China’s trade war w Australia

[Red Leg]

This pretty much sums up the situation! Too many politicians with too many fingers in the money pile! The peasants get what’s left!

It is even more insidious than that. Shareholders own corporations, not politicians. They vote with their investments and corporate stock values rise and fall with quarterly reports. Corporations are measured against their peers based upon net growth and profitability. If they can build item X cheaper than a competitor, then the corporation is incentivised by its shareholders to do just that. Doing that on a national scale tends to generate internal growth, jobs, and profitability - the US prior to the 1960's. Globalism was seen as a way to extend that concept on a global basis - altruistically, a rising economic tide would raise all ships. Realistically, it raised some (China and India) and lowered others (The Northern Hemisphere generally). Conservatives also applauded in the name of "free trade" and a perverted interpretation of capitalism that accepted economic self-destruction at the altar of competition.

The guy getting left out of this new economic formula was the fellow who actually built things in this country. We somehow forgot that our middle class was actually largely composed of blue collar workers building things across our vast post-war industrial base. What is worse, we are now doing the same thing with our engineering base to include software development.

We may be too late. Already, people refer to the US as a service industry based economy. A nation of corporate shareholders (if you have a 401K, you are one too), government employees and waiters. I don't think such a economic system is sustainable. Unfortunately, not a lot of voices are being raised in either party voicing concern.

 

[CoElkHunter]

It is even more insidious than that. Shareholders own corporations, not politicians. They vote with their investments and corporate stock values rise and fall with quarterly reports. Corporations are measured against their peers based upon net growth and profitability. If they can build item X cheaper than a competitor, then the corporation is incentivised by its shareholders to do just that. Doing that on a national scale tends to generate internal growth, jobs, and profitability - the US prior to the 1960's. Globalism was seen as a way to extend that concept on a global basis - altruistically, a rising economic tide would raise all ships. Realistically, it raised some (China and India) and lowered others (The Northern Hemisphere generally). Conservatives also applauded in the name of "free trade" and a perverted interpretation of capitalism that accepted economic self-destruction at the altar of competition.

The guy getting left out of this new economic formula was the fellow who actually built things in this country. We somehow forgot that our middle class was actually largely composed of blue collar workers building things across our vast post-war industrial base. What is worse, we are now doing the same thing with our engineering base to include software development.

We may be too late. Already, people refer to the US as a service industry based economy. A nation of corporate shareholders (if you have a 401K, you are one too), government employees and waiters. I don't think such a economic system is sustainable. Unfortunately, not a lot of voices are being raised in either party voicing concern.

Excellent analysis! The problem with “globalization “ is it’s often not with imports and exports on a level playing field? Take China for example. Number one, they’re still considered within the U.N. and it’s economic arm a “developing nation “! What a joke! This gives China all sorts of benefits. Number two, they’re allowed to devalue their currency at will with no international interference. They’ve dumped cheap steel, aluminum and electronics worldwide below the market value. It’s no wonder there aren’t any jobs left in those industries in any country? We, along with many other countries, have been “asleep at the wheel” so to speak, and it’s time to WAKE UP! The lack of available medical supplies in this country during this pandemic because they’re all made in China, and China decided to cut off the exports of them, is a perfect but prophetic example of what the future holds if business as usual doesn’t change? What’s next? China holding the world hostage if it develops the Covid 19 vaccine first?

 

[spike.t]

Wonder if could offer them on a cull hunt............too many bloody here....

 

[CoElkHunter]

“And that’s not all” China throws millions/billions at the sources of countries/organizations criticisms of them but there aren’t strings attached. But what is attached is a long, thick rope around the necks of those entities for the “pay to play” China syndrome!

 

[CoElkHunter]

Wonder if could offer them on a cull hunt............too many bloody here....

Well, you could offer it to them, but they’d probably pay you in devalued yuan, and anyway, they have all those animals waiting for slaughter in cages in their “wet” markets waiting to spread the next pandemic, so why go to Africa or anywhere else for a cull hunt?

 

[spike.t]

Well, you could offer it to them, but they’d probably pay you in devalued yuan, and anyway, they have all those animals waiting for slaughter in cages in their “wet” markets waiting to spread the next pandemic, so why go to Africa or anywhere else for a cull hunt?

You got the wrong end of the stick there. ...

 

[Newboomer]

It's going to take a long time for the US to shed the chinese yoke. We've given them too much of our technology which they have turned against us with all the cheap junk they flood the world with. There are way too many dirty politicos and bureaucrats with their fingers in the til who care about nothing else.
I think the world is beginning to realize what china is up to and is starting to rebel. Hopefully what President Trump started with leveling the trade playing field will spread across the globe and shut them out. Nationalize what they have in all these countries, throw them out and bring home manufacturing.

 

[jeanes]

Trying to find something that China does NOT have a hand in is a monumental task. If you buy anything or have any sort of pension or investment savings you are associated with China. Even the Made in America label doesn't guarantee that the product doesn't have some connection with China. The present situation has evolved over a long space of time, probably since Nixon's trip over there, and it won't be resolved quickly, if at all, even if Trump wins in Nov. We are finding out that The Swamp is much wider and deeper than we ever imagined and the swamp creatures are fighting back viciously.
I'm all for drinking Aussie beer. Don't know what I can get here other than Fosters, though. I'll have to wait until tomorrow to get some since we can't buy alcohol on Sunday. I'll just have to make do with Ziegenbock and the sampler case of German bier I laid in before the quarantine.

 

[Mr. Zorg]

Ross Perot had a major plank of putting the USA back on a manufacturing based economy but didn't get far enough along the road the first time, and bowed out the second time (after splitting the ticket, who knows if there were financial incentives to do so). It didn't work among the clamor of the supremacy of moving to a low emissions service based economy then among the populace and I seriously doubt it will gain any significant traction now.

Surveys showed younger voters didn't count Sleepy Joe's cozying up with a brutally repressive regime back when I was a newly eligible voter while he was still in the race. Sleepy Joe I think well remembered how hospitals there with universal health care were in no quantifiable way anything approaching a sterile environment with patients whose open wounds were draining into open topped glass jars in gurneys in the hallways, much less what patient rooms and operating theaters were like. That's fine by him as long as he and his family and cronies have elitist access to a higher standard as a perk for knowing what's best for everybody else. Make no mistake. Similar to the lady with a fondness for ice cream with her 21st century version of "Let them eat cake!"

 

[Red Leg]

It's going to take a long time for the US to shed the chinese yoke. We've given them too much of our technology which they have turned against us with all the cheap junk they flood the world with. There are way too many dirty politicos and bureaucrats with their fingers in the til who care about nothing else.
I think the world is beginning to realize what china is up to and is starting to rebel. Hopefully what President Trump started with leveling the trade playing field will spread across the globe and shut them out. Nationalize what they have in all these countries, throw them out and bring home manufacturing.

The problem is it is not the bureaucrats and the politicians. It is a shareholder and consumer driven issue. That is solidly in our laps.

 

[spike.t]

The problem is it is not the bureaucrats and the politicians. It is a shareholder and consumer driven issue. That is solidly in our laps.

Yup the shareholders causing companies shit at AGMs about green issues.....so can be done....

 

[Nyati]

Most consumers just want cheaper products and could not care less where they have been manufactured.

 

[jeanes]

Yes, it can be done. The question is how much pain are
shareholders/investors/consumers/pensioners/retirees willing to endure. Green issues are not woven into the fabric of our global economy as has been China for the past 50 years.

 

[spike.t]

Sorry to take a curve here...apologies to Dr Ray....but as its a holiday tomorrow... Africa Freedom Day.... And having a couple of sundowners ....as not much else to do .....And just been wandering around YouTube which apparently puts things to you it thinks you are interested in..... Well putting this on....it is slightly exaggerated but gives an idea to people who have never been here or other countries where these cockroaches operate..... But this is an African giving his opinion..... As I said it's slightly over the top.....but shares how Pissed off I get at seeing more and more Chinese stuff going up across here.....

 

[mdwest]

The only Australian beers I see in the US with any regularity are Fosters (which is actually brewed in TX for the US market, but is an Oz company).. and you can sometimes find Redback in stores that stock a lot of craft and import beers...

 

[Ridgewalker]

Now I’m feeling extremely guilty! I live off my 401k, IRAs, some stock and bond investments and SS. I made a living designing products and machines, stamping dies, molds, automation, etc. for many US manufacturing industries. It was a good life.

I pay the tuition each year for some engineering students at Texas A&M and sadly there may not be any jobs for them.

 

[Ray B]

The problem is a shareholder and consumer driven issue.

It isn't a consumer issue when the consumer is given no choices. There is demand for simple gas powered automobiles however the politicians have prevented such automobiles from being made. There is demand for quality goods but business executives push cost cutting policies, making only second-rate products with price as the primary factor. you may be familiar with Winchester products made prior to 1964.

 

[Red Leg]

It isn't a consumer issue when the consumer is given no choices. There is demand for simple gas powered automobiles however the politicians have prevented such automobiles from being made. There is demand for quality goods but business executives push cost cutting policies, making only second-rate products with price as the primary factor. you may be familiar with Winchester products made prior to 1964.

So Ray, I am just going to guess that you have never been either an appointed or elected officer in a publicly traded corporation. So let me tell you something about to what those evil executives are actually trying to respond.

Most large companies find that they are unable to remain competitive in a particular market segment without developing cash/investment reserves greater than the post tax margin that they bank in a particular year. Thus, either from founding or over time they go public with shares offered on one of the trading markets. The moment they do that, the company is no longer owned by anyone but the shareholders. Those shareholders then control the value of the company based upon their investment or divestment of those shares. Their decisions are driven by things such as year over year sales growth, profitability, cash flow, and debt. Growth, profitability, and cash flow are driven directly by the company's success or failure in their consumer market. Every quarter the company's performance is measured against its peers. All three of those particular metrics are largely driven by the company's cost of doing business. Their product, whether a toaster, a TV, or a B1 bomber has to offer a purchase advantage to the market sector's consumers. So yes, enormous effort goes into driving down the cost of production to make those metrics as attractive as possible. But the place to point the finger is at the demands of the consumer and the shareholder, not the company officers simply trying to satisfy that demand.

It is probably worth noting that tax rates further compromise that math. Profits are normally used to boost investment in R&D, new production space, hires, outreach into new markets etc. However, in a punishing tax environment, it often makes better quarterly financial sense for the corporation to buy back its own shares. This would seem a waste of money, but by reducing the number of shares available to investors, it either stabilizes or drives up value of those shares thus increasing market cap which offers competitive advantages in dealing with that fourth metric, debt.

Winchester made that decision in 64, because at the time they were no longer able to build the model 70 and sell it at a competitive price. Remember, this is pre-CNC technology. Their production floor was aging, they were trapped in a high cost of labor environment, and their shareholders were abandoning them for other manufacturers. Worst, the consumer was ever more unwilling to pay more for the Winchester brand than one of their competitors. Sure, they made drastic and ultimately fatal cost cutting decisions, but it was as much our fault, the consumer, as theirs.

With respect to cars, again it is hard to blame evil government. Government, in a democracy, responds to the will of the people. Whatever anyone thinks about the power of campaign contributions, votes really do matter. I am not sure there is much of a real market for a simple gas-powered car among the emerging primary purchasing age groups in this country. I should add people of your age and mine with a trusty socket wrench in our pocket longing for a simpler age are getting fairly scarce on the ground. What the consumer seems to want is an affordable automobile with as many bells and whistles as possible. Government is indeed driving emissions control and those related expenses, but that can only happen because the majority of our fellow citizens are fully vested in the notion of man-made climate change and its effects on the environment. If majorities didn't support it, politicians wouldn't do it. So again, the place to point is at ourselves, not some evil bureaucrat.

I will have to note however, with respect to quality and dependability, my 2016 Ford F250 is light years ahead of the truck I was driving thirty years ago. No, I can't begin to work on it, but those evil executives are building a pretty good product because they had to become competitive with superior Japanese and German products that were taking over our market. That opens the door for a broader discussion over the value of international competition and free trade, but let's leave that for another day.

 

[Saul]

Gone are the days when you could just open the hood and work on your own car...but I would rather convert all of my cars to biofuel before I will ever go electric.

I will always be a proponent of free trade over protectionism. There is no putting globalization back in the bag and protectionist policies will lead to sure destruction in the global marketplace. As others have pointed out, if we are to have free trade, we need fair trade and there is no fair trade as long as China is able to act with impunity. The three biggest threats to the West are China, Russia, and Iran. I hope that the coronavirus pandemic has started to wake nations up to just how dangerous China has become, both economically and as a known viral vector,

 

[LivingTheDream]

So Ray, I am just going to guess that you have never been either an appointed or elected officer in a publicly traded corporation. So let me tell you something about to what those evil executives are actually trying to respond.

Most large companies find that they are unable to remain competitive in a particular market segment without developing cash/investment reserves greater than the post tax margin that they bank in a particular year. Thus, either from founding or over time they go public with shares offered on one of the trading markets. The moment they do that, the company is no longer owned by anyone but the shareholders. Those shareholders then control the value of the company based upon their investment or divestment of those shares. Their decisions are driven by things such as year over year sales growth, profitability, cash flow, and debt. Growth, profitability, and cash flow are driven directly by the company's success or failure in their consumer market. Every quarter the company's performance is measured against its peers. All three of those particular metrics are largely driven by the company's cost of doing business. Their product, whether a toaster, a TV, or a B1 bomber has to offer a purchase advantage to the market sector's consumers. So yes, enormous effort goes into driving down the cost of production to make those metrics as attractive as possible. But the place to point the finger is at the demands of the consumer and the shareholder, not the company officers simply trying to satisfy that demand.

It is probably worth noting that tax rates further compromise that math. Profits are normally used to boost investment in R&D, new production space, hires, outreach into new markets etc. However, in a punishing tax environment, it often makes better quarterly financial sense for the corporation to buy back its own shares. This would seem a waste of money, but by reducing the number of shares available to investors, it either stabilizes or drives up value of those shares thus increasing market cap which offers competitive advantages in dealing with that fourth metric, debt.

Winchester made that decision in 64, because at the time they were no longer able to build the model 70 and sell it at a competitive price. Remember, this is pre-CNC technology. Their production floor was aging, they were trapped in a high cost of labor environment, and their shareholders were abandoning them for other manufacturers. Worst, the consumer was ever more unwilling to pay more for the Winchester brand than one of their competitors. Sure, they made drastic and ultimately fatal cost cutting decisions, but it was as much our fault, the consumer, as theirs.

With respect to cars, again it is hard to blame evil government. Government, in a democracy, responds to the will of the people. Whatever anyone thinks about the power of campaign contributions, votes really do matter. I am not sure there is much of a real market for a simple gas-powered car among the emerging primary purchasing age groups in this country. I should add people of your age and mine with a trusty socket wrench in our pocket longing for a simpler age are getting fairly scarce on the ground. What the consumer seems to want is an affordable automobile with as many bells and whistles as possible. Government is indeed driving emissions control and those related expenses, but that can only happen because the majority of our fellow citizens are fully vested in the notion of man-made climate change and its effects on the environment. If majorities didn't support it, politicians wouldn't do it. So again, the place to point is at ourselves, not some evil bureaucrat.

I will have to note however, with respect to quality and dependability, my 2016 Ford F250 is light years ahead of the truck I was driving thirty years ago. No, I can't begin to work on it, but those evil executives are building a pretty good product because they had to become competitive with superior Japanese and German products that were taking over our market. That opens the door for a broader discussion over the value of international competition and free trade, but let's leave that for another day.

I typical agree with you but a lot of these scenarios that you are describing is based in a bit of a silo or vacuum. Using your example, Climate Change, this would assume this is everyone's top issue or an issue that would influence their vote (it also assumes they are informed or understand the facts but that is a different discussion). Because there are numerous reasons on why someone votes for who they do, this is not a direct correlation. The fact that wind and solar are highly subsidizes you could argue it is not the consumer/voter driving this issue.

I would also disagree regarding shareholders selling out, it is a bit of a chicken or the egg scenario. In a true free market society I would agree, however if the US government didnt want manufacturing in China there would not be legal manufacturing in China. However, since companies spend a lot of money on lobbyist they make sure their interests are taking care of. This includes making sure their ability to drive costs down to remain competitive. However, as we saw during the trade war, the government was immediately able to interfere with the free market principles.

I will say this, greed is usually the basis for a lot of problems