Political and economic history

[Einherjar86]

Those are a lot of good points that will result in us just basically talking in circles over and over again, so let's make room for another topic before Grant gives up hope altogether.

 

[Dak]

Those are a lot of good points that will result in us just basically talking in circles over and over again, so let's make room for another topic before Grant gives up hope altogether.

agreed.

 

[zabu of nΩd]

 

[Einherjar86]

My girlfriend directed me to this interesting article:

http://www.nytimes.com/2012/01/22/b...ass.html?pagewanted=6&_r=1&ref=general&src=me

I was particularly intrigued by this tidbit:

They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

In recent decades, and even today with Romney et al spewing typical, tired conservative slogans, we've heard countless conservative pundits and politicians simultaneously encourage the unquestionable ideals of Capitalism and Nationalism/Patriotism; but I've long been skeptical (and this article only goes to support my belief) of the inherent ties between American nationalism/exceptionalism and the underlying tenets of capitalism.

What this seems to illuminate, to me, is the inherent contradictions between nationalism and free market capitalism. Companies obviously have multiple stakeholders, which can include (but aren't limited to) its stockholders and its country. However, these two interests don't necessarily go hand in hand, and today we're seeing more and more companies send their jobs overseas to countries that can supply cheaper and more efficient labor.

The truly frightening component of all this is the relatively poor working conditions of many overseas factories (the article goes into this in some detail). If we agree that these entities exploit their employees, we've pinpointed another dilemma. In this country, I'm certain that every politician/pundit who considers himself or herself to be an economic conservative would claim that companies like Foxconn treat their employees poorly, unfairly, and that such behavior is not what capitalism entails.

And yet, at the same time, our capitalist system is reliant upon these ethically vague entities for its own success and survival. We're entering an age where a complete economic overhaul is in order, and I have a feeling it's either going to result in potentially serious reactionary policies that preserve our economic system at the expense of global and technological development; or, on the other hand, an exponential increase in technological advancement that sees a complete revisioning of our economic processes.

Thoughts?

 

[Dak]

While I don't agree with Karl D on "the solution", he makes an excellent point on this very thing:

http://market-ticker.org/akcs-www?post=200904

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

It's easy to be "speedy" and "flexible" when you effectively own your "employees" as slaves!


_______________________________________


Free market principles are fine right up until people start using slave labor on an effective basis, along with environmental arbitrage, as the means of "progress." And let's not mince words: That is exactly what has happened.

Absent intentional interference in our monetary and economic system on both sides of the Pacific what happened can't be sustained. Americans cannot buy iPhones without money to spend on them and they cannot have those funds absent "free credit" and ponzi bubbles without good jobs.

In other words, absent the intentional distortion that is generated by massive deficit spending by state, local and federal governments what happened can't as it immediately self-corrects. Henry Ford understood this -- which is why he paid his employees enough so they could buy one of his cars! He not only drove down the cost of building a car he increased the modestly-skilled laborer's wage so he could afford one. He took the efficiencies he found in automation and manufacturing and allocated some of it to labor so that the total economic surplus would be recycled back into the purchase of his, and others, products.

That's what productivity improvement is, it's what powers the natural deflation that is the ordinary state of all economies over time, and it brings common improvement in the standard of living for the majority of the people.


“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

What Apple (and other companies) want are employees that are housed in dormitories, can be roused at midnight to work a 12-hour shift on demand fueled with only a cup of tea and a ten cent biscuit, paying them $17/day.

THAT is what Apple and these other firms demand.

It is absolutely true that America cannot fill that demand, because at one dollar an hour you can't manage to put the food on your table for a family of four, say much less pay rent, electricity or gasoline for your car to get there and back!

 

[zabu of nΩd]

Wow, apparently Romney's tearing a hole in Newt Gingrich's ass over his past ethics issues: http://www.cbsnews.com/8301-503544_162-57364412-503544/romney-goes-on-offense-in-gop-debate/

Either there's a chance Romney has some actual integrity, or the Republicans [and Democrats] are just masterminds at deploying public speakers at the right time to resonate with a wave of strong public opinion. These days, of course, it's over ethics in the government. They have to sell themselves by looking "tough on corruption".

 

[Dak]

It's only being addressed because Gingrich trounced him in South Carolina. Which isn't terribly important because:

Cold Hard Math

 

[Einherjar86]

While I don't agree with Karl D on "the solution", he makes an excellent point on this very thing:

http://market-ticker.org/akcs-www?post=200904

It seems to me he's suggesting that the company should do the ethically responsible thing and not rely on a supplier that, for all intents and purposes, employs slave labor; but, "capitalistically" speaking, that's not what is best for Apple.

 

[Dak]

However, it is no more capitalistic than any other slave-holding example throughout history. The only reason Apple (and other countries) are able to pay pennies on the dollar to have products made in one place and sell them for ridiculous profits in another place is because of government trade,business, and monetary policies in both places.

It's a completely contrived situation from A-Z and works to the advantage of all involved, except, of course, the people doing the work (compared to everyone else). However, it's still better for them than the alternative in their respective countries.

At some point though, if people don't get wise, the situation is going to get flipped, because you can't exist on debt in perpetuity.

 

[Einherjar86]

However, it is no more capitalistic than any other slave-holding example throughout history. The only reason Apple (and other countries) are able to pay pennies on the dollar to have products made in one place and sell them for ridiculous profits in another place is because of government trade,business, and monetary policies in both places.

It's a completely contrived situation from A-Z and works to the advantage of all involved, except, of course, the people doing the work (compared to everyone else). However, it's still better for them than the alternative in their respective countries.

At some point though, if people don't get wise, the situation is going to get flipped, because you can't exist on debt in perpetuity.

Right; eventually, China will surpass us in wealth, their standard of living will increase, and Apple won't have Chinese sweatshops to go to where they can get cheap iPod screens for minimal cost to them.

 

[Dak]

Right; eventually, China will surpass us in wealth, their standard of living will increase, and Apple won't have Chinese sweatshops to go to where they can get cheap iPod screens for minimal cost to them.

Not necessarily. The factories will just get moved to another poor, regressive/oppressive nation with a weak currency and exploitable government/population. When I said "flipped", I meant eventually the US will eventually fit the bill.

 

[Dak]

Excellent breakdown of the problem with subsidies, focused on Ethanol as an example.

 

[Einherjar86]

I recently began reading a book that I'm sure you'll find repulsive, Dak.

But for those interested in a different take on globalization and the future of democratic institutions, I'd recommend it; it's a very accessible text:

 

[Dak]

What's the premise?

 

[Einherjar86]

That the "dichotomy between markets and states - between trade and rule - is false and hides more than it reveals."

 

[Dak]

The general gist of the Amazon reviews is that he is carting out mercantilism and national protectionism. This isn't anything new.

 

[Einherjar86]

What I consider "new" about it is his argument against the Austrian position that governments only hinder economic success. He does a great job of defining between national and international trade, and how governments play different roles in each.

He also opens the book by making the claim (which I tend to agree with) that pursuing both democracy and national interest while trying to pursue globalization at the same time is contradictory.

 

[Dak]

What I consider "new" about it is his argument against the Austrian position that governments only hinder economic success.

Well they certainly don't hinder economic success for everyone directly.The very foundation of mercantilism and national protectionism is favored status for certain businesses, who in turn payback/payoff the politicians. So it's good for them. However, this does have a net effect of decreased wealth though, as innovation is stifled, and living standards stagnate or reverse for the general population.

Based off the reviews his entire focus is on how to keep nation states fed with power and money. That's not an economics book, that's political apologetics.

Edit: Based on excerpts from the book, he already assumes there must be either a "decentralization of power" in the form of existing nation states, which "protect" themselves with protectionism, or we have a global technocracy. That's a false dichotomy.

 

[zabu of nΩd]

Ooh, that's a spicy argument.

 

[viewerfromnihil]

I've been listening to Mises's Human Action on audiobook during my long commute to school. It has turned out even better than I was expecting, and I'm looking forward to reading it when I finish the semester.

I moved recently and I couldn't have moved next to a better neighbor. He's into vintage guitar gear and Austrian economics.He let me borrow his copies of Hayek's "The Road to Serfdom" and Friedman's "Money Mischief", so I'll be digesting that over the next couple of months.