I've been a person who has never been absolutely certain where I stood on the protectionism vs globalization debate. At times I would side with globalization then at other times I would swing back to US protectionism. Lately I've been moving back to globalization eventhough it's causing havoc in many industries in our country(I'm not even considering illegal immigration at this point), but I'm afraid that the alternative is even worse.

While I dont want to sound like an alarmist considering past economic problems were caused by many different factors and one factor alone can't cause a severe problem. With that being said Im honestly concerned if GM does end up filing for BK in the next 12 months it could cause a rise in protectionism which could be catastropohic for our economy. The political sound bites after a GM BK will be too powerful to overcome and if you are for globalization it will make you sound like you are against the American worker.

Eventhough the Great Depression began in 1929 after the collapse of the stock market and people losing a ton of money on margin and the result was a run on the banks (No FDIC insurance to a $100,000 back in 1929 but most people in 2006 have their money in stocks or their house and not a FDIC insured bank account), but the bottom of the depression didn't occur until 1934 when most people depleted any extra money they had or assets they could sell (the Fed tightening the money supply in its attempt to prevent hyper-inflation didn't help either).

As the depression continued people became more favorable to protectionism and subsequently the ecomomy got even worse. By March of 1933 international trade plummeted to 33% of its 1929 level. The loss of such trade was devastating and only contributed to causing havoc on the US economy. Even though tariff rates rose by up to 50%, imports continued to decline to the point that revenues fell 46% from $602 million in 1929 to $328 million in 1932.

Now in 2006 almost every US company gets some type of product and/or raw material overseas (far more then in 1929) and if protectionism and/or tariffs become common again it will cause a huge spike of inflation and loss of jobs that would bring the US economy to a halt.

While globalization has it problems and is far from perfect Im afraid a major swing into protectionism and/or applying significant tarrifs would be far worse.


Just a thought.....

 

To answer the question, yes.

 

Economist hate protectionism. Cheap goods and services from over seas is one reason we in the USA have such a high standard of living. I like that cloths are so cheap I can use them for rags once they get old. That didn't happen 100 years ago with US made textiles.

In the long run protectionism will just lower the standard of living and save a few obsolete jobs making the US less economically competative globally. It is no different than when manufactoring jobs moved to the south, or when people cried about automation.

Many people predict a depression in the coming decade just based on economic cycles and the baby boomer retiring. On top of that the US savings rate is at a negative number for the first time since 1933 and the Bush admin is pushing the US into debt faster than almost all past administrations in the last 50 years combined. The Chinese also hold $1 Trillion in US debt that they can manipulate our economy with.

 

You can protect US companys all you want...but if people don't want what they are selling whats the point?

 

The problem is when the government tries to make things 'equal' it usually results in everyone will be 'equally' poor and 'equally' dependent on the state for social programs and/or welfare.

 

Let me simply say this...

China is utilizing "protectionism" (as you call it) to induce it's people to buy products made inside their borders.

They are also using it to induce companies to invest in R&D inside their borders.

They make NO BONES about it, and apparently, it is working for them.

Personally, I prefer not to drop terms like protectionism , globalism, capitalism, and the like because the lines are too fuzzy anymore. And if I were to get my wish, I'd simply like to have the American consumer demonstrate more loyalty to the American Product than to their precious bank accounts. THAT is where the problem lies.

 

It is working in China because people are dumping money into china like they did with the NASDAQ in the late 90's.

China also fixes the price of there currency so that imported goods are much more expensive than Chinese products. That same currency manipulation is also what makes Chinese products super cheap over in the USA. China is also in the middle of an economic boom. Wait and see how protectionism does when it isn't a boom economy.

 

Considering that most of the Chinese are very poor (far poorer then the poorest Americans), they can't afford to anything other then cheap Chinese goods regardless if the Chinese government imposes protectionist policies or not. In fact its those same protectionist policies that will keep the Chinese masses poorer for a longer duration then if China became more open to free trade. Right now in China you have a very small % of extemely rich and a small but growing middle class in coastal cities while the rest of the country lives in ultra-poor economic conditions.

China protectionism = US Protectionism = Very bad

China in 2006 = Nasdaq in 1999 = Not good

 

In a perfect world, I'd say protectionism to save our auto industry should be done without hesitation. In the real world, all it would do is take pressure off our industry to become more efficient and make the changes it needs to make, and the focus would go right back to the quick buck

It's been known since the early 80s when H. Ross Perot was on GM's board that it was a wonder that GM ran at all, and when he tried to get things fixed, GM bought him out and sent him packing. Compare it to today where GM is making changes and streamlining in ways that would have been unthinkable just 5 years ago.


That said, I DO think we ought to enact a "Fair Trade" policy that treats other countries the way they treat us. If you have high tarriffs against our cars to your country, we'll place the same on your cars coming here.



On a side note, I know that many cars we make are impractical in other countries. Some have taxes based on vehicle size and/or engine displacement. But with a Fair Trade policy, we would be able to have more stylish and smaller economical cars here. Carmakers feel the market here isn't big enough for mini cars, but if we are able to export most of them, that fear is elminiated.

 

Most of our electronics and other things are massed produced oversea anyway now...we sold out to these companys and you get what you get with that. I was refering to the auto industry above about making things people want..people would rather pay $30,000+ for a nissian altima,then a pontiac GTP/G6 that costs less....thats what we need to figure out...I don't think you make it harder for people to get something they want....I think you make something that they would desire more....

Your computers/DVD's /injected molded plastic junk...there's not much you can do with that...and like was stated earlier people live good by buying these cheap goods...lowering everyone's standard of living dosen't seem like a solution...and I agree with the whole china inflating its currency thing...something needs to be done about that.

 

The problem with that is most Toyotas/Hondas are made in the USA. Nissan Titan & Toyota Tundra are US only trucks built in the USA and even Kia and Hyundia are building US plants. Sure they add a few US jobs, but they don't help GM/Ford.

Wouldn't that also hurt GM since the Aveo in imported? GM is a global company and maybe it would be best to keep the small cars built in countries that offer the advantage of cheaper labor. GM needs to fight fire with fire, fight Korean and Chinese car companies with GM built Chinese and Korean cars.

 

The problem with that logic is that it's those same poor protectionist trade policies of many countries is why those countries don't have a large enough middle class to afford to buy our products. Why would we want to copy another country's poor economic policy? Are we going to 'stick it to them' by making our own people poor and jobless?

Let's 'stick it to' those foreigner SOB's by making our own economy suck

 

Intresting points.

I'll think more on it.

 

Like the iceberg you see ABOVE the ocean, you have stated a few truths (what can be SEEN above the water).
What you DON'T know is just how expansive, deep, and convicted to their dominance the Chinese government and it's people really are (like the ice under the water).

I can't type enough to explain it to you in this forum, but stay tuned...
I think you have a great start, and I plan to provide you with some GREAT info in a few days.


I do not intend this to sound derogatory or insulting in any way, but have you ever been to China? Spent any amount of time there? Is your POV based on experience and actual presence or is it based on what you read and see on TV?

The reason I ask is this... I - myself - had what I thought was a pretty good understanding of China, their economy, policy, and vision of the future. I am a pretty astute dude and "I get around" as far as travelling goes. As embarrasing as it is to admit it - I am admitting it to you humbly... I DIDN'T KNOW SH1+ UNTIL I WENT THERE.

What you are calling "protectionism" is actually far from it - especially in the eyes of a Chinaman. They view themselves as being patriotic, investing in their own growth, taking care of their own, sharing amongst themselves, and being "defensive". And the common layperson is VERY staunch about it too.
THAT seems to be the biggest difference between them and us - we dumb@*** Americans care more about how much money we save than our own domestic economy as a whole. It's already been stated right here in this very thread. I can tell you first hand that a Chinese buyer will walk away from an imported product, and even do without something they need or want if they can't find it domestically. An American... sheez... don't get me started.

Their government DOES make policies that induce Chinese to buy domestic, but they don't hold a gun to their heads - the people WANT to buy domestic, even if the quality isn't there. Plagearism, copy-cat clothes, knock-off shoes... they don't care! They buy it because their brother/sister/mom/dad works in the factory that made it! That's why I made the statement in my previous post about "protectionism"... it could just as easily be called a "defensive" economic policy (nationally, economically, or otherwise), or "preservationism", or anything else. It depends largely on where you stand as to how you view the policy in question.

Lastly - don't ANY of you underestimate the buying power of the "typical" Chinese worker any more. They make typically $150/month in these new factories, but when you can live on less than $1/day, you are able to save a helluva lot of money. I've been to Shanghai and Hong-Kong and they are booming, but I saw the same thing in the small cities like Kunshan and Guangzhou too which are farther west (inland). I saw 8-lane streets totally gridlocked with vehicles, EVERYBODY there has nice clothes and shoes, most girls have a peice of jewelry or two, guys have "gadgets"... it's really not so unlike here in the States except that not everyone squanders $60/month on cable TV, $20/day eating out, $40/pr for designer jeans, $100/month mowing yards, etc. etc. Most don't own a car by choice, which helps them save on gas, insurance, maintenance, etc which is inconceivable to us Westerners. Just take my word for it - they are not like the Ethiopians or Liberians in Africa - these people are "buyers" of goods.

I plan to ressurect my "Cars in Asia" thread this weekend and expound on things a bit in there - you'll see some evidence of what I say in here come to light then. Now... I need to get some more work done before I leave!

 

I haven’t been there personally but I have friends who have but more importantly I know a handful of people who I do business with on a daily basis not who are constantly traveling back and force to China and some who have manufacturing operations there. So in many way I know a lot of the business tactics, logistics, and cultural roadblocks that exist within China from 1st hand sources who know best. I even know little-known facts regarding rolling blackouts within China's Manfacturing sectors because economic growth is now outstripping China energy infrastructure and that its causing major delays in manufactruing times from a 2 day cycle to over a week in some cases.


It’s still protectionism regardless if you want to admit it or not


You lost me @ dumbass Americans…..

China not only artificially keeps their currency lower then it should to keep it products cheaper on the global market, but China needs its economy to grow at a rapid amount just to keep it unemployment rate stable to handle its huge population.

You do realize that most of China’s population lives outside the areas you visited in far different living conditions? China is improving greatly in many regions but they have a long road of ahead them nationally.



For some reason you use a lot of words in your posts, but provide very little usable information.