NetNews Usenet Archive 1992 #27/NN_1992_27.iso/spool/soc/singles/31409

Internet Message Format | 1992-11-20 | 8.5 KB

Path: sparky!uunet!cs.utexas.edu!usc!hela.iti.org!cs.widener.edu!netnews.upenn.edu!netnews.cc.lehigh.edu!ns1.cc.lehigh.edu!jm0i
From: [e-mail] (JOSEPH ALOYSIUS MCVEIGH)
Newsgroups: soc.singles
Subject: Re: Nightline and Presidential Cantidates
Message-ID: <[e-mail]>
Date: 20 Nov 92 22:31:39 GMT
Organization: Lehigh University
Lines: 146

[e-mail] (Dennis Bednarek Mfg 4-6971) writes:
Yikers. I hate doing this, but I'll have to cite and respond in pieces.

In article <[e-mail]>,
[e-mail] (Dennis Bednarek Mfg 4-6971) writes:
>
>Well perhaps I was a little overly assertive in using such
>strong words as force corporate America to hire.  In reality
>I believe that the American industry should find it more
>profitable to hire US workers than to sub-contract US
>jobs to Asian nations.

And people in hell want ice water. "Should" and "will" are different things.
Honda "should" be able to hire Japanese workers back in Osaka to build all
their cars for export to the US in the most efficient, cost-effective fashion
possible, but the poor bastards on the board had to set up a shop in Maryville,
OH, to compete effectively in the US market. How dare they honor their
fiduciary responsibilty to their owners (read as: stockholders)! There's
someone out of work in Osaka! Same logic applies. I hope your TV is a Zenith,
or you've got a big philosophical dilemma.

>As someone said in replies this global recession is not
>Bushes falt and did not start with him.  Well I haver to agree
>with them it really started with Nixon price and wage freeze
>to stop inflation, then when the Democrats took office and
>lifted the freeze they were blamed for the inflation.

The wage and price controls were a futile and stupid - and short-lived -
gesture in response to inflationary pressure that already existed. From where
did that pressure come? A futile effort to maintain the gold exchange standard
that was in place since the end of WWII. This set up the US as the world's
exchange window and guarantor of exchange rate stability in the period of
reconstruction of much of the world, in both the real and economic sense. When
that system was established, the USA accounted for half the world's GNP. That
was eroding, but we were still stuck being, in effect, the world's monetary
police. That proved costly by 1970-71, and there's where the seeds of the
inflation of the 70s were sown. Oh, and the oil embargo of 1973 didn't help;
raising the cost of such a key input jacked up all the downstream pricing.

>That brought the era of Regeanomics which was the biginings
>of putting inflation in line by causing a US reccession,
>that has slowly grown to a Western recession.

The gutting of the spiraling inflation was accomplished mostly due to a policy
change by the Fed, announced Oct 21, 1979 - the "Saturday Night Special" of
Paul Volcker. The US Fed, along with other central banks, abandoned explicit
interest-rate tweaking shenanigans in favor of stabilizing money growth that
would cut inflation and thus ensure lower, more stable levels of interest
rates in the long-term. As I've mentioned in this forum before, that sent
rates through the roof immediately, of course - inflation was still there and
money became tight suddenly - but shortly thereafter inflation fell to the 5%-
and-lower range and rates fell too in light of the solid currency.

The Reagan era recession ended in 1982. The ensuing recovery and expansion
lasted until 1991. Did we cause a Western recession? Germany's economy was
taken out and shot by the unification. Ostmarks were exchanged for DM 1:1 (or
roughly 8-10 times their "real" value in terms of purchasing power), exploding
the money supply virtually overnight. The only way to keep inflation from
ridiculous 1920s-era magnitude [Germany's foremost economic goal], the
Bundesbank was forced to raise short-term interest rates. This hamstrings
economic growth - cost of capital rises, so investment suffers - and
strengthens the Deutschemark - slashing the desirability of overseas
purchases of German goods overseas AT THE MARGIN. Is that America's doing?

Additionally, a ton of unskilled - virtually unemployable - workers were added
to the work force, or out-of-work force, so to speak. Another ton of
inefficient, money-pit, then-state-owned operations from the old DDR were
tacked onto the unified German books. And inflation has picked up, not much,
but inflation is effectively a tax with no real benefits to anyone but debtors
(and is that a stimulus to prospective lenders?). Taxes drain wealth and hinder
real growth.

We can blame Germany's economic woes on Reaganism only if we assume unification
was a result of our actions.

Looking east, to Japan, yeah, they're in a recession. Why's that? Financial
institutions have been buffeted by scandals. Accordingly, stock prices are way
down as the public lost confidence in the purity of the markets - honor's a
big deal there, especially when it's breached - that's been under way since
the end of 1989. Since then, the Tokyo Stock Exchange has lost approximately
57% of its value; imagine our Dow Jones Industrial Average at 1350.
The direct, major effects are at least trifold:

    - Public corporations face higher capital costs, raising the costs of
      maintaining their assets, and precluding expansion (see above). With
      prices so depressed, raising new capital is dicey at best, laughable at
      worst.

    - Banks, which count their holdings of stock as part of equity capital,
      have their capital base eroded. This limits their capacity for new
      lending, and even their ability to maintain their current level of
      assets. They're hurt already by the real-estate collapse.

    - The wealth of individuals who own stocks declines. Accordingly, consumer
      spending will take a dive.

Did Reagan engineer the burst of the Japanese bubble economy?

>Where did the job shortage really come from.  Well its
>the old story of corperate greed.  Why should I hire an American
>for $30,000.00 dollars a year, when we can hire an oriental
>for $10,000.00 plus shipping costs of $28,000.00 for a total
>of $2,000.00 less profits.

[BTW much recent job loss - and jos shortage is an inaccurate term - is due to
eliminating inefficiencies and redundancies]

Looking past your math - assuming there's a typo in there - I wonder if there's
someone actually sitting in a decision-making capacity who is so asinine as to
ignore "Cost and Freight" figures - what it costs to make a product and get it
to where the title passes - when evaluating production decisions.

For my part, I also question the ethics of any manager who, when considering
site location, would think, "Well, our total cost (including allocated fixed
costs) per unit of output (not per labor-hour) are $1.75 if we manufacture in
Pennsylvania, and $0.50 if we manufacture in Thailand......let's stay in PA."
S/He's voilating a responsibility to, and stealing the money of, every owner
of every single damned share of that company's stock. Why should "free
enterprise" stop at a national border?

>Even Bush said that when the US
>wages meet the Mexican wages then Mexican yobs will be coming to
>the US.  Well who can survive in the US on $5.00 an hour?

This argument ignores a fact which should elate both of us - the superior
productivity of American workers. If someone earning $5.00/hour produces the
only a third as much as someone earning $12/hour, whom would you hire?
American workers are - by many measures - the most productive in the world.
By your logic, why use a Cray computer that costs hundreds an hour to run and
support when we can hire a mathematician or scientist at $58/hour ($150,000
per year spread over 52 fifty-hour weeks)?

-------
What a long discourse, and boring as shit. If you've read this far, please do
me a favor and give a quick "Reply To Sender;" I'm curious to see if this was
just wasted bandwidth, and I can't verify because I won't be able to check S.S
until approximately Tuesday, and my node doesn't archive very much. Thanks.

Sorry to put this on SOC.SINGLES, but that's where it started; equal time and
all....
--
-------------------------------------------------------------------------------
Joseph Aloysius McVeigh |"The world is full of articulate people who may not
   jm0i@.Lehigh.edu     | know too much, but are nonetheless perfectly willing
      "N.I.N.A."        | to make policy."                 - Philip R. Lochner
-------------------------------------------------------------------------------