Levelling the playing field: How to keep more jobs in America

More and more American companies are outsourcing manufacturing jobs to other countries because they can do it cheaper than we can. The ability of other countries to compete against us depends on several factors, but one large factor is the lack of labor laws in those countries.

Many foreign countries that we import products from do not have strict occupational safety and health standards and pollution standards. In America, these regulations cost manufacturing businesses extremely large sums of money, making them incapable of competing in the global market.

Most of what I have heard is to decrease our own regulations in order to increase our competitiveness, but most of these regulations have very sound reasons behind them that help protect the well being of employees and the environment.

Why not instead impose these regulations on countries that export to us (of course, gradually, with required benchmarks each year)? Basically, force these countries to have higher standards of occupational safety/fairness and environmental responsibility before they can continue doing business with us. This will level the playing field.

One might argue that a country like China would never agree to something like that, and we can't do anything about it because we are addicted to their loans. They, however, are addicted to our business. We are currently interdependent on each other. If we imposed these regulations on them, they will probably refuse them, in which case the American people will need to be prepared to take their business elsewhere, or keep it in the US, even though it will be at a higher (but more realistic) cost.

I know this plan would make virtually every product more expensive, but it will also increase the country's GDP, generally increase wealth, put us in a better position to become a more powerful exporting country, and promote employee rights and sound regulations in other countries.

Any thoughts? Please comment.

 

Before imposing any tariffs all tax breaks for outsources should be repealed. Under current law corporations do not have to pay taxes if the invest their money in new business regardless of where business is located.

 

Unlevel playing fields primarily focus on Western trade advantages that lead to over-reliance on resource exploitation (facilitated by multinationals), such that trade can actually reduce the well-being of populations in the developing world. Its therefore a little bit rich to moan about distinctions in pollution controls etc.

It gets even worse when we look at the 'dirty industries'. These tend to operate in capital-intensive, large-scale methods of production. And what are such industries prone to? Using their relative domestic power to seek government 'relief' (from tariffs to subsidies). Your solution would shift us from the gains derived through multilateral liberalisation to a world which encourages the return of such inefficiency.

In reality you need to get rid of the 'we're hard done by' nonsense. Pollution control derives public goods and provides possible avenues for technical innovation. Want to create jobs? Be more innovative!

 

Reiver, you seem to have misunderstood my entire argument. I am well aware that the business we do with other countries often hurts them more than it helps them, which is another reason why I think my proposal would benefit them in the long run, too. It would tighten their own pollution controls and labor rights and force the large multinationals to play by fair rules, eliminating their ability to exploit the labor and natural resources of other countries to no limit because of the regulations that would be in place in that country, imposed by my proposed act. Currently, no dependent, developing countries can do this because corporations from America would never do business with them, they would go somewhere else cheaper! If we were able to blanket every country with this, however, they would be able to get a better deal out of the business they do with multinationals without sacrificing the business that would likely go elsewhere. If these countries do end up losing business due to this regulation, it would likely be because the corporation would bring its work back to the US because it does not see adequate gains from working with the foreign country.

Therefore, my proposal would be beneficial both to foreign countries because of their increased ability to impose regulations (both labor and environmental) on the corporations that do business with them, giving them greater freedom without the fear of losing business, as well as beneficial to US manufacturing companies, because their chances of getting some work would probably become higher. Like I said above, the only downside I see to this is that the cost of goods generally would increase, but I believe that is acceptable because the current costs of some things are unrealistically low, and we have no right to gorge ourselves at the expense of the impoverishment of other countries.

 

No, you have misunderstood trade relations. You're coming out with inane defence for protectionism,avoiding the reality of trade and how you would empower a damage that destroys domestic output. I have no tolerance for it as its ultimately about sneering at basic economic concept, using "woe is us" comment to hide from the obvious trade liberalisation gain

 

I'm sorry, but I don't think that is an even close to realistic proposal. I would argue that we could gradually develop a relationship with China over time. However, we first have to get our financial house in order and also streamline and apply cost benefit analysis to regulations. Unless we can do that and grow successfully, China doesn't even have a reason to listen. I think we could compete with China in the coming years without having China change anything though. China will not be able to maintain the level of growth it has today.

 

In the Western world ordinary people do not get anything from the trade liberalization except reduction in standard of living.
Liberalization is only good for rich multinational globalists, not for us.
I can understand real liberalization i.e. when both economies and laws are equalized among all countries, but it is not what multinationals wants.
They want us to be bound to strict rules and regulation while making money without any kind of barriers.
That is not liberalization it is modern type of slavery.

 

That's nonsense. We see lower price and greater choice. Its basic economics

 

yea, sure lot of choices but no jobs

 

You're adopting the standard zero sum game bobbins used by the long dead mercantilists. Trade doesn't create unemployment. Comparative advantage enables consumption outside the production possibility frontier. Intra-industry trade, in comparison, allows for the exploitation of economies of scale

 

part of the problem is that corperation's mobility is a lot greater and faster than individuals, the real problem today is that labor allocation is greatly limited by national borders for obvious reasons, so if your job would be best allocated in another part of the world, a lot of problem obvious arises, some individuals could overcome that problem, but usually most people can't. Which means the market becomes inherently inefficent.

How to solve that? I have no idea really espeically in the short term, it is very unlikely that such inefficent labor distribution can be solved within the framework of the modern world, unless we somehow abolish national border and have a unified language . in the longer term education to have most people better adapted / capable fo working aboard and more trade talks allowing more realistic freedom of movement for labor seems like what can be reasonablly done within a few decades.

For example, some countries import foreign labor, Taiwan's IT factories' assembly line is often largely manned by S.E Asian workers on working visas, the same idea can apply to the US (and in reality there's already people doing that anyway, such as alot of the farmers in the south). The idea is to kill two bird with one stone by opening Latin Americans to work at low level jobs to drive down the labor cost (and also at least reduce the illegal immigration problems) . on working visas, but rules would stipulate that for every x foreign labor you must also hire x number of domestic labor etc...

In short, we often talk about "liquidity" for capitals, but the same really applies for labor as well, if the labor force is illiquid it's obviously not going to be doing well, and currently, in most part of the world, labor force's liquidity lags very far behind that of capital's

 

I don't agree with this at all. The whole point of orthodox comparative advantage analysis is to show that, even if labour mobility was zero, trade will still promote economic efficiency.

 

bring back tarriffs

 

It's funny to watch the broadcast media talk about "keep the jobs in America". This is just propaganda that corporations want you to side with. Fact is the real smart successfull Americans are going out of country to establish themselves and their buisness. I'm not just talking major corporations. I'm talking individuals going abroad to work and get a job in tech, media, manufacturing, and teaching. Those who make up the 10+% unemployed in the USA are unemployed for a good reason. They do not have the skills or the background and track record to maintain a job in the USA.

Long gone are the days of work the same skill/job for 20 to 50 years. Some have a different job every 3-4 years. It's called progress. Some are starting their own buisness.

Just think the corporations want people to sit around and be slaves to their power and wealth. They don't give a crap about you or the USA. There is a world of opportunity out there in the world. South America, Aisa, India, Pacific Islands, and Africa.

Forget trying to get a job in the EU other than Germany or France. They are going through the same crap the USA is going through: broke, in debt, no growth, and no future out look for growth. Why? because everyone is downsizing for more profit. And there is no more room to capitalize other than to capitalize more on the government. That is what capitalism is all about. Make more with less, and make money off someone who is making money, and at this point the governments aint making any money for the corporations and buisnesses to capitalize on.

So, you can forget about laying around and expecting the gubment to hand out "JOBS", and go abroad and get a job. You will be supprised how much money you can make in a forigen country with the US training and skills you have. Your life will be better.

The sooner Americans realize that their time is up, the sooner they will start looking to other countries with better job opportunities. By that time it will be too late. Just like the gold rush of the 1800s.

The time to act is now.

 

First off, at least at the moment the corporate headquarters are in the US providing some jobs and tax revinue for the US. If the choice becomes "you can due business from the US only if you can live by the US labor and environmental laws, or you can move your headquarters to somewhere else" (and yes Americans, they can leave) most will leave the country before you can start enforcing the law.

China wouldn't agree to such laws in the least, not in a small part because they know that in a fight to get a factory, they have a labor/environmental plus in their low wages and low regulation. They won't change it because it's done nothing but good things for the Chinese economy. They aren't about to kill the goose that lays the golden egg. And as to China being addicted to our business? Really? The only reason that we buy chinese stuff is because we have a large credit card debt and negative savings. As our economy gets weaker and they grow their potentially huge consumer base, it will be much much cheaper to make and sell products for their own population and perhaps the rising middle class of Abu Dhabai or other such nations who aren't likely to declare bankruptcy in the next decades.

Until we lower our standards to parity with the rest of the planet -- job for job, most jobs that can be physically done outside the US will be. WE've priced ourselves out of 90% of the job markets. And until we get in line with the rest of the world, we're only going to decline farther.

 

Decoupling (i.e. a shift away from the US being integral for the world economy to just one of the many significant markets) will be an interesting, but potentially disturbing, proposition. One could hypothesise that it will be as painful as 'Old Europe' and its loss of empire. Mistakes, from the risk of trade wars to even more aggressive foreign policy, are very much possible

 

Before we lower our standards, we have to stop giving tax breaks to corporations that ship jobs overseas.

 

While everyone foucs on the obscure, the reality is the USA can't compete because of the big corporat capital monkey they have on their backs.

Capitlaism and capital overhead has dampened buisness, manfacturing, and services to the point that there is no profit, and there is no room for growth. As a result, the high cost of goods and services are too much for other countries to pay.

In order for a USA company to profit, they need to sell massive amounts of products and services.

Because the other countries do not have this huge monkey of capital overhead, they can make more money than any US company selling the same product cheaper.

That is why the USA will continue to struggle.

 

Jobs are not going overseas, the jobs were created overseas. Corporations establish overseas, not in the USA. Hence the jobs were never in the USA to begin with.

 

I forgot to add:

Jobs are not going overseas, the jobs were created overseas. Corporations establish overseas, not in the USA. Hence the jobs were never in the USA to begin with.

And worst, the forigen countries are able to now establish without US corporations intervention. Hence the massive trade exports between China, Mexico, and the greater South American countries. A product from the USA sells more than what the US pays for it. 2x more in Mexico. That same product made in China is 2x cheaper, and the Chinese will make 2x more profit selling that same product in Brazil.

The US government is not looking at the global market and is only focused on the USA.

Corproations, have burned their bridge abroad in South America, Canada, and Austrailia. And as the USA falls deeper in debt and the USD continues to decline. Other countries are passing the USA by for products and services.

 

If U.S. corporation establishes overseas, it gets the same tax break for developing new business as it gets for establishing business on U.S. territory.
Before lowering standards of living that incentive should be eliminated completely. Last time I remember that issue have been mentioned during Kerry Bush campaign, but never since.
Flat tax would definitely help to alleviate that problem, but whoever starts talking to much about flat tax gets out of political debates quickly.

The other issue is a huge difference in saving account interest rates between U.S. and BRICS countries. I can get 8-10% gain by just holding Brazilian Real in the Brazilian bank, while only about 0% if U.S .
Why in the world I will be willing to invest in U.S. if I get 10% overseas by doing nothing.

 

Except when ones country's comparative advantage is its capital. The it can create a capital DRAIN from the country. All those rents and stock dividends no longer go to the wealthy within the country, so there is much less to "trickle down".

Countries such as the USA are big enough. Why can such a country not provide a decent living standard to its own people by itself, even if it was completely blockaded from the outside world? The arguments about trade making people better off just do not make any sense. With all this globalisation we have been seeing, why are so many losing their jobs? Obivously more open trade has not brought the high levels of wealth that so many free traders promised everyone.

 

In a mature "rich north' country, comparative advantage will be in capital-intensive product. Trade doesn't create unemployment in that circumstance (except perhaps for some structural deficiencies). It can lead, however, to a shift towards factor price equalisation.

Economics informs us that isolationism will lead to a reduction in well-being. Comparative advantage is one means to derive gain (from that reference to consumption outside the production possibility frontier, as mentioned earlier). Intra-industry trade, however, is even more important for the 'rich north' (with economies of scale gains substantial)

Its supported by theory and empirical evidence. There's no point in pretending otherwise

Capitalism's instability is quite independent of foreign trade.

 

Your school of economic thought, though admittingly dominant in academia, is nonetheless a stubborn close-minded ideology. The free market certainly is important and has its merits, but it is not the end-all solution to every economic problem. Free market economists tend to be dismissive of the many other causes of poverty, and generally refuse to recognise that in some situations, a more "efficient" market can actually reduce wealth. It is almost as though it is just plain impossible for you to see that. "Growing the pie" involves more than just enabling the free market to operate.

I, for one, do not ascribe the root cause of unemployment to "instabilities" in the market. If not for the underlying problems (diminishing job opportunities and wages because of the increased world competition), the "low point" in such natural fluxuations would not be so bad. Sovereign debts may also likely be an important contributor to the economic malaise, both by the "asset-ification" of these debts and the taxes required to finance the interest payments.

 

Its based on sound economic comment and economic reality. Your dogma, in contrast, isn't.

There is no such beast as the 'free market'. We know, for example, because of market imperfections that the gains from specialisation according to comparative advantage will not be fully exploited. However, that's a 'so what?' moment as your dogma would eliminate all of the gains that we do achieve,

This is a red herring. "Free market economists" have delivered the inanity of neo-liberalism. However, that doesn't provide any justification for ignoring the gains from foreign trade. Both orthodox and heterodox economists will agree that both inter and intra-trade gains are significant. The difference tends to concentrate on economic development (e.g. how Krugman and his part in 'new trade theory' has underplayed the need for forms of protectionism to allow domestic industries to grow in a transitional economy)

Then you ignore neo-liberalism and how profit (here to the financial class through creating instability) are to the detriment of the general populace. Fair enough, but to couple that with unsupportable remark over trade gains just isn't cricket!