted from GDP calculations, any reduction in that deficit works to increase the GDP, the economic numbers national politicians rise and fall on. Higher costs of steel using domestic production also increases the GDP all the way through the manufacturing, distribution and application cycles. We’re talking about a win/win GDP numbers situation. Losers? The American public and the US export industry. We pay more for everything made with domestic steel when real wages are actually falling and companies can’t compete with other nation’s products using cheaper steel. Solution? Companies move more manufacturing out of the US to remain competitive, but domestic housing, office buildings, vehicles and anything else using steel passes the additional cost on to the consumer. How long has it been since American workers have had raises to even cope with inflation, much less suddenly higher priced products?

We have an enormous trade deficit with China, and any reduction of that deficit falls right to the GDP. Textile workers, at one time numbering 300,000, I don’t know the current figure, are a big voting block and their increased production will contribute to the GDP. That’s another win/win on GDP numbers. Losers? As usual, the American public with increased clothing prices.

This one is a little different than steel in that China internally finances a great deal of their trade with the US. Pushed far enough, China is very capable of squeezing credit to US firms, forcing them to seek domestic credit to finance their trade not affected by the textile tariffs without slowing Chinese industrial production. That demand could easily drive interest rates up, which would have an adverse affect on our one remaining strong industry, construction. And drive up the interest on government bonds and operating credit line rates for still struggling American businesses.

All short term, the world trade organization is now suing us for the steel tariffs, but quite a gamble in today’s economic conditions to attempt pumping up the GDP numbers and secure that block of votes in an election year. A majority of voters will see it as isolationism and ‘protecting America’ without realizing how it will get into their already heavily pilfered wallets. Brassieres, included in the targeted products, will increase in price, maybe taking us back to the ‘braless’ ‘70s.

For you fans of Isolationism, that caused the collapse of the iron curtain countries and their currencies. Last thing we need is foreign dumping of the dollar for the Euro.

 

Hmm...jsut as a quistin, but to a non-economically minded person, but in order to solve the whole problem with companies going off shore and all of our imports...why do we not put on a HEAVY tax on ALL imports? Such a heavy tax that companies will be forced to come back here, and force people here to buy products made here? Apply taxes for all things made outside of our borders? I am talking tax Ford for making the trucks in mexico, or tax taiwan for flags made over there. Also levy taxes on foreign companies taht make products over here, not taxing the productio persay but the management. Makes sense to me. But then again, what do I know. And yes I am aware taht this would also hurt me and my family in theor business considering that it is actually a foreign owned business.......

 

My only problem is how do you levy a tax on computer programming industries? I mean, they are not exactly a physical thing to tax, and how would you keep programs written overseas from entering the states without the proper taxes?

 

There is no solution other than our continued decline. If you tax every import to a point where domestic production can be competitive, people wouldn't be able to afford most products and other nations would shun our poorly made and expensive products, just as they now do. Remember the former iron curtain nations with no ability to export because their tariffs made imported products too expensive for their populations to purchase? Non-iron curtain nations retaliated with their own tariffs. Their isolation became complete as their currency became worthless and they collapsed because no credit was available to import necessities. We’re no longer an agrarian society where majorities of people are self-sufficient. As an example, we haven’t produced tool quality steel in this country for many years. We need products produced in other countries. We’ll just end up with a two-tiered society, the haves and the have-nots.

I hate to say this, but most large-scale programming is shifting to sources outside the US under contract to US companies, at about half the cost. We're back to our out-dated high standard of living making us non-competitive even in purchasing our own products.

 

Part of the thing is that you just mentioned, is that we do not have any import neccesities....we can and have made and do everything right here in the US There must be a solution...I do doubt we will find it or apply it even if we do find it but there is always that chance right? I mean we have had our haydays, why can we not go back to that type of business? and who says we need the rest of the world they can go elsewhere (I have a specific place in mind) for all I are.

 

We no longer make a great number of the necessities our various industries depend on. As often said, you can never go back.

Besides, I like eating sweet watermelon in Late November.

 

I seen an interview with Allen Greenspan. He said,this policy of incremental tariffs and taxation of imported goods, will hurt the economy by producing higher interest rates and reduce the publics buying power. He seems like an intelligent guy.
Our economy is changing, and we must adapt.
zanny

 

The market place is the world. We sell to it and we buy from it and, being the largest consumer of just about everything, we continously buy more than we sell. We are no longer the 600 pound gorilla that could make the rules we wanted or ignore the ones we did not like. Our economic fate is no longer totally ours to mold or distort as we please and is in the hands of players who know the cards they hold and how to play the game. We can not stand alone and survive, We NEED the rest of the world.
Dono

 

Let's hope Greenspan is strong enough to make his opinions heard by the general public. People deserve to know what's being done to them by a sleazy political agenda.

The key will be normally tame network TV broadcasting. Will they stress the incredible damage these policies can do or keep their viewers and advertiser's customers complacent by waving the flag as in their normal way of doing business? China does not like to be pushed around and this isn't an issue that can be resolved with gunboat diplomacy.

As Dono points out, we're no longer holding all the cards. With some of our recent policies and actions I often wonder if the people in charge still know how to play the game. Or care.

 

you know, tis just occured to me...when our people cannot afford alot of the stuff we purchase rightnow, mainly plat things, alot of which are made oversees, will that not hurt all the markets, or most of them, I mean, when people cannot afford new cars, won't that hurt the japenese? what about when we cannot affordf to purchase new stereo or computer equipment? Will not all of this have a great effect on foreign markets also? I believe since we are the worlds largest consumer of everything but maybe rice..i.e. china...should not the whole market be looking out for our well being? and I do believe we still have the power to control the market, we jsut need to figure out how to do it correctly. If we cannot afford products, will that not drive the price of these imports down?

 

When that does happen, you're talking about a world depression.

Imported products are already, in most cases, priced far lower than domestic products. That's the reason for the huge trade deficits; we buy more (import) than we sell to other countries (export) because they are priced lower. Quality used to be a limiting factor to imported goods, but that's no longer the case. With US companies lowering quality control in attempts to meet lower foreign wage and compliance levels, imported quality has surpassed domestic quality.

Markets are determined by supply and demand. If the public is offered two identical stereos, imported at $100 and US made $150, all the flag waving in the world isn't going to convince an average consumer to spend $50 more just because one was made in the US. The extra $50 can be used elsewhere. The days of buy 'Made in the USA' are long gone.

Because world trade is just that, yes, the rest of the world is very concerned about our financial health because we are the largest single consumer of all manufactured goods and natural resources. The governments of other nations aren't as ignorant as our network media makes the general US public. They understand the long-term financial effects of our greatly accelerated deficit spending with reduced tax revenue and keep a close eye on our politically motivated policies for that very reason.

As a net buyer of goods (we buy/import more than we sell), we no longer control world markets. If we did, as in the past, we would be a net seller (seller/export) and our treasury would be filling up with profits from those sales, expanding the economy (not just the pie in the sky GDP) and creating new jobs. We’re becoming a service economy where our profits are limited to exchanging existing dollars with each other, not bringing in fresh profits from exports to expand our economy in a real manner.

Wish I could portray a brighter picture, but we seem to be painting ourselves into a corner and isolationist political schemes to get votes certainly don’t help the situation.

 

The game goes on! Someone suggested that we tax imports so that domestic products can compete - if only it was that simple. There is currently a U.S. teriff on imported steel to help our ailing steel producers (40 bankrupcies since 1997). Japan has filed notice with the WTO that it will slap $85 million in retaliatory tariffs on U.S. products to offset their loss on steel sales. Japan joined the EU, Norway, South Korea, China, Switzerland, New Zealand and Brazil in Challenging the legality of the teriffs. The EU has threatened $2.2 billion in rataliatory sanctions against U.S. imports. Last Monday Washington decided to impose tariffs as high as 46% on color TV's from China and China will respond to that. My point is that the import/export game is a very complex game in constant play and the sectors in play are constantly changing, steel today, textiles tomorrow, orange juice next week. There are no easy solutions - I'm not even sure there is a solution.
Dono

 

That'll continue until after the federal election. When you owe your last win to a few paper chards, there's no limit to buying possible votes. For politicians, it'll be a double win. The GDP will go up with the more expensive products we consumers will be forced to buy while subsidizing excessive US labor costs and imports will be reduced. Do we even manufacture TV sets in the US? I thought that went away years ago. Another scoop of dirt out of our deeper financial grave.