Buffett Warns: The Dollar Will Decline

[Gustaf]

Well it bloody well better - we have to make about 25% of our current wages in order to 'compete globally'.

That's utterly stupid.

A weakening currency is sort of like running a temperature - it's a bad symptom but it's also a good reaction.

[Gustaf]

Well it bloody well better - we have to make about 25% of our current wages in order to 'compete globally'.

That's ***************** .

No, Gustaf - that's the fact.  Wages in China are far less than 25% of US wages, so the US worker needs to come a lot closer to the price of the Chinese worker in order to compete.  A weaker currency and some poor-killing polices here at home are the way the US 'competes' in the 'global economy'.

Haha! The fact? My goodness. The difference in wages reflect differences in productivity, you simpleton.

Otherwise, all production would just shift to whereever wages are the lowest. And that obviously hasn't happened.

[Gustaf]

Your post has been reported.  Also, the apparent fact that production is shifting, has shifted, and will continue to shift away from the US and towards China shows us that the productivity differential is insufficient to counteract the price difference.  The goal of globalization and neoliberalism is to reduce the price of american and European labour.

Next I suppose you will claim that the Earth is flat, because it appears to be when you look around you? As long as you keep doing that you will have to endure a little bit of ridicule, I'm afraid. No one is forcing you to make a fool of yourself by talking about things you know nothing about.

You don't seem to realize that Chinese wages are increasing. The reason they are is that their productivity level is increasing. Which, of course, also explains why they are getting certain industries. But as their productivity approaches ours so will their wages. That's just what happened with the low-wage competition from Germany and Japan after WWII.

You seem to think that production will be where the wages are the lowest. If that were the case industry wouldn't be moving to China, but to Africa.

[Gustaf]

You seem to think that production will be where the wages are the lowest. If that were the case industry wouldn't be moving to China, but to Africa.

Production is in fact moving to Vietnam, Cambodia, Bangladesh, Indonesia, etc., as well as China, and it will also move to Africa as soon as the bullets cease flying.  I never questioned or in fact mentioned productivity - I don't bother with the obvious.  The fact is that labor outside the US is still cheaper even given the difference in productivity, and this is why production is moving.  Your claim seems to be that the cost of labor is irrelevant, or perhaps that increasing productivity means increasing wages.

Surely you realize that American labor productivity has increased rapidly over the last 30 years, while wages have stagnated?  The reason for this is simply that workers are replaceable with hundreds of millions of other cheaper workers. The whole point of unionization and government regulation is to distribute productivity gains - 'the market' won't cause this to happen.

You claimed that US wages would have to fall to the Chinese level simply because they have lower wages. That clearly ignores the issue of productivity differences.

To say that wages have stagnated while labour productivity increased is overly simplistic. Productivity gains have been slower for the least qualified labour which means that those people have not been seeing much wage gains. As I recall, higher wage earners in the US have actually seen wage increases.

It is true, of course that there are areas where productivity differences between, say, China and the US are comparatively small and in those areas we've seen production move. This doesn't mean all industry is threatened though.

It's true that the West has had some problems handling the social problems arising from a lack of low-productivity jobs. Young, uneducated men have suffered from this and are the root of a lot of problems in modern society.

Of course, even given that, it remains unclear by what right American workers should have a higher standard of living than those in China. But I suppose that is your racism shining through again.

PS: Africa? You're really digging a hole for yourself.

[Gustaf]

Of course, even given that, it remains unclear by what right American workers should have a higher standard of living than those in China. But I suppose that is your racism shining through again.

Obviously by the right of citizenship - of the theoretical power derived from democracy:  They should be able to vote themselves out of the 'global economy'.  The fact that instead they must compete with Chinese shows that they actually have no power.

PS: Africa? You're really digging a hole for yourself.

Not at all, friend, you're a bit out of date - Africa is booming.  Mostly on the wave of the 'resource boom' which is lifting Australia and South America even moreso, but also due to some political stabilization.  The Chinese are investing there big time.  Exploitation waits for no man - better keep up, gustaf.

No...see, if you think Africa's problems are just about "flying bullets" you are quite deluded. I've studied this issue so I actually know something about it. I'd be happy to provide you with links to articles explaining it. I doubt you're interested in questioning your prejudices though.

(your first paragraph doesn't really make much sense)

[Gustaf]

Your post has been reported.  Also, the apparent fact that production is shifting, has shifted, and will continue to shift away from the US and towards China shows us that the productivity differential is insufficient to counteract the price difference.  The goal of globalization and neoliberalism is to reduce the price of american and European labour.

Next I suppose you will claim that the Earth is flat, because it appears to be when you look around you? As long as you keep doing that you will have to endure a little bit of ridicule, I'm afraid. No one is forcing you to make a fool of yourself by talking about things you know nothing about.

You don't seem to realize that Chinese wages are increasing. The reason they are is that their productivity level is increasing. Which, of course, also explains why they are getting certain industries. But as their productivity approaches ours so will their wages. That's just what happened with the low-wage competition from Germany and Japan after WWII.

You seem to think that production will be where the wages are the lowest. If that were the case industry wouldn't be moving to China, but to Africa.

That depends on the resources some of those countries have, which are often few/exploited by their own governments. 

Since I'm not sure on what your "that" refers to I'm not sure what your point is? I agree that different resource endowments will play a role in allocations of production, if that's what you mean. But feel free to elaborate.

[Gustaf]

Obviously by the right of citizenship - of the theoretical power derived from democracy:  They should be able to vote themselves out of the 'global economy'.  The fact that instead they must compete with Chinese shows that they actually have no power.

(your... paragraph doesn't really make much sense)

Look here, simpleton, it just means they could vote in a strict protectionism if they had the power to do so.  Alas for them apparently they don't.

So?

[Gustaf]

Look here, simpleton, it just means they could vote in a strict protectionism if they had the power to do so.  Alas for them apparently they don't.

So?

So, the question remains - who has political power and what trade policy do they implement to their benefit.  The answer is obviously the owning class and 'free trade'.  These policies are incredibly harmful to most people and to the country as a whole, but, as you say.. so what.

That's a complete non-sequitur.  The vast majority gains from free trade, especially in a global perspective.

Anyway, the interesting question is obviously what your stake is here. You're not a member of the American working class. Why do you care about them? It can't be solidarity with the poor because you obviously don't care about the really poor in the Third World who gain from freer trade. Is it just plain old racism against those uppity Asians?

[Gustaf]

The vast majority gains from free trade, especially in a global perspective.

Anyway, the interesting question is obviously what your stake is here. You're not a member of the American working class. Why do you care about them?

No stake, Gustaf.  Just commentary.

Oh, you're doing that tired dance again. I'll never understand why old cynics feel the need to pretend they care about someone half the time (alternatively pretend that they don't give a damn the other half). If you're going to be detached, then stick to it and save us your preachy sentimentalist mumbo-jumbo.

[Gustaf]

Your objections are sentimental, Gustaf.  One's observations are no more or less valid because 'one cares' or 'has a stake' in an issue. 

Huh? I think age is beginning to hurt your reading comprehension, old man. I'm sure you still posses the necessary skills to understand what I was saying if you give it another try, though.

(Hint: I don't mind you being anti-sentimental. Just spare me the pretense of having sympathy with the working class)