Occupy movement... Fall out for supporters?

[Lord Darkstorm]

Outsourcing is a reality. If it is made in japan, then it is probably a good product, china, well, could be good or bad, mexico...crap usually, although there are exceptions.

I think as the world becomes smaller with the way we communicate, it can also become smaller in who produces the items we use. I forget which company it was, but they said it wasn't the wages that pushed them to move there manufacturing overseas, it was the regulation. The government imposed such a cost on them to keep making products here, that it made it more profitable to move their factories overseas.

I don't have the answers, but I do believe if we could get the government out of the way, we might be able to do something here.

 

[The Blue Lotus]

No, it's because of the economic system we had. The wealth we had as a country is now being sent overseas. We have a small pool of very wealthy and a shrinking middle class. We are no longer at the top of the list and every year, we drop further down the list. The percentage of US citizens under the poverty line is growing every year, not shrinking. The poor are getting poorer, the number of homeless is growing, and we're losing our foothold as the leaders in... Well, anything. Like the economic system we had.


Your assumption here is that anyone who is unemployed for a long period (extensions of unemployment) is unemployed by choice. You assume that the only thing keeping them from getting a job is the fact that money is still coming in. Twenty or thirty years ago, that would have been a safe assumption. But with 5,000 applicants for every job available in America, that's not the case. It's the lack of jobs that is keeping people out of work, not the lack of desire for jobs. Certainly there are people who will live by your assumption and sit back and do nothing as long as the money is coming in. But most folks in America have things like house payments and car notes to pay and unemployment doesn't cut it. Why wouldn't they rather have a job so they can do crazy stuff like live with a roof over their heads.

By your assumption, every time I'm unemployed, I just sit around, rolling in the cash that comes my way, hoping that gravy train just keeps rollin'. After all, unemployment pays practically 13.6% of what I get on my usual salary and I could just live like a... No, wait a minute, that can't be right. Why would I want to live on unemployment when a job can give me so much more?

People don't WANT to sit around and do nothing. It's an assumption that just doesn't hold water in the real world. Most folks dream of having time off and a life of ease. But when push comes to shove, most people want something to do every day.

Shadoe, you make some sound points. Thank you.

As for the bit about 5,000 apps for every job you are not kidding.
I went so far as to apply for a job that paid 8$ an hr 4 hrs a week. Thats it just 4 hours of work per week.

She had 30 interviews!

So, to anyone who thinks it is so easy I applied at McDonalds, I was told that since I am not spanish bilingual that I was not fit to serve! OMG.
How sad is that? And for those who say that welfare is nothing but freeloaders JKR was on assistance at one point too.

I do not take assistance the hubby, and my company do make enough to get by with. We don't have any savings atm, we are still paying off student loans, and supporting my dad who is disabled,(but our GOV won't give him assistance, IMHO it is all being used up by people who are not suposed to be getting these services) as well as his 70 year old parents (retired, in India) so we can't afford to have kids any time soon. But thats ok, something has to come up eventualy.

I apply to no less than 100 jobs per day. I am lucky to hear back from just 1 of them a month. I don't get the job because there are other people out there that have far more experiance and a college degree in the field, but I still try.

I have become so fed up with the job hunt that I am about to give up! To that end I invited about 10 other unemployed or under employed friends over for dinner (Pizza was all I could afford, but everyone likes it so...) And laid out an idea, if we were to pool our cash, cram into a house and all buy into something and just pay for the basic things like food and supplies for said idea in 10 years we could all have enough cash on hand to get into something a little better with out having to live like cavepeoples.

Now that is pathetic if you ask me.

 

[Fnord]

That wasn't really my point. My point was, we should starve the beast. If a company takes its manufacturing to other countries in order to make massive profits here by selling at outrageously high prices, why should we buy it here? American products don't sell well outside of America, so it's not like the company's just going to take the product and sell it to France. France has its own supply line. So does China. So the manufacturer can (try to) sell elsewhere or pay. Pay is nice, but that's not really the goal. You're going to say that they'll just pass the cost on to the customer. But there's a limit to that. There's only so much a person will pay for a given product. After that, they'll just stop buying. And with the middle class shrinking, the pool of American customers is shrinking, so that price tag will need to shrink to even be able to sell at any decent quantity. I'm not really thinking of recouping money here, I'm thinking of getting rid of the beast altogether. Companies that use cheap foreign labor so they can jack the profits astronomically should just... disappear. Seriously. Starve the beast. To death.

That's not really how it works though. American products sell plenty well outside of the United States, which is part of the reason why companies build manufacturing operations in other countries in the first place--to be nearer to other markets. A company that outsources assembly operations, for example, will have the final price of the good reflected in lower prices, not higher prices. That's the whole point after all.

Look at the real prices of consumer goods (especially electronics); they have dropped dramatically over the last 30 years or so. In 1980 the price of a bulky, 19-inch tube tabletop television cost you $400 in 1980 dollars. In, today's dollars, $400 will buy you a pretty nice 42-inch plasma television at Best Buy. So you can't claim that the outsourcing of assembly operations to other countries raises the prices of goods because that's just not true at all. There's no "jacking up profits"; in consumer goods with many producers the profit margins tend to be very thin.

The biggest problem we have is illustrated by a news piece I read today about the iPhone. It sells for about $200 and it's produced for about $8. Now, the $200 price tag is cheap for anything Apple, and I'm thinking I probably found an introductory price on it or something. But see, the thing is, if it costs $8 to make, why is anyone selling it for $200? Why not $10? The immorality of it disturbs me, I'll admit that. And if we had a guy here in America who figured out that he could make an iPhone-like critter and make it for $40 each, he could sell it for $80, still make a heck of a profit, and undercut the iPhone market. But he can't do that, because the iPhone is still selling here.

I don't know where you get your news from, but the cost of making an iPhone is a lot higher than that. $8 is the price of only the final assembly part of the phone. The components inside of an iPhone (which are built all over the world, including in the U.S.) cost a lot more than that. So no need to have your morality disturbed by it, because it's simply not true. On top of the component and assembly costs, there's also the development cost that has to be recouped and that's not cheap either. Consider the prices of smartphones in the same market as the iPhone--if a company could make one with similar capabilities for $40 and still reap a profit, they would because they'd win out in sheer volume. But that's not realistic.

So "starving the beast" would really amount to "starving the consumer". American consumers would simply be worse off as a result because we'd be deprived of a great number of goods in the short run and those goods would become much more expensive in the long run if companies bothered to move assembly operations back to the U.S. (which most probably wouldn't because they wouldn't be able to compete in export markets).

 

[Fnord]

No, it's because of the economic system we had. The wealth we had as a country is now being sent overseas. We have a small pool of very wealthy and a shrinking middle class. We are no longer at the top of the list and every year, we drop further down the list. The percentage of US citizens under the poverty line is growing every year, not shrinking. The poor are getting poorer, the number of homeless is growing, and we're losing our foothold as the leaders in... Well, anything. Like the economic system we had.

Our wealth isn't being shipped overseas. Trade is an exchange--for every dollar sent to another country is a dollar that has to return to the U.S. in the form of purchasing U.S.-made products or investing in U.S.-held assets. The dollar doesn't disappear into a void. The trade deficit (which only measures finished goods production, mind you) is really just another term for capital account surplus. On top of that, foreign holders of U.S. dollars, especially in developing countries, tend to either invest in assets or purchase capital goods from the United States.

And this is why I don't see a problem with cheap consumer goods being made elsewhere; the United States has a very robust manufacturing sector in the area of capital goods--aircraft, machinery, specialized electronics, and other large and intricate items. In the developing world, people in those countries aren't buying TVs, Playstations, iPods or any of that stuff that we don't built here, they're buying bulldozers, concrete batch plants, backhoes, and other large pieces of machinery that the United States builds better than anyone else. Our manufacturing sector has more output now than it has ever had.

Your assumption here is that anyone who is unemployed for a long period (extensions of unemployment) is unemployed by choice. You assume that the only thing keeping them from getting a job is the fact that money is still coming in. Twenty or thirty years ago, that would have been a safe assumption. But with 5,000 applicants for every job available in America, that's not the case. It's the lack of jobs that is keeping people out of work, not the lack of desire for jobs. Certainly there are people who will live by your assumption and sit back and do nothing as long as the money is coming in. But most folks in America have things like house payments and car notes to pay and unemployment doesn't cut it. Why wouldn't they rather have a job so they can do crazy stuff like live with a roof over their heads.

By your assumption, every time I'm unemployed, I just sit around, rolling in the cash that comes my way, hoping that gravy train just keeps rollin'. After all, unemployment pays practically 13.6% of what I get on my usual salary and I could just live like a... No, wait a minute, that can't be right. Why would I want to live on unemployment when a job can give me so much more?

People don't WANT to sit around and do nothing. It's an assumption that just doesn't hold water in the real world. Most folks dream of having time off and a life of ease. But when push comes to shove, most people want something to do every day.

It's not an assumption, it has been observed empirically in numerous studies; the more generous the unemployment benefits, the longer unemployment tends to persist. We see it in many European countries especially, who have "natural" levels of unemployment much higher than countries who have limited benefits. While the replacement rate is lower in the U.S., given the treadmill effect of long-term unemployment, it becomes less and less of an incentive to accept a "lower tier" job than it is to wait it out and hope the type of job (and pay) you had before comes back.

But the touches on the psychological effects of being on unemployment too. While someone can be on unemployment for a year or more, they act in a way that is much different than if they had a job even making the same wage. Since every citizen exists on both the demand AND the supply side of the producer/consumer relationship, a worker who is not producing will also not be consuming--the fundamental aspect of Say's Law. That slows recovery significantly.

We could stand to learn something by looking at a country like Germany, however, who has been something of an economic anomaly in the Euro-zone. Their unemployment has steadily dropped and it looks to be in large part of how it addresses its labor market problems. For one thing, they have no statutory minimum wage. Though union contracts generally set some minimum wage, that doesn't affect workers outside of those contracts. However, instead of paying people money to sit on their couch, the government pays up to 67% of the wage cost to an employer who hires such a worker. In addition, the worker can also participate in new job training while this is going on. Such a policy couldn't run forever, but it puts a stipulation on the subsidy to incentivize the worker far better than standard unemployment benefits do, and some of that cost is borne by the employer too. The employer thus has skin in the game but a lower level of risk (as employing people is expensive beyond just the wage and benefits paid out), the employee has skin in the game and a much better prospect for adjusting to a changing labor market.