Can Chinese workers afford the products they make?

[TahitiNut]

I think this question receives altogether too little examination. With the 'off-shoring' of labor comes the increased devaluation of the dollar and impoverishment of the American worker.

When Chinese (or Bangladeshi or Indian or Indonesian) workers cannot hope to afford to buy the products in which their labor is invested, then there's no balancing US export of those products in exchange for reimportation of the dollars that've been exported. When we don't create markets for those products in the same places we're 'importing' labor, the dollar is devalued. Indeed, it's the Chinese government that obtains those dollars, not the people. Those dollars are then LOANED back to the U.S. in subsidizing the debt.

To a very real extent, American corporatism is lining the pockets of the wealthy and selling off our nation itself.

[Elginoid]

1. how many rolls-royce factory workers drive one home every night?

and they're made in england.

what's your point?

[enki23]

4. rolls-royce sales are insignificant.

what's *your* point?

[Elginoid]

7. the point is-

there are plenty of factories all around the world where the workers can't afford what they produce- it's not a new phenomenon.

[TahitiNut]

10. (sigh) ....

The workers in England, Germany, and Canada (where Rolls Royce products are made) actually do buy those products ... through their domestic companies and their governments.

But that's irrelevant.

My original post was not narrowly limited to a specific company any more than it was limited to a specific worker. I deliberately used the collective noun "workers" - as in all the workers in that nation.

Likewise, I didn't get wordy and say "products and services" nor did I belabor the details of the transactions of importation of raw materials or subassembies, the intricacies of ownership and compensation, or the arcane aspects of the global monetary systems.

The audience for this thread was one I presumed to be at least marginally familiar with such background information, if only on a simple macroeconomic basis.

With all due respect, the content of your posts has added nothing to this discussion. I'm personally not inclined to delve into a simplistic and cartoonish microeconomic chat - instead being more interested in the longer term macroeconomic effects of a 'third world' national labor force exploited for private gain and public loss.

The "point" (as you so originally and inventively call it) is TANSTAAFL (i.e. 'there ain't no such thing as a free lunch') and an examination of how the "piper gets paid."

Sorry about that (and by 'that' I don't mean mixed metaphors).

[Elginoid]

11. well, then...the answer to your original question is "yes, they can."

read the post by NewJeffCT.

[CrispyQ]

2. You make a valid point.

I read somewhere that the outsourcing of jobs to India & China hasn't really helped them overall & has created some civil conflict. The reason? These two nations have 1+ BILLION people. The few jobs going overseas is not even close to impacting a significant number of the people. (Sorry, I don't recall where I read this.)

Another question to ask is: How long before most Americans won't be able to afford the products the Chinese make?

Corporations are so short sighted. They cannot see beyond the bottom line of next quarter.

[snowFLAKE]

3. Social Credit Party Philosophy suggests not . . .

Social Credit is an economic theory and a social movement which started in the early 1920s. The Canadian social credit movement was by far the most notable, but the ideas also gained some lesser success in other countries. One such country was New Zealand, where the Social Credit Party gained several seats in the national parliament.

Social Credit was originally an economic theory developed by Scottish engineer Major C. H. Douglas. The name Social Credit came from his desire to make the betterment of society (Social) the goal of the monetary system (Credit).

Social Credit theory proposes that because the amount of money available under capitalism is necessarily lower than the total cost of goods produced, there will always be insufficient money to pay a realistic, sustainable price. He demonstrated this fundamental flaw with his A+B theorem, which states that if A is the payments made to all the consumers in the economy (through wages, dividends, and interest paid to banks) and B is the payments made by producers that are not eventually played out to consumers (such as the overhead costs of buildings and equipment as they wear out) then the price charged for all goods must be at least A+B - an impossibility since only A is available to spend.

For such a system to sustain itself Douglas asserted that a number of things must happen:

* People go into debt by buying on credit
* Governments borrow and increase the national debt
* Business borrow from banks to finance expansion
* Businesses sell below cost, and eventually go bankrupt
* We win a trade war, putting foreigners in debt to us for our surplus of exports
* We have a real war, "exporting" goods such as tanks and bombs to the enemy without ever expecting to be paid for them, financing this by government borrowing

If these things don't happen "businesses are forced to lay off workers, unemployment rises, the economy stagnates, taxes go unpaid, governments cut back services, and we have widespread poverty, when physically all of us could be living in plenty."

http://www.fact-index.com/s/so/social_credit_1.html

[Tims]

18. Definite Flaw

in the Social Credit theory. In the "A+B" equation, "B" does not really exist, it must be part of "A". All cost, regardless of their nature, whether they be overhead or equipment replacement, always are costs paid out to someone and therefore must be added to "A". For this equation to have any meaning "B" would have to be money removed from the system, in other words wages paid to people outside the system. As long as the system is closed "B" must be part of "A".

[SoCalDem]

5. That single fact proves the fallacy of "globalization"

MOST third world workers can NEVER expect to buy the products that they make....or even WANT to buy them.. Who needs a $200 pair of shoes, when the factory worker lives in a locked-down "company-town" compound?? Do the people who earn $2.75 a day expect to buy that $1,000.00 TV?? Would they even have a home to put it in?? electricity to power it??

What third world people NEED....

They need a steady supply of clean drinking water...electricity for more than a few hours a day...schools for their kids....breathable air (which they USED to have, before we built factories there)...they need housing that is not corrugated and soggy when it rains...

The third world was never really crying out for sewing machines, Calvin Klein jackets, Nike sneakers, $30K cars, and many others..


any businessman who claims that he is being altruistic when he outsources to the third world, is a GD liar.. They do it because they CAN...and because they are so afraid of "not making their target" and what their stock will do, that they miss the forest for that one puny tree they are focused on...

When the middle class is dead here, who WILL buy those products?? I guess as we transfer our middle class dream to China, there will eventually be a market there, but at what cost??

Is it a cost we are willing to pay??

[Union Thug]

6. What will happen?

Look at the social credit post... For most americans, prosperity is a false one. Prosperity is financed on credit cards and home loans. It's a ghost that drives many to debt-enthrallment and bankruptcy. My 'beef' with it is that I don't think any of it is sustainable, nor do I think it is morally digestable. Any system that relies on war to bolster its economy is one that needs to be overhauled..oh wait, er..um.. anyways...

The right don't give a shit so long as they can continue to concentrate their wealth and slip further and further away from the ever more impoverished thralls that they created.

Without an aggressive (some, such as myself, would say 'thuggish') labor movement, there's no counterbalance to the trends. I say, "BRING ON THE UNION THUGS.. Let's bust some heads for economic equality!"

[SoCalDem]

9. The "credit bubble" is about to POP..

People have sucked every drop of equity from their overpriced homes already.. Using equity to pay down credit cards, so they can just charge some more "stuff", is a dangerous thing to do, but THAT'S what's been fueling that "fabulous" economy that * talks about all the time..

If the senate ever gets going again with their proposed bankruptcy bill changes, look for about 1/3 of the "middle class" to throw in the towel while the rules are still relatively lenient..:(

Our whole economy is like that old Ed Sullivan act.. They guy with all the spinning plates.. As long as he got a rhythm going and kept working those poles , the plates kept spinning.. Once he missed even one, most of the plates crashed to the floor..

It's not going to be pretty...and the way the rest of the world looks at us now, we can expect nothing more that haughty laughs, as we return to the glorious days of yesteryear...the ones where people were all pretty much BROKE and hopeless..:(

This election is important in so many ways, and I see that one as maybe the MOST important.. If we "re-elect" *, after the Fiasco2000 adventure, "Old Europe" and the rest of the world will KNOW that we are crazy, and will not lift a finger to help us.. We will truly be alone in the world :(

[TahitiNut]

15. My 'symbolic' proposal ...

... is to require corporations to pay equitable wages (close to what they'd pay domestically) no matter where and to impose a 'profiteering' tax when they play games (through false facades of tiered corporations) with selling goods in the US for five, ten, and twenty times their cost in a third world market.

Simple-minded proponents of (fictitious) 'free market economics' pretend that such profiteering is 'self-correcting' when others will compete on the price/cost divergence by lowering prices. With the corporatist-serving regulatory barriers in place that are, in effect, a protection of the vested interests, and the ungodly conglomeration of transnational and trans-industrial corporations for the sole purposes of tax evasion and restraint of trade (through 'exclusive' contracts and crony regulation and licensing), we're about as far from anything resembling a 'free market' as we are from the Garden of Eden.


When I think of what would happen if corporations, in effect, paid wages (only by coercion, of course) in China on a par with wages in the US, I can only think that the result would be better overall.

[NewJeffCT]

19. the cost of living in China is generally much lower

Generally, when I compare prices, I divide by 8. While it may actually be 5 or 10 or 15 times difference, 8 is what I normally use -we bought some bottled water in China for 12 cents a bottle. I'm sure a vending machine in a local mall in the US would have it going for $1.00 to $1.50.

The difference is that if I wanted to fly on Air China within China, it would be dirt cheap for me as a visiting American. If my in-laws came to visit my family in America and wanted to fly to Disneyland on American Airlines, it would cost them a few month's salary.

But, my cousin in Shanghai who just got a job at an American company there and is making over $14,000 (US) per year is really doing well for herself. It's the equivalent of me making well over $100K per year (I wish).

[NewJeffCT]

8. Yes, many can afford them

We just went to China. My wife, who was born in China, bought a good quality business suit for herself - a jacket & a matching skirt - for the equivalent of $8.50. I'm sure it would have been well over $100 here. As far as I know, it was not a name brand, though. If it was, it was a Chinese name brand.

You can buy knockoff DVDs of the latest movies for 75 cents a pop that would cost you $10-$20 in LA or NYC. (At least I think knockoff DVDs in NYC go for that much...I've never bought any in either place as I don't trust knockoffs)

My parents-in-law & sister-in-law there both have newer home theater systems for their TVs in their apartments. Everybody has cell phones.

And, shops selling seemingly legitimate famous brands (Armani, Hugo Boss, Versace, etc) don't seem to lack for customers. I was browsing at a pair of Ray-Ban sunglasses until I found out the price was the equivalent of $190.

That said, there are also many more that cannot afford even these things. And, I did not really get out of the major cities.

[TahitiNut]

12. From whom are they 'buying' these products and services?

Surely not from the global corporations exploiting the labor of the Chinese worker. In the case of "rip off" CDs, who's paying for the intellectual property? In the case of the $8.50 suit, who's making and selling it? The global corporation or a domestic industry? Are the 'dollars' being sent back to the US (or UK, for example) or are they being used domestically without a balance of trade impact?

[NewJeffCT]

13. That wasn't my point

My point was that there is a growing middle class in China that can afford many similar things that the shrinking middle class in America can afford. The main difference is the price level between countries - an $8.50 suit in China, after you add shipping costs to the US, marketing costs in the US and an additional margin for what the market will bear here in the US, will get you quite an increase in price.

[SoCalDem]

14. Gotta think long-term, here

China IS undergoing a boom....but..as people from the countryside flood into the already crowded cities, there will be more and more problems ahead..

I watched a China in the 21st Century report this past weekend on CNN..and YE-GODS!!!! the traffic is horrific already (they are competing for OUR OIL:eyes:...and yes..some people do have money, but the ones who will start arriving soon to the cities are the ones who are country folk..uneducated, poor, and untrained in much beyond farming.

China has a HUUUUUGE population..The vast majority of those people are POOR...

The program profiled ONE CITY (forgot which)..but anyway.. that ONE CITY was larger than Belgium,the Netehrlands, and another small European country..

Can you imagine the logistical nightmares??


by 2030, things are going to be very weird all around the world..:scared:

[NewJeffCT]

17. Chongqing, I believe

Chongqinq (Chong ching) is a municipality of about 31 million. The actual city is like 5 million. Sort of like saying that New York City is a city of 7 million, but the metropolitan area is much greater.

And, in my original response, I did say that while many there in China can afford a similar life to people in the US, I also stated that many more could not. And, China does have a lot of problems - the more modern & wealthier East and the dirt poor West have huge income disaparities, probably even greater than Orange County, CA or Fairfield County, CT compared to rural Arkansas or Alabama.

Traffic is a huge problem in any city in China.

The poor from the Chinese countryside have been migrating illegally into the cities for years - that is the source of China's seemingly endless labor supply. They are the supply of labor for some of China's massive public works projects - digging ditches, moving crates or whatever type of unskilled or low skilled manual work is needed. The Chinese government doesn't have to worry about eminent domain, so create massive works projects to keep this labor busy (3 Gorges Dam, the Mag-Lev train in Shanghai or the raised superhighway there to help alleviate traffic) . Can they keep doing it? If not, any already bad unemployment problem will turn worse.

[AlCzervik]

16. It's possible they can afford some of what they make

because China is becoming a center of counterfeiting. They build products for American companies and then they use the technology to make knock off for far less money. Some are not exact replicas but they are pretty damn close. For example Ping has many of their drivers made in China, China in turn uses the molds and reproduces the same clubs out of lesser metal and then sells them cheap. There are many products that this is happening to now, so we aren't just losing our jobs to overseas, we are also losing are technology.

[marano]

20. It will turn around.

If you look at anything here in the U.S. lately it seems that it is made in China. Chinese products for the most part used to be cheaply made. No so much the case anymore. They are a smart people and they are building their economic base by using us as much as our corporations are using their cheap labor. Just like Japan though there will come a day when they do not need the U.S. and will kick us to the curb as they become the masters in their own right of their economy and they will become as Japan has a leader in exports to the rest of the world.

[fedsron2us]

21. Yes they will not want western corporations running the show

All those stupid, arrogant and grasping Western CEO's had better make their money fast because soon they will be out of a job like the rest of us.