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Old 2013-01-02, 11:19   Link #3561
Vallen Chaos Valiant
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Quote:
Originally Posted by willx View Post
The relatively poor tend to scrape by with the cheapest most generic essentials (with negligible margins) and the big splurge purchases are only of foreign luxury items.

The rich almost exclusively consume foreign products.
"Made In Japan" used to be a mark of inferiority. But that was so long ago most people don't remember it. And that's where China stands. It's not that Chinese manufacturing is always bad; it's that the "Made In China" brand is associated with negative traits.

China is making products for major Western companies. But they haven't got a Chinese Brand that they can be proud of. They need a Sony Walkman. They need a Nintendo NES. A product made by a local company, that made a splash and is desirable. China need a famous company.

It is telling that most people don't know who actually makes ipads until there is industrial dispute or some other bad news.

But yeah, back to America... America just needs to decide that they need protectionism back. That all the huge corporate profits don't mean anything if the tax is dodged and not enough local jobs are created. Protectionism WORKS. Yes, it is inefficient. It means a company can't take advantage of differences in policy between nations and get more money than they could have just locally. But a private company being "efficient" does not benefit a nation by default.

Free Market made people rich. But you can't control where the money flow to. "Trickle Down" Economics technically worked... It just trickled from rich Western companies into the pockets of Chinese labourers. This is the fact of it. Now, the Chinese deserve prosperity as much as any other human society, but I just think a government should take care of their own population first.
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Old 2013-01-02, 11:25   Link #3562
SaintessHeart
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Quote:
Originally Posted by willx View Post
As for China, I have some (somewhat distant) relatives that own several factories in mainland China and they have been struggling with wage and cost inflation for several years now, and have been working on R&D avenues to branch out their production. They specialize in plastics so they make toys and other simple products for multinationals. From their perspective the main avenues to profit now in the mainland is producing goods for domestic consumption, but there is such a huge rift due to the social landscape:

The relatively poor tend to scrape by with the cheapest most generic essentials (with negligible margins) and the big splurge purchases are only of foreign luxury items.

The rich almost exclusively consume foreign products.
That speakth much wisdom. With the costs at the world's biggest factory rising, where are the multinationals going to go? Laos has been opened up, Vietnam has been opened up, Cambodia and Myanmar too. The northern part of SEA is currently the last possible site after Africa that can have a large manufacturing industrial base, but the place is prone to natural water-based disasters that building factories there is pretty much a suicide mission.

And the general income divide isn't helping the domestic consumption much in China; alongside the current inflation this end smells like an economic collapse.

Quote:
Originally Posted by Vallen Chaos Valiant View Post
But yeah, back to America... America just needs to decide that they need protectionism back. That all the huge corporate profits don't mean anything if the tax is dodged and not enough local jobs are created.
There is one huge problem - the risk where the companies would just deregister themselves from the NASDAQ and NYSE and move over to Shanghai Composite, passing the leadership to a China citizen of their inner corporate circle and poof! US loses a bunch of corporate taxes. I don't know how protectionism can work when they have gotten this far down the road to hell.
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Old 2013-01-02, 11:38   Link #3563
GDB
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Quote:
Originally Posted by SaintessHeart View Post
There is one huge problem - the risk where the companies would just deregister themselves from the NASDAQ and NYSE and move over to Shanghai Composite, passing the leadership to a China citizen of their inner corporate circle and poof! US loses a bunch of corporate taxes. I don't know how protectionism can work when they have gotten this far down the road to hell.
Then you slap a tariff on their products. Penalize them where you can.
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Old 2013-01-02, 11:44   Link #3564
Vallen Chaos Valiant
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Originally Posted by SaintessHeart View Post
There is one huge problem - the risk where the companies would just deregister themselves from the NASDAQ and NYSE and move over to Shanghai Composite, passing the leadership to a China citizen of their inner corporate circle and poof! US loses a bunch of corporate taxes. I don't know how protectionism can work when they have gotten this far down the road to hell.
The idea isn't to keep corporate tax. The idea is that losing tax income is worth it if it means recovery of local industries. Trade barriers means that if you want to sell to Americans, you are better off making the products in the country. A real life example; The New York Subway once was massively antiquated and needed updating. Kawasaki of Japan makes respectable train cars and they successfully made a bid. However because of protectionism laws, they ended up had to set up a whole Kawasaki factory in USA to meet the criteria. Boom! A whole group of people got jobs because of protectionism.

Americans buy things. They need to buy them, but they also have no jobs to support the spending. Corporate Taxes isn't going to give people jobs, only industries could. I guarantee Obama is willing to sacrifice Revenue if it means jobs; after all, isn't that what a Stimulus is meant to do?

Yet, if you don't set up trade barriers, most stimulus money would first flow to International Corporations, then exiting the country to the manufacturing centres elsewhere.
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Old 2013-01-02, 11:45   Link #3565
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Originally Posted by GDB View Post
Then you slap a tariff on their products. Penalize them where you can.
But then it wouldn't be fair! The rest of the world is consuming it, so why aren't the Americans allowed to?

Didn't one of the amendments say Americans reserve the right to freedom of consumption?

Quote:
Originally Posted by Vallen Chaos Valiant View Post
The idea isn't to keep corporate tax. The idea is that losing tax income is worth it if it means recovery of local industries. Trade barriers means that if you want to sell to Americans, you are better off making the products in the country. A real life example; The New York Subway once was massively antiquated and needed updating. Kawasaki of Japan makes respectable train cars and they successfully made a bid. However because of protectionism laws, they ended up had to set up a whole Kawasaki factory in USA to meet the criteria. Boom! A whole group of people got jobs because of protectionism.

Americans buy things. They need to buy them, but they also have no jobs to support the spending. Corporate Taxes isn't going to give people jobs, only industries could. I guarantee Obama is willing to sacrifice Revenue if it means jobs; after all, isn't that was a Stimulus is meant to do?

Yet, if you don't set up trade barriers, most stimulus money would first flow to International Corporations, then exiting the country to the manufacturing centres elsewhere.
That sounds logical. However, how is the administration going to enforce it without the Big Corp throwing in the towel and taking away valuable technologies away elsewhere?
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Old 2013-01-02, 11:57   Link #3566
GDB
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Originally Posted by SaintessHeart View Post
But then it wouldn't be fair! The rest of the world is consuming it, so why aren't the Americans allowed to?

Didn't one of the amendments say Americans reserve the right to freedom of consumption?
We'd still be able to purchase it. It'd just cost more, and as such, less people would buy it, hurting the company's bottom line.
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Old 2013-01-02, 12:00   Link #3567
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Originally Posted by SaintessHeart View Post
That sounds logical. However, how is the administration going to enforce it without the Big Corp throwing in the towel and taking away valuable technologies away elsewhere?
If the technology can be taken away so easily, then America never had them to begin with. I give the example of Food and Weapons; both are heavily protected, and both are working fine. Most would say they work too well in fact.

Import Tariffs is the main way trade barriers work. It has existed for centuries. You make a product more expensive to import, thus making local production more competitive. Japan has a massive rice import tax, thus their local rice industry survives and is self sufficient in feeding the nation.

If a corporation decided they are not going to sell stuff in America at all because of import tariffs, then they lose out on the entire USA market. It opens up the chance for a local entrepreneur to fill the gap. Yes, it would mean the goods produced would become more costly to buy; but the idea is that people would have jobs and thus could afford them.

Using Japan as an example, their rice price is higher than elsewhere in the world. But the population understands that their food security is worth it. That they need to keep their farmers.

Free Market does two things; it makes the Giant Corporations pay out huge bonuses, and the wealth trickles down to the labourers who actually make products. But as soon as a nation realised that they are not making anything anymore, they should know that they are no longer benefiting from the Free Market.
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Old 2013-01-02, 12:14   Link #3568
willx
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Quote:
Originally Posted by Vallen Chaos Valiant View Post
If the technology can be taken away so easily, then America never had them to begin with. I give the example of Food and Weapons; both are heavily protected, and both are working fine. Most would say they work too well in fact.
They are in fact not working fine in a purely economic sense -- what does "working fine" mean to a country and it's people? These industries are strategically important, and are thus heavily subsidized, which is fine from a strategic perspective .. but what about an economic perspective? A business can't constantly be on life support by a government that is looking to reduce spending..

A free market does more than two things. Please realize that the U.S. consumer has been better off by having access to low cost goods. Your idea of protectionism and tariffs will make everything more expensive. So in a world where the U.S. is struggling and will need to tighten its belt .. you will also make everything more expensive simultaneously. Remember, cheap labour and cheap cost of goods .. is great for the U.S. consumer.
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Old 2013-01-02, 12:26   Link #3569
Vallen Chaos Valiant
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Originally Posted by willx View Post
They are in fact not working fine in a purely economic sense -- what does "working fine" mean to a country and it's people? These industries are strategically important, and are thus heavily subsidized, which is fine from a strategic perspective .. but what about an economic perspective? A business can't constantly be on life support by a government that is looking to reduce spending..
See, the issue is that those industries are subsidised to the extent that they got overpowered. But that doesn't change the fact that it worked.

Both the GOP and the Dems want to "Grow the Economy". No disputes there. But the mistake is to think rich corporate profits equal jobs.

When people make products, they are paid. These same people can then use their wages to buy products. Trade barriers means the local products are cheaper in comparison, so more people buy local. This then encourages sales and thus, increase local production jobs. And the spending keeps moving the money around, which is the very definition of a stimulus.

Government money spent within the country is not wasted at all; that money will come back one way or another. The only Spending that is wasted is on money that escapes to other nations.

What is happening right now is that all the government spending is leaking overseas. All those modern prosperous Chinese are created due to the generosity of the US government.

Yes, cutting spending is important. But it is about cutting spending that leads nowhere. Giving tax breaks to corporations who aren't forced to employ American labour in exchange, is money thrown away. Tax breaks are meant to be a REWARD for helping the country, not free gifts.

Quote:
A free market does more than two things. Please realize that the U.S. consumer has been better off by having access to low cost goods. Your idea of protectionism and tariffs will make everything more expensive. So in a world where the U.S. is struggling and will need to tighten its belt .. you will also make everything more expensive simultaneously. Remember, cheap labour and cheap cost of goods .. is great for the U.S. consumer.
Cheap goods mean nothing when you don't have a job. As I say, America currently tries to spend money to buy growth; but it doesn't work because all the growth happened in China. A paying job with a liveable wage is what the people need, not cheap goods they don't have the money for.

Buying local goods means someone gets to receive a pay-check. And that person can then use that money to buy local. And so on. Local Employment is worth the price, literally.
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Old 2013-01-02, 12:40   Link #3570
willx
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Originally Posted by Vallen Chaos Valiant View Post
Government money spent within the country is not wasted at all; that money will come back one way or another. The only Spending that is wasted is on money that escapes to other nations.
I call fallacy on this. Look at Japan. Not all spending is "productive" .. heard of a bad investment? Bubbles can be formed through both consumer and government spending.

Anyways .. ultimately this is a debate with very complex economic concepts, that I won't pretend to know the absolute answer to, but it's not so simple as can be resolved simply with the word protectionism.. There are significant unforeseen consequences to any and every policy, let alone whether protectionism will make the situation better or exacerbate the problem.
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Old 2013-01-02, 12:40   Link #3571
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I'm not for banning free trade by throwing up trade barriers, but I'm all for eviscerating the tax code to remove the loopholes commonly abused by corporations to avoid paying any taxes.

I'm also for offering massive tax breaks for any company that maintains all of its operations in this country. Throw them tax breaks for hiring American workers working at American job sites. Don't use negative reinforcement--Saintess already showed what very bad things can happen if you threaten the corporations.

Instead, offer them incentives to do all of their business at home. While food and weapons are of strategic importance, so are microprocessors. A lot of the world's silicon comes from TSMC, though almost all of Intel's fabs are located in the US. However, there's something neat about the US--we've got lots of flat empty space. Fabs and other factories are huge and take up lots of horizontal area (unlike office buildings).
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Old 2013-01-02, 13:02   Link #3572
Vallen Chaos Valiant
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I guess my point is this; one way or another the government is going to spend money trying to get more jobs for its people. I am suggesting that both positive and negative incentives could work, to ensure that the goal is achieved.

Guess the question is if you care about cutting spending more. If you want to cut spending, then increase tariffs and change current tax breaks to require American production. If you don't mind increasing spending, you can reward additional tax breaks for American manufacturing.

Negative Trade barriers doesn't increase debt, but can cause temporary revenue loss as companies re-adjust around. Positive Trade barriers cause short term guaranteed revenue loss via additional tax breaks, but it is less shocking to the economy.

I say do a little of both. That's sort of how I view things personally.
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Old 2013-01-02, 13:48   Link #3573
willx
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Originally Posted by synaesthetic View Post
I'm not for banning free trade by throwing up trade barriers, but I'm all for eviscerating the tax code to remove the loopholes commonly abused by corporations to avoid paying any taxes.
This. And I'd also say rework the tax code so that individuals are properly paying their taxes as well. I'd say gut all the exemptions and deductions and start from scratch .. which is pretty much impossible but one can dream.

Oh, and this is my last words on the complexity of economics: http://forums.animesuki.com/showthre...46#post4497746
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Old 2013-01-02, 14:22   Link #3574
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Originally Posted by synaesthetic View Post
I'm not for banning free trade by throwing up trade barriers, but I'm all for eviscerating the tax code to remove the loopholes commonly abused by corporations to avoid paying any taxes.

I'm also for offering massive tax breaks for any company that maintains all of its operations in this country. Throw them tax breaks for hiring American workers working at American job sites. Don't use negative reinforcement--Saintess already showed what very bad things can happen if you threaten the corporations.
Maybe it is time the USMC prepare an expeditionary force to the Cayman Islands.

Quote:
Instead, offer them incentives to do all of their business at home. While food and weapons are of strategic importance, so are microprocessors. A lot of the world's silicon comes from TSMC, though almost all of Intel's fabs are located in the US. However, there's something neat about the US--we've got lots of flat empty space. Fabs and other factories are huge and take up lots of horizontal area (unlike office buildings).
Well, if they move all their fab labs to Detroit City, you guys can start manufacturing cyborg law enforcers.

There! The ultimate solution to gun crimes - one violent shooter at any one time. There can even be a state-owned company by the name of Omni-Consumer Products that manufacture export versions in different languages.

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This. And I'd also say rework the tax code so that individuals are properly paying their taxes as well. I'd say gut all the exemptions and deductions and start from scratch .. which is pretty much impossible but one can dream.
The problem with gutting exemptions and deductions is that it disincentivises entrepreneurship. There has to be a proper enforcement team first - on my side of the world, there is a corporate tax holiday for the first $100,000 earned, but it has been waylaid by credit-card swiping by SMEs filed under Costs of Doing Business. In fact, I think the government overlooked it because if they were to enforce, the number of startups would drop and SMEs will just go out of business because costs of doing business is really high over here, even with virtual offices.
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Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don't save, then you're guaranteed to end up with nothing.
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Old 2013-01-02, 14:27   Link #3575
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Maybe it is time the USMC prepare an expeditionary force to the Cayman Islands.



Well, if they move all their fab labs to Detroit City, you guys can start manufacturing cyborg law enforcers.

There! The ultimate solution to gun crimes - one violent shooter at any one time. There can even be a state-owned company by the name of Omni-Consumer Products that manufacture export versions in different languages.
who needs cyborg enforcers when We got Predator Drones.
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Old 2013-01-02, 14:42   Link #3576
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@China/Japan Comparisons: It's important to remember that the success of Japanese industry in the past is not purely down to cheap labour costs (though they certainly helped). It was much more due to the fact that certain Japanese companies had developed much extremely efficient production methods. As an example from a book I'm reading, in 1989 European cars on average required ~36 man hours to be assembled. In the US, where companies were already copying the Japanese, it was 24. In Japan? 16.

The reason Japanese companies kicked ass at producing cars was simply because they were much better at producing cars then any of their competitors. There method of manufacturing is well known as "lean manufacturing".

As for China, I don't know how their factories compare to others, and how much of their cheapness is purely down to wages. But if the success of their industry is purely down to wages, then long term they're doomed. Other countries that have relied on cheap wages usually end out with shoddy products and bust companies, ultimately. This happened to Korea in the 80s, and they shaped up and started copying Japanese production methods. Whether it will happen in China is another matter.

@Free Trade: Protectionism has 2 very bad consequences for the country where it's implemented:
1. It harms consumers in that country as a whole. Everyone has to pay more for the tariffed goods.
2. It preserves innefficient companies and industries, and prevents them from being exposed to outside influences, which otherwise might lead them to innovate and be internationally competitive themselves. Industries in protectionist countries are doomed to never see their products sold in the wider world, because they're just not good, or too expensive compared to better foreign products.

It can keep those companies alive in the short term, but ultimately they'll only fall further behind.

Not only that, but Free Trade does not necessarily mean that companies industry will leak out from the country. All else being equal, local production is always more efficient then distant production. There's less shipping costs, less items in transit (tying up capital), less inventories required. It's only when other countries are anti-competitive (say by enacting subsidies) that this balance is messed up. In that case it's right for the countries to enact tariffs to redress that balance.

So to go to the NYC subway example. It's entirely likely that if NYC gave Kawasaki a long term contract, Kawasaki would not have in the long term shipped all the trains and maintenance parts from Japan. They would have set up local production in order to make these savings. But with tariffs(or worse, import limits), they're less likely to even bother to bid on US contracts, as setting up shop in america will be much more expensive and difficult, as they won't be able to rely on supplies from Japan while they're gearing up New York operations.

So ultimately, under protectionism NYC is more likely to end out with inferior, more expensive American trains, NYC may be robbed of a potential new industry (Japanese style train manufacturing), and the people of New York have to put up with more taxes and a worse subway system.

Now there are times when protectionism is necessary, but those times, in my opinion, are very rare.
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Old 2013-01-02, 16:11   Link #3577
Vallen Chaos Valiant
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I understand that protectionism cause inefficiencies. However I am not suggesting a complete stonewall; only restoration of past trade barriers.

The fact is it isn't the government's job to maximise the profitability of an industry. The government should only care about its people, and thus the employment picture. I simply believe that manufacturing in general is as much of strategic importance as the specific weapon and food sectors. And thus the goal is not to give corporations money/taxcut to do anything they want, but to offer incentives that has a marked beneficial effect on the nation.

One way, as suggested earlier, is to only offer Tax Cuts for local manufacturing. Because since the tax cuts were created specifically aimed at growing the local economy, it should be spent on ONLY growing the economy. Not to enlarge the end of year bonuses of the executives.
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Old 2013-01-02, 16:24   Link #3578
DonQuigleone
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More efficient industries, in a correctly functioning economy, will lead to lower prices for consumers, higher wages in those more efficient industries and greater prosperity for all.

So, what benefits industry and productivity(but not cronies!) is very much in the best interests of the citizenry and country as a whole. After all, don't we all want to be more prosperous?

Free Trade in general leads to greater productivity, and better goods and services being available to individuals. Trying to "protect" your industry often just ends out coddling it, and maintaining their worst impulses. Rather then improve themselves, industries will instead try to lobby the government to put up more trade barriers, to their own benefit but the collective loss of society as a whole.

After all, how would you feel if you wanted to buy a clean reliable Toyota, but because of tariffs it's too expensive for you. Instead you end out buying a rickety error prone Chevy and look on in envy at Japan and their slick cars that for mysterious reasons (IE tariffs) you just can't afford.

If anything, protectionist policies favor the plutocratic elite, not normal workers.

However, like others I don't believe "Free Trade" goes as far as to make it easier for companies to move their production off shore and evade taxes. Likewise, there's no problem with using positive "enticements" to encourage companies to open up new factories. But it shouldn't be preferential, Japanese companies should be just as able to avail of such opportunities as American companies.
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Old 2013-01-02, 16:50   Link #3579
Vallen Chaos Valiant
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Originally Posted by DonQuigleone View Post
More efficient industries, in a correctly functioning economy, will lead to lower prices for consumers, higher wages in those more efficient industries and greater prosperity for all.

So, what benefits industry and productivity(but not cronies!) is very much in the best interests of the citizenry and country as a whole. After all, don't we all want to be more prosperous?
Planet-wide? Yes. Nation-wide? Only if the industry stays local. The "higher wages" you speak of currently occur in China. The owners of the industries might be American, but most of their employees aren't. Without serious incentives, any desire to improve the industry practice would involve transfering profits to overseas ventures.

Quite simply, an industry that isn't even in the country has an efficiency of zero in promoting jobs. No local industries = no efficient industries. It doesn't matter how efficient the Chinese factories are; they are still in China and doesn't count.

America is careful about who they sell their military tanks to. If only they are just as careful about who they give tax cuts to as well.
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Old 2013-01-02, 16:58   Link #3580
Anh_Minh
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Originally Posted by Vallen Chaos Valiant View Post
I understand that protectionism cause inefficiencies. However I am not suggesting a complete stonewall; only restoration of past trade barriers.

The fact is it isn't the government's job to maximise the profitability of an industry. The government should only care about its people, and thus the employment picture. I simply believe that manufacturing in general is as much of strategic importance as the specific weapon and food sectors. And thus the goal is not to give corporations money/taxcut to do anything they want, but to offer incentives that has a marked beneficial effect on the nation.

One way, as suggested earlier, is to only offer Tax Cuts for local manufacturing. Because since the tax cuts were created specifically aimed at growing the local economy, it should be spent on ONLY growing the economy. Not to enlarge the end of year bonuses of the executives.
The problem is that the American dream is about those people who get rich getting really rich. Not about most everyone doing kinda ok.

Jam tomorrow beats margarine today, in their narrative.

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Originally Posted by DonQuigleone View Post
More efficient industries, in a correctly functioning economy, will lead to lower prices for consumers, higher wages in those more efficient industries and greater prosperity for all.
Yes, but right now it means higher wages for Chinese workers. Who are more numerous, so maybe in the grand scheme of things it is, indeed, better. But that's not the same as saying it's great for everybody. Especially in the short term, and nobody here will be alive to see the long term anyway.

Protectionism has its own problems. But I can certainly see the temptation.
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