The original idea was to lower trade barriers so that companies could build additional factories overseas where the items produced at those factories--yes, at a lower cost--could be then sold at a lower cost in the area where those factories were located. Heinz followed this idea and does today.

What the corporate fat cats did was shut all the factories in the US, make their stuff more cheaply overseas with near slave labor, and then sell the crap at the same price they would have sold it for had it been made in the US with well paid union labor. See: Nike shoes.

The big bosses looted the difference and pocketed it, the main reason for the ridiculous increase in executive pay packages. The stockholders didn't do much better and their former employees were left scrambling to find a patchwork of service jobs that paid too little to live on in order to survive and too little to buy what they used to make.

This is why greed was the problem, why 400 men now hold more wealth than the bottom 90% of us do, and why this country's economy is in the toilet.

Nobody begrudges those foreign workers the chance to build things, the companies to sell them, and everyone to make a living offshore. What created the disaster was throwing Americans out of work just so a few hogs at the top could get fatter.

This is what your niece needs to know, although she also needs to know she has to parrot Freeper nonsense to pass the course.

Because we can't sue teachers for malpractice.

have a tough time making their companies profitable and we were told they would go bankrupt if they did not manufacture overseas.

i did point out that though levi went overseas to produce product (she was told cheaper product now and americans dont want to pay more) i am not seeing cheaper. they were 25 or under. not 35-40'ish for the same 501. so where is the cheaper.

but where i am being tripped up is were the companies really endangered of not making profit? was that a bill of goods sold to us to make us accept them going overseas. was it another factor that had the companies doing so poorly, like those large package.

on edit... thank you for the point that they were to go overseas and manufacture for those in the area. not to bring back to gain higher profit

Walmart drove the prices so low that companies did have to start manufacturing overseas to be able to sell to those leeches.

....would benefit the workers there.

What it did instead was to create the same type of wealth disparity "there" -- regardless where "there" was or is -- that was being created here. In other words, a few greedy bastards in China got fabulously wealthy exploiting the labor of their Chinese workers, while at the same time further enriching the likes of Steve Jobs -- may he be reincarnated as a [s]worker[/s] slave for one of Apple's Chinese contractors -- and impoverishing the Americans who used to work in the electronics field.

Ditto for clothing manufacture, shoe manufacture, appliance manufacture. In many cases, the [s]workers[/s] slaves were paid so little that they could not afford to buy the merchandise they were manufacturing, even though that was often the justification for locating manufacturing facilities there.

The other aspect that often is not even explored is that the American working class in the couple of decades following WW2 enjoyed increasing prosperity to the point that the gap between the American worker's lifetyle and the lifestyle of workers in even second world economies was enormous. Few want to admit that the American working class, as a victim of capitalist advertising, was as guilty of exploiting many workers in "developing" nations as were the managers of the companies that were relocating. In that sense, the American working class was living pretty comfortably, using too much non-renewable energy, depleting resources far more rapidly than any other economy.

So it's almost certainly not a bad thing that American consumers take a good look at their profligate ways and cut back a little or even more than a little.

Unfortunately, the lifestyles of the pigs at the top of the trough don't want that, nor with they give up any of their even more profligate ways. When Bill Gates comes out and says, "I've made sufficient billions off Microsoft and henceforth new editions of Windows will sell for $15 and older editions will be supported as long as there's a single computer still operating on Windows 95, 2000, XP, Vista, etc., etc., etc." then things might begin to change. But the Jobses and the Gateses and the rest of the bazillionaires are raking in money that they never earned. And the people who are earning it for them are being treated like shit.



TG

The more people in a given labor force, the lower wages are.

Your niece's instructor is a victim of the bastardization of the field of economics which has been ongoing since the mid-1970s. He or she have never read the source documents for the field.

Profits are not a goal of an economic system, period.

Adam Smith, the founder of modern economic thought, wrote The Wealth of Nations, where he examined the reasons a country was poor or rich. He found that production of goods makes a country wealthy.

He points out that the first thing business people do when they meet anywhere, parties or just on the street, is to begin figuring how to cheat consumers to make more money for themselves. To this end, he discourages the meeting of business people and thinks that the corporation should not be allowed to exist as a form of business. Profit should be just enough to prevent the merchant from going out of business. Production should be maximized, and then jobs and incomes are maximized as well.

Before the 70s, the classic American business model was find a place where people need your stuff and locate a branch there. But during the 70s and continuing today, is this perverse notion that business does not have to accept things as they are, but are free to create their own reality. So you stop going where people are, and make people move, instead. That big promotion now means leaving here to go to the big city, where you are cut off from your family and friends, your natural economic support system.

Maybe your uncle the mechanic would work on your car at home for just the parts, your dad the accountant did the whole family's taxes and so on. That's how I grew up, with grandmother babysitting us while mother shopped and so on. Your earned dollars went further, because when you moved away and needed brakes, go to the brake shop and pay full price, same for child care, and anything else you need. Now you need two people working in the household to have the same things you used to get with one. Business continues to squeeze, until now you have mom and dad and kids working as well. Nearly all my high school senior students work, and not for pocket money - they are paying their insurance, clothes, car payment in some cases, as well as chipping in for general family support. Now you have 3 or more people working for what one used to provide.

Overseas and small child continues the scam - now you can get 7 or 8 or 9 people to work for what one used to get.

Now they're trying to get it done over here to make the global pool of labor even larger and wages even lower.

All in the name of profits.

Production, not profits, is the goal of economics. The rest is a race to the bottom, and I so inform my students, and give them strategies to opt out of the current game to their own benefit and that of their families.

The more people who work for less and less, the less and less they can buy, including food. Too many workers spells hunger, and that's where we're at. A huge increase in poverty in the world's richest country, and it won't get better by putting 7 year olds to work.

I'm in awe.

Thanks. Fortunately for me, my economics professors from the early 70s were quite rigorous and insistent on source documents.

I've been teaching eco now for 3 decades, so plenty of practice.

Thanks a bunch for all you do, which is mighty work!

She is hoping to spend at least part of the upcoming week-end poring over the dozens of freebies she has downloaded to her Kindle for PC.

Got any recommendations?

Or some John Stuart Mill would be good.

Schumacher isn't available for Kindle.

Neither is EP Thompson.


Much of what I've downloaded so far is 19th and early 20th Century, well in the public domain. Often there's little information on the listing itself, so it's kind of a crap shoot. One of the titles that caught my attention was Social Value A Study in Economic Theory Critical and Constructive, by Benjamin M. Anderson, which being free I downloaded.

The work is (c) 1911, printed in November, so it is almost exactly 100 years old. The following is from the Preface:



This series of books owes its existence to the generosity of Messrs. Hart, Schaffner, and Marx of Chicago, who have shown a special interest in directing the attention of American youth to the study of economic and commercial subjects, and in encouraging the systematic investigation of the problems which vitally affect the business world of to-day. For this purpose they have delegated to the undersigned Committee the task of selecting topics, making all announcements, and awarding prizes annually for those who wish to compete. In the year ending June 1, 1910, the following topics were assigned:—
1. The effect of labor unions on international trade.
2. The best means of raising the wages of the unskilled.
3. A comparison between the theory and the actual practice of protectionism in the United States.
4. A scheme for an ideal monetary system for the United States.
5. The true relation of the central government to trusts.
6. How much of J. S. Mill's economic system survives?
7. A central bank as a factor in a financial crisis.
8. Any other topic which has received the approval of the Committee.

Anderson, Benjamin M. (Benjamin McAlester). Social Value A Study in Economic Theory Critical and Constructive. Kindle Edition



I think it will be an interesting read, even though obviously none of those suggested topics have any lasting relevance.


The odd irony is that the BF's dad sold HSM menswear for 30 years or more.



TG

There are wise and knowledgeable people in this discussion and this group. As a business person, I’ll now offer many words in agreement with those individuals.

The profit motive is always at work and many things are used as cover for that profit motive.

As an example, the shoe industry first moved to Brazil during the Reagan administration. Reagan was joyful that we had more millionaires in this country than ever before while I was disgusted that thousands of American workers were losing their employment in the shoe industry as plant after plant closed.

It was mentioned of course that those jobs would help workers in Brazil to improve their living conditions and would be good for their economy.

Once though, the shoe industry could move production to a lower wage country, China, the shoe industry was out the door and the workers in Brazil lost their jobs.

Isn’t it delightful that workers in China now can improve their living conditions and our shoe industry will be good for China’s economy?

As another example, trade with China was first sold to Americans as an opportunity to open a vast new market for all our U.S. made goods. It was also sold as an opportunity to expose Communist China to capitalism and they would supposedly soon embrace Democracy as a result. Fanciful notions, weren’t they? Those notions were promoted as cover for the profit motive.

U.S. businesses wanted to escape union wages, minimum wages, product, worker and environmental regulations. If they could escape those costs, they could enlarge their profit margins. Those companies cheerfully traded our jobs, safety, our manufacturing capability and economic security for massive profit margins. They could easily afford to toss the American consumer a few dimes in savings on foreign made goods if they so desired.

The closest I can come to the idea of companies either moving production abroad or going bankrupt, are the companies who struggled to practice capitalism honestly. There were companies who struggled, after so many other companies in their industry moved production abroad. Those companies with domestic product, had difficulty competing because of unfair foreign competition. The American manufacturers were operating on a smaller, ordinary profit margin. They faced a difficult decision to either stand firm and possibly go down, or embrace the race to the bottom.

Our large retail chains play a role in this race. They’ll inventory domestic product and once they are established as a company’s largest account, they’ll pressure the American manufacturer to move production abroad so the profit margin on the goods will be enlarged. The foreign made goods are always marketed as a means for consumers to save money, when they are actually in fact massive profit margins masquerading as products. This explains why domestic product, with an ordinary profit margin and actual product, is rarely available in large retail chains leading consumers to believe that nothing is manufactured anymore in the U.S., which is untrue.

I also blame Wall Street for much of our loss in manufacturing. They would happily take down a company that was succeeding if they could make more money than if they supported the company.

I could present you with examples today, of union made domestic product that has a lower price than comparable foreign made goods. Is that not proof that a company can manufacture in the U.S. and make a profit? Now you can wonder that if a U.S. company with union workers can manufacture here and make a profit, how much profit must there be in the foreign made counterpart.

There are no reasons why companies can’t make a profit in the U.S. There are only many reasons why they can usually make more money by manufacturing abroad.

Now there is a trend in re-shoring, where companies are moving production back to the U.S. Does this mean those companies remembered to care about American workers? Does it mean that they no longer care about improving the lives of workers in other countries? Does it mean they finally abandoned their hope of converting Communists to Democracy?

No, re-shoring means that those companies have determined that they will realize greater profit by manufacturing here than by continuing to manufacture abroad. Factors including a long supply chain and shipping times, rising foreign labor wages, higher freight costs, quality problems, counterfeit product, lower material costs from recycling, etc., explain their decision to re-shore.

Your niece is looking at one aspect of child labor in foreign manufacturing. Those children may be exchanging their labor for the opportunity to acquire meals, but they are also trading their labor at the expense of their health. We have regulations for sound reasons; industry often presents dangerous environments for workers. Those children are often exposed to hazards and toxins that will shorten their lives. There is an excuse for a capitalist somewhere though, who will look past the massive profit made from that labor and the danger and harm done to those children, simply because they were able to eat today.

I am a business person and I am motivated to profit. There is much though that I value in addition to money and I make my decisions based upon my many values. I understand clearly why regulation is necessary to ensure a free market so that the system remains productive and that everyone derives a benefit from the system.

When regulation is absent and when only money is valued, only those persons at the top of industry will profit at the expense of consumers, workers, our environment, product safety, innovation, our manufacturing capability, and our economic security.


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to work on making each country more or less self supplying when it comes to the goods they need. This was happening after the Depression in this country. Yes, I no that no country can be totally self sufficient so there would still be trade between countries. But what is happening right now is dangerous.

I do not know how this would work or if it is even possible but I wish it were.

I wonder if anyone knows if there was more starvation in places like Africa back in the 50s than there is now? Have taking our businesses over there helped or hurt?