Comments on: Still Manufacturing Myths Aplenty http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html where orders emerge Mon, 16 Jan 2012 02:06:33 +0000 hourly 1 http://wordpress.org/?v= By: JohnK http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191531 JohnK Tue, 24 Nov 2009 12:15:00 +0000 http://cafehayek.com/?p=7341#comment-191531 In the case of the mill towns without mills, the government has stepped in to take care of the now jobless people, and these social services are paid for in part with foreign debt. So instead of producing goods to be sold overseas and having that money keep the town alive, we're selling debt overseas and paying people to do nothing. Such a system can't go on forever. In the case of the mill towns without mills, the government has stepped in to take care of the now jobless people, and these social services are paid for in part with foreign debt.
So instead of producing goods to be sold overseas and having that money keep the town alive, we’re selling debt overseas and paying people to do nothing.

Such a system can’t go on forever.

]]> By: Anonymous http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191526 Anonymous Tue, 24 Nov 2009 08:17:00 +0000 http://cafehayek.com/?p=7341#comment-191526 Barbarossa,I just skimmed, because I'm on my way to bed, but even if your assertion that service jobs can't be exported is true, I don't see that it matters. The debt will be paid by the US government taxing the shit out of producers, even if those producers are only producing services for their fellow Americans.And, even if our economy was driven by heavy industry selling locomotives to Bolivia, the debt will be repaid by the government taxing the shit out of locomotive builders. Barbarossa,I just skimmed, because I’m on my way to bed, but even if your assertion that service jobs can’t be exported is true, I don’t see that it matters. The debt will be paid by the US government taxing the shit out of producers, even if those producers are only producing services for their fellow Americans.And, even if our economy was driven by heavy industry selling locomotives to Bolivia, the debt will be repaid by the government taxing the shit out of locomotive builders.

]]> By: Barbarossa http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191524 Barbarossa Tue, 24 Nov 2009 07:59:00 +0000 http://cafehayek.com/?p=7341#comment-191524 "bo" is actually me. Damn, I must have been drinking longer than I thought. “bo” is actually me. Damn, I must have been drinking longer than I thought.

]]> By: Barbarossa http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191523 Barbarossa Tue, 24 Nov 2009 07:55:00 +0000 http://cafehayek.com/?p=7341#comment-191523 And don't forget, we, unlike every other country or any involved in a theoretical model, can repay our debts in our own currency. Surely, that has some effect on the outcome. And don’t forget, we, unlike every other country or any involved in a theoretical model, can repay our debts in our own currency. Surely, that has some effect on the outcome.

]]> By: Barbarossa http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191521 Barbarossa Tue, 24 Nov 2009 07:51:00 +0000 http://cafehayek.com/?p=7341#comment-191521 And it's not like most of this debt was actually accumulated for investment purposes, in which case it might legitimately be said that the debt was a "good" thing or "indeterminately good or bad." So much of the debt was not done on the free market, but was done by foreign central banks/governments and/or through our own central bank/government. And any debt that our government incurs can rightly be categorized as wasteful consumption, something on which Mises, certainly Hayek, would agree. Foreigners see Treasuries as "investments" because they are "guaranteed" by the U.S. taxpayer, but Austrians of course know that government expenditure and debt can never be considered investment in any real sense, only in a faux or illusory sense, as has been the case with foreign creditors. Though they may perceive such debt as investment, it is only investment insofar as it is able parasitically to drain the productive sectors of the economy through taxation or inflation, and thus such debt, if continually increased, can never be sustainable. Even if foreign central banks (read: non-free market entities) weren't such major purchasers of T-bills and our debt was purchased entirely by private economic actors, such purchases would nonetheless remain non-free market and would therefore be tantamount to wasteful consumption expenditure as well as a real loss to the productive sector. I've been drinking, so I hope at least some of this makes sense, but I won't begrudge anyone who shuts me down or dismisses me simply as an alcoholic. And it’s not like most of this debt was actually accumulated for investment purposes, in which case it might legitimately be said that the debt was a “good” thing or “indeterminately good or bad.” So much of the debt was not done on the free market, but was done by foreign central banks/governments and/or through our own central bank/government. And any debt that our government incurs can rightly be categorized as wasteful consumption, something on which Mises, certainly Hayek, would agree. Foreigners see Treasuries as “investments” because they are “guaranteed” by the U.S. taxpayer, but Austrians of course know that government expenditure and debt can never be considered investment in any real sense, only in a faux or illusory sense, as has been the case with foreign creditors. Though they may perceive such debt as investment, it is only investment insofar as it is able parasitically to drain the productive sectors of the economy through taxation or inflation, and thus such debt, if continually increased, can never be sustainable. Even if foreign central banks (read: non-free market entities) weren’t such major purchasers of T-bills and our debt was purchased entirely by private economic actors, such purchases would nonetheless remain non-free market and would therefore be tantamount to wasteful consumption expenditure as well as a real loss to the productive sector. I’ve been drinking, so I hope at least some of this makes sense, but I won’t begrudge anyone who shuts me down or dismisses me simply as an alcoholic.

]]> By: Barbarossa http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191518 Barbarossa Tue, 24 Nov 2009 07:22:00 +0000 http://cafehayek.com/?p=7341#comment-191518 Purchases by foreigners of our debt will tend to strengthen the dollar; dollar strengthening will tend to give an advantage to foreign manufacturers over domestic; such an advantage will tend to reduce the presence of domestic manufacturers; such a reduction will increase our reliance on and the advantage of foreign manufacturers; such reliance will increase our need for foreign debt; our decreased manufacturing base will reduce our ability to repay said foreign debt, since service production is internationally non-tradeable; the process repeats, until the entire U.S. economy is unsustainable and breaks. Purchases by foreigners of our debt will tend to strengthen the dollar; dollar strengthening will tend to give an advantage to foreign manufacturers over domestic; such an advantage will tend to reduce the presence of domestic manufacturers; such a reduction will increase our reliance on and the advantage of foreign manufacturers; such reliance will increase our need for foreign debt; our decreased manufacturing base will reduce our ability to repay said foreign debt, since service production is internationally non-tradeable; the process repeats, until the entire U.S. economy is unsustainable and breaks.

]]> By: muirgeo http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191517 muirgeo Tue, 24 Nov 2009 07:18:00 +0000 http://cafehayek.com/?p=7341#comment-191517 es&dfw es&dfw

]]> By: Anonymous http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191514 Anonymous Tue, 24 Nov 2009 06:30:00 +0000 http://cafehayek.com/?p=7341#comment-191514 I'm not sure how you're linking debt that the US government owes to foreign governments to how the US economy is divided between service and manufacturing.I have no formal training in economics, but from my vantage point, the US government's growing debt to foreign governments is a reflection on the US government's inability to control its own spending, and that debt is going to be paid back by taxing the productive, whether they're productive in manufacturing or productive in writing software. I’m not sure how you’re linking debt that the US government owes to foreign governments to how the US economy is divided between service and manufacturing.I have no formal training in economics, but from my vantage point, the US government’s growing debt to foreign governments is a reflection on the US government’s inability to control its own spending, and that debt is going to be paid back by taxing the productive, whether they’re productive in manufacturing or productive in writing software.

]]> By: Barbarossa http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191504 Barbarossa Tue, 24 Nov 2009 04:43:00 +0000 http://cafehayek.com/?p=7341#comment-191504 "Provoked" would have been better. “Provoked” would have been better.

]]> By: bo http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191503 bo Tue, 24 Nov 2009 04:41:00 +0000 http://cafehayek.com/?p=7341#comment-191503 I just don't see how if our country is tending toward a 100% service economy, and manufacturing growing or not (and if growing, obviously growing at a rate smaller than the service sector, otherwise, obviously, the service sector would not be an increasing percentage of the economy), our debt to foreigners is increasing relative to the GDP in terms of BOTH the service and manufacturing sectors, and services are largely internationally non-tradeable goods, how we can ever repay these debts while on this path. Perhaps I'm being simplistic and ignorant, I'll allow that, but no one has convinced me otherwise, and I'll give my integrity this much credit: when I know I've been proven wrong, I'll admit it and shut up. I'm earnestly pleading here. It was initial disrespect on the part of others that evoked my sarcasm, and if someone could simply be civil about answering me, I would reciprocate. I just don’t see how if our country is tending toward a 100% service economy, and manufacturing growing or not (and if growing, obviously growing at a rate smaller than the service sector, otherwise, obviously, the service sector would not be an increasing percentage of the economy), our debt to foreigners is increasing relative to the GDP in terms of BOTH the service and manufacturing sectors, and services are largely internationally non-tradeable goods, how we can ever repay these debts while on this path. Perhaps I’m being simplistic and ignorant, I’ll allow that, but no one has convinced me otherwise, and I’ll give my integrity this much credit: when I know I’ve been proven wrong, I’ll admit it and shut up. I’m earnestly pleading here. It was initial disrespect on the part of others that evoked my sarcasm, and if someone could simply be civil about answering me, I would reciprocate.

]]> By: Barbarossa http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191496 Barbarossa Tue, 24 Nov 2009 04:25:00 +0000 http://cafehayek.com/?p=7341#comment-191496 "We show that, under the same assumption, fiscal deficits can have worrisome implications if they turn out to be permanent. First, if they occur in large countries they significantly raise the world real interest rate. Second, they cause a short run current account deterioration equal to around 50 percent of the fiscal deficit deterioration. Third, the longer run current account deterioration equals almost 75 percent for a large economy such as the United States, and almost 100 percent for a small open economy." --IMF working paper “We show that, under the same assumption, fiscal deficits
can have worrisome implications if they turn out to be permanent. First, if they occur in large
countries they significantly raise the world real interest rate. Second, they cause a short run
current account deterioration equal to around 50 percent of the fiscal deficit deterioration.
Third, the longer run current account deterioration equals almost 75 percent for a large
economy such as the United States, and almost 100 percent for a small open economy.”

–IMF working paper

]]> By: Barbarossa http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191493 Barbarossa Tue, 24 Nov 2009 04:10:00 +0000 http://cafehayek.com/?p=7341#comment-191493 Not everything I have contributed has been questions, and thus far YOU have contributed no real answers. My questions are for the most part very broad (and did I mention before, legitimate?), so that no real research is necessary, only accessing one's own knowledge on the subject (as you did previously concerning GDP). I ask these questions while operating on the assumption that SOMEONE (Don, you, not Muirgeo, whoever) can quasi-extemporaneously respond to such questions, if only in brief. All you have done is spat vitriol and hostility, which to a casual observer seems only to indicate an irrational intellect incapable of any real discussion. Not everything I have contributed has been questions, and thus far YOU have contributed no real answers. My questions are for the most part very broad (and did I mention before, legitimate?), so that no real research is necessary, only accessing one’s own knowledge on the subject (as you did previously concerning GDP). I ask these questions while operating on the assumption that SOMEONE (Don, you, not Muirgeo, whoever) can quasi-extemporaneously respond to such questions, if only in brief. All you have done is spat vitriol and hostility, which to a casual observer seems only to indicate an irrational intellect incapable of any real discussion.

]]> By: Barbarossa http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191492 Barbarossa Tue, 24 Nov 2009 04:04:00 +0000 http://cafehayek.com/?p=7341#comment-191492 It does help: to support the irrelevance of your point. If janitorial salaries are used to determine the value of final manufactured products, then that is a bogus statistic. If the firm produces the same value of manufactured goods while outsourcing the janitor, how can it be said that the value of such goods has increased (or decreased)? It CAN'T, so your point is irrelevant (though very pretty in the knowledge it invokes). It does help: to support the irrelevance of your point. If janitorial salaries are used to determine the value of final manufactured products, then that is a bogus statistic. If the firm produces the same value of manufactured goods while outsourcing the janitor, how can it be said that the value of such goods has increased (or decreased)? It CAN’T, so your point is irrelevant (though very pretty in the knowledge it invokes).

]]> By: Anonymous http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191447 Anonymous Mon, 23 Nov 2009 22:50:00 +0000 http://cafehayek.com/?p=7341#comment-191447 John, No major disagreement to your points. It was probably too much of a shortcut on my part to just simply say 'union', when it would have been more accurate to say, 'unions and and their enablers', which includes the parties you listed. <I>Congress equally failed. For too many decades they ignored the welfare of consumers and implemented laws which allowed unions more power.</I> That's probably the most significant point of your post. Thanks John,

No major disagreement to your points. It was probably too much of a shortcut on my part to just simply say ‘union’, when it would have been more accurate to say, ‘unions and and their enablers’, which includes the parties you listed.

Congress equally failed. For too many decades they ignored the welfare of consumers and implemented laws which allowed unions more power.

That’s probably the most significant point of your post.

Thanks

]]> By: JohnK http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191440 JohnK Mon, 23 Nov 2009 21:59:00 +0000 http://cafehayek.com/?p=7341#comment-191440 I did not mean it that way. I just don't see how it is enough. I see mills closing and be replaced with housing projects, I see once productive people becoming wards of the state. It just doesn't seem sustainable. I hope I am wrong. I did not mean it that way. I just don’t see how it is enough. I see mills closing and be replaced with housing projects, I see once productive people becoming wards of the state. It just doesn’t seem sustainable. I hope I am wrong.

]]> By: John Dewey http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191412 John Dewey Mon, 23 Nov 2009 20:25:00 +0000 http://cafehayek.com/?p=7341#comment-191412 barbarossa: " but you're telling me that the fiscal deficit DOESN'T contribute to the current-account deficit?" Yes, I am telling you exactly that. barbarossa: "How is that not already occurring?" It hasn't to the extent that it might because China and other nations have been buying our federal debt. barbarossa: "And this is the problem that concerns me. " And well it should. But eliminating the current account deficit will do nothing to stop Washington from spending. barbarossa: ” but you’re telling me that the fiscal deficit DOESN’T contribute to the current-account deficit?”

Yes, I am telling you exactly that.

barbarossa: “How is that not already occurring?”

It hasn’t to the extent that it might because China and other nations have been buying our federal debt.

barbarossa: “And this is the problem that concerns me. ”

And well it should. But eliminating the current account deficit will do nothing to stop Washington from spending.

]]> By: Randy http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191409 Randy Mon, 23 Nov 2009 20:15:00 +0000 http://cafehayek.com/?p=7341#comment-191409 <i>"You ARE accepting them on a voluntary basis by choosing to be secure and use these services nearly every hour of your lfe and NOT choosing to relocate to the country of your choice."</i> This is my home, an essential human condition. As I live in my home, and care for my family in my home, I obey the rules made by the rule makers because it makes my life easier than to not obey them. It doesn't follow that the rules are good rules just because they exist. <i>"...you are a guy who wants all the comforts of a planned [civilized?] society but none of the responsibilty."</i> Responsibility to who? To those who claim a right to speak for "society"? To those who exploit? Not a chance. The only responsibility I accept is the responsibility to deal fairly with those who deal fairly with me. “You ARE accepting them on a voluntary basis by choosing to be secure and use these services nearly every hour of your lfe and NOT choosing to relocate to the country of your choice.”

This is my home, an essential human condition. As I live in my home, and care for my family in my home, I obey the rules made by the rule makers because it makes my life easier than to not obey them. It doesn’t follow that the rules are good rules just because they exist.

“…you are a guy who wants all the comforts of a planned [civilized?] society but none of the responsibilty.”

Responsibility to who? To those who claim a right to speak for “society”? To those who exploit? Not a chance. The only responsibility I accept is the responsibility to deal fairly with those who deal fairly with me.

]]> By: John Dewey http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191408 John Dewey Mon, 23 Nov 2009 20:12:00 +0000 http://cafehayek.com/?p=7341#comment-191408 <em>JohnK: "I'm not sure how it is sustainable. The only ones paying taxes are the ones in the service industry, and everyone else is either part of the public sector or sucking off the government teat."</em> That's not correct. The <a href="http://www.bea.gov/newsreleases/industry/gdpindustry/2008/gdpind07_rev.htm" rel="nofollow">growth in value added by the goods producing sector</A> outpaced the service and government sectors every year from 2004 through 2007, as reported in December, 2008. Since value added includes both employee compensation and operating profits, it is the goods producing sector (manufacturing) which has seen a larger increase in taxes paid. Of course, the service sector is larger than either the goods producing sector or the goods producing sector. That's been true for at least 60 years. So, if you are meaning that the service sector is paying more taxes, you would be correct in 1950 and you would be correct today. What about the service sector makes you believe it's jobs and profits are not sustainable? Do you understand what firms are included in the very broad sector known as the service sector? JohnK: “I’m not sure how it is sustainable. The only ones paying taxes are the ones in the service industry, and everyone else is either part of the public sector or sucking off the government teat.”

That’s not correct. The growth in value added by the goods producing sector outpaced the service and government sectors every year from 2004 through 2007, as reported in December, 2008. Since value added includes both employee compensation and operating profits, it is the goods producing sector (manufacturing) which has seen a larger increase in taxes paid.

Of course, the service sector is larger than either the goods producing sector or the goods producing sector. That’s been true for at least 60 years. So, if you are meaning that the service sector is paying more taxes, you would be correct in 1950 and you would be correct today.

What about the service sector makes you believe it’s jobs and profits are not sustainable? Do you understand what firms are included in the very broad sector known as the service sector?

]]> By: Anonymous http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191403 Anonymous Mon, 23 Nov 2009 20:05:00 +0000 http://cafehayek.com/?p=7341#comment-191403 JohnK: 90 percent of the U.S. workforce today is in the service industry. You seem to suggest in your e-mail that that's an unfortunate fact. If so, can you tell me what's so unfortunate about this fact? What's so unfortunate about working in the service sector? JohnK: 90 percent of the U.S. workforce today is in the service industry. You seem to suggest in your e-mail that that’s an unfortunate fact. If so, can you tell me what’s so unfortunate about this fact? What’s so unfortunate about working in the service sector?

]]> By: John Dewey http://cafehayek.com/2009/11/still-manufacturing-myths-aplenty.html/comment-page-1#comment-191400 John Dewey Mon, 23 Nov 2009 20:02:00 +0000 http://cafehayek.com/?p=7341#comment-191400 If your entire contribution to this blog continues to be asking a bunch of questions, you're going to soon be ignored. No one has time to research a bunch of questions just to satisfy your curiosity. Research them your self. If your entire contribution to this blog continues to be asking a bunch of questions, you’re going to soon be ignored. No one has time to research a bunch of questions just to satisfy your curiosity. Research them your self.

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