Explanation of the Tea Party view of the economic crisis

As far as I'm concerned they fail to comprehend that a) we are social animals, (b) everything we do is political, and (c) power abhors a vacuum. So, they adhere to an ideology in which government is minimized such that the individual has "freedom" and "liberty", which is unrealistic as a) government is an inevitability and (b) people will always act to further their desires, which means that government will be appropriated by certain powers to promote their interests. In large part, the American people, especially those who consider themselves conservative, have created the "incoherent" government that the tea party now frets over precisely because of their rejection that they had any obligation to society other than acting as the free market.

Had liberal ideology been accepted to a greater extent proper regulation would have prevented many of the problems the tea partiers lament, such as environmantal regulations, financial industry regulations, consumer protections, etc. Unfortunately, whereas liberals accepted that they have obligations to society, many, but not all, conservatives didn't and so allowed business interests to take control of our political process through providing jobs to pols and their staff and funding campaigns, which resulted in their taking control of our government.

It's the fractional reserve banking system in which more money is always owed than is eve in cirrculation.

Currently  Americans owe the FED $1.5 Quadrillion dollars.  America only has a $10-$13 Trillion economy.  So for every $13 you have you owe the Federal Reserve $1500.

The Federal Reserve Act is un-Constitutional.

Watch this film for more details...

The Money Masters.

http://video.google.com/videoplay?docid=-515319560256183936&q=The+money+changers&ei=Zd4QSMjvB47YqAKQtJmzBA

red star jedi (cool name, by the way),

I'm not a Tea Party member, but I would consider myself a fellow traveller and probably overlap with them to a significant extent.  So, though I'll offer you my opinion, be aware that my opinion may differ to some extent from a Tea Party member.

I see several interrelated causes of the current depression, but the primary cause would be the same one that always causes boom-bust cycles, and that would be an unsustainable inflationary bubble brought about by credit expansion.  I'm not sure whether or not you're familiar with business cycle theory, but the very, very, very condensed version goes like this:  The natural rate of interest serves a very important function in an economy, which is to act as a signal of consumers' time preferences.  Time preference refers to the degree to which consumers consume now (spend) or defer consumption (save).  When consumers decide to defer consumption (save), they save their money and put it in the bank.  This increases the supply of loanable funds, which has a tendency to lower interest rates.  On the other hand, if consumers increase current consumption at the expense of future consumption, their savings decrease which raises the interest rate.

So the interest rate is an economic indicator of consumers' present and future consumption patterns.  (As a side note, interest rates also influence consumers' savings rates.  As interest rates rise, there is more incentive to save, and as they fall there is less incentive to save.)  But in its role as an economic signal to producers, lower interest rates have the effect of making longer-term projects more profitable, because the cost of funds is lower in relation to the expected rate of return.  The lower interest rate signals to businesses that consumers are not consuming all the goods and services being produced, which means that there are goods and services available to invest in capital improvements designed to improve future productivity (that will satisfy the future consumption of customers.)

However, when the interest rate is artificially manipulated, it sends the wrong signal, both to savers and to businesses.  To savers, the signal tells them that there is plenty of saved money in the system and offers no incentive to provide actually much needed loanable funds.  To the businesses, they are sent the erroneous signal that there are plenty of spare goods and services that they can use to invest into capital improvements, so they embark upon long-term projects for which the resources are unavailable.  This is referred to as malinvestment - they are building something (a factory, a mall, a housing development) for which the resources simply do not exist to complete.

Over time, this actual scarcity of resources manifests itself in higher prices, as businesses big higher and higher on the resources required to complete their projects.  Eventually, the input prices rise to the point where the original plan is no longer feasible, and it becomes apparent that all these long-term projects are bankrupt.  The businesses take a bath, shut down or scale back operations, and lay off those working on these failed projects.

Given an understanding of business cycle theory, most of the blame for the current recession can be placed upon the monetary policy of Greenspan and Bernanke who respond to every downturn by dropping interest rates through monetary and credit inflation, which is exactly the opposite prescription necessary for sustainable growth.

Then there are some other contributing factors that made the problem even worse.  Banks and mortgage brokers were given perverse incentives that made them take on much more risk then they otherwise would were there not certain government guarantees in place (FDIC and Fannie Mae guarantees).  Also, since inflation and low interest rates always drive money out of savings accounts and CDs and onto Wall Street, our friendly Wall Street gurus had lots of money to put into their sexy new derivatives.  But where else is grandma supposed to put her nest egg - into her local savings an loan where 2, 3, 4, or 5% of her life savings can evaporate every year? 

And the last thing I'll mention is that the artificially low interest rates enable the massive government borrowing we see today, and now the massive government borrowing requires that rates be kept low, forever, or cities, counties, states, and nations start going bankrupt.

Anyway, sorry this post is so long, but you asked for an explanation. I hope you don't regard this as ranting and raving a la your relatives.  The nutshell version is that the artificial low interest rate inflationary environment coupled with moral hazard caused malinvestment and risky borrowing by businesses, consumers, and governments, which ultimately ended up collapsing into the bust.

rbs: I see several interrelated causes of the current depression, but the primary cause would be the same one that always causes boom-bust cycles, and that would be an unsustainable inflationary bubble brought about by credit expansion. - I agree x10, and that ties in exactly with what Volitzer is saying.  The Fed and fractional reserve banking in general creates money out of thin air and when the system becomes choked with this funny money, a collapse is inevitable.

red star jedi: Namely, that deregulation, financialization, and stagnant wages are the root causes.  - I take some issue with all the arguments laid out here but especially the wages argument.  A nation is only worth what it produces, it doesn't matter how you attach a fictional monetary unit to that production.   I am a billionaire in Zimbabwe, but so is everyone with a $1 bill in their pocket.  Raising wages artificially won't increase our output, it just means everyone has more of the same funny money to buy the goods that we are producing, and prices on that product will increase with it.  If raising wages would make any country more prosperous overall, you would see every leader embarking on that strategy.

Aren't stagnant wages a reflection of the fact that we've offshored what produces value? And if we say that wages should reflect production, the value produced, and production and productivity rise incredibly, but wages remain stagnant, it's the allocation of the value produced, wages versus profits, that's the issue.

I don't think anyone has ever argued for jamming wages higher by fiat, which is just inflation.  What the progessive argue is that 1) we need to end manipulated trade practices that have gutted the value producing activities in this country, and share productivity gains with workers, like we did from the founding until some time in the 1970s or so.  Since then productivity gains have gone almost entirely to owners and executives. 

Jasper, red star jedi was saying that one of the causes of the economic crises was stagnant wages.  I answered as such and did not presuppose what the cause of that stagnation was.  If you are saying that stagnant wages are a reflection of off-shoring, then that to me appears to be a different subject.  I am sure that I would probably disagree with you as I believe in free trade.

Hey tmoney13, not sure if you're familiar with Tom Woods, but he is an economic historian with a good grasp of economics.  Here (http://www.youtube.com/watch?v=wCmwRN5gjOo) is a video in which he gives a good thumbnail explanation of Austrian business cycle theory.  Worth a look for anyone wanting to better understand how inflationary monetary policy causes the boom-bust cycle.

...I'm enjoying the commentary by all on this topic.....

Thanks rbs, I will check it out.  I am reading The Creature from Jekyll Island, which is pretty amazing, but I will definitely check out Tom Woods.  Thanks again.

I don't mean to say this in a bad way, but what evidence do you have that free trade in this country has produced a good result.  We had a high tariff and a protectionist attitude for about 200 years, and at the end of it we had the greatest middle class the world had ever seen, with wages rising with productivity in a nice, sustainable way where prosperity was incredibly broad based.  "Free" trade reversed that, wages stagnated, our current account and trade deficitis exploded, and we're unwinding a debt bubble.  I'm not sure what part of what we call "free" trade is at all sustainable.  And how the broad middle finds a job that can pay a decent wage.  The reality is other than production, there aren't many value producing occupations available to someone without an advanced degree of some sort, in the top 10% or less of intelligence. 

Jasper, the way you framed this made it a pretty broad subject spanning 200 years so it is going to be difficult to point out a specific piece of evidence like you are asking for.  I listed some points below that I think are useful, and you can attack each one individually as you see fit.  I tend to agree with you on the point you made in regards to education.  I think in a technology driven world, the days of making a “good” living turning a lathe are probably coming to an end.

1)  At no point in US history have we ever had real free trade.  We have had periods of free-er or free-ish trade, but never completely free trade.  If we had free trade there would be no need for a NAFTA bill that was 20,000 pages long. 

2)  As countries begin to adopt free trade, they see a rise in general welfare.  Compare China, India, etc now vs. 50 years ago.

3.)  During a greater portion of the 200 years of our history or maybe all of it depending on where you call the beginning and the end, the dollar was either made of or linked to gold or silver or both.  So one could easily say that having hard money led to our prosperity. 

4) According to my micro econ text book 93% of economists believe tariffs and import quotas are harmful to general welfare.

5) It is a misconception that wages are stagnant.  Wages tend to track productivity in the long run.  From 1959-2006 productivity growth rate was 2.1% while real wages growth rate was 2.0%.  If you break down that same data to a more recent time period 1995-2006, the productivity growth rate was 2.6% and real wage growth rate was 2.5%.  This info was from the Economic Report of the President 2008, table B-49

6) The affects of protectionism are easily seen in the events leading to the Civil War (I know you thought it was about slavery right, well, not so much).  The New England states were losing out to England in textile manufacturing and wanted protection, which they got, making English textiles more expensive.  England retaliated by putting tariffs on cotton, which made it difficult on Southern farmers.  So in essence the Southern states faced higher prices on the goods they consumed and got less for the goods they produced.  Recognizing that this arrangement was benefitting the North at their expense the South wanted out.

And economists have never lived in the real world, as they dwell within the realm of huma desire. For example, China can't feed itself and grow its economy and is facing the end of cheap energy as oil and coal are at peak. So what of economist arguments about free trade? They turn out to be absolutely irrelevant as the real world comes crashing in. The same goes for their religions of free market, people acting in their self interest, etc.

We pay far too much attention to economists, as we have desires that we want fulfilled I suppose, and because our cultures revolve around how we think we fit into the world. It's about time we account for reality.

jeffbiss, what you did was nothing short of amazing, you shrug off the overwhelming consensus of economic experts by saying that they have never lived in the real world.  I will have to remember that iron-clad argument the next time one of my eco-Nazi friends trots out a statistic that says that 96% of all climatologists believe in manmade global warming.  Sorry, but climatologists don't live in the real world, end of discussion.  Thank you jeffbiss for your amazingly thorough argument.

Sorry to disappoint you but most economists don't live in the real world as they treat economics as ideology rather than an observational science to explain human behavior with regards to trade, resources, etc. Unfortunately for you, climatologists do live in the real world and through their research capture real data to use to create hypotheses to test. Whereas an economist will make a completely unsubstantiated statement that markets are self correcting because people act in their own self interest a real scientist, including economists who actually practice economics as an observational science, will simply capture data and create theories to test.

There is something very wrong in a "science" that chooses to ignore the consequences of our behavior, such as environmental degradation, yet that considers itself a science. Most economists ignore the harm we cause because their focus is the realm of human whim we know as the economy.

Okay, I can quickly see this going to dissolve into a semantic argument about defining things such as "most" economists or wether they treat economics as an ideology or an observational science.  I am pretty sure I could come up with some equally "convincing" arguments towards climatologists, like how all of them are funded through various government agencies that only get funding when there are problems to be found and solved, which therefore necessitates the need for them to find problems.  Global cooling becomes global warming, becomes climate change etc.  But since that is not really the point of the discussion, lets just pretend that I didn't make statement #4.  What is your response to the others?  Especially stagnant wages since this is what Jasper and I were discussing.

Also, in discussing stagnant wages without any context, such as how nothing we do is sustainable, is to choose to discuss economics in a vacuum. For example, as human population increases we will exponentially degrade the environment and use finite resources and simply exacerbate the degradation we have caused to this point. Therefore, discussing stagnant wages is mere bellybutton gazing.

That's what this is about. for example, it's one thing to discuss how people will react when it is obvious that all the cheaply obtained oil and coal have been extracted and another that the market will simply find alternatives or develop other technologies. The former is a valid area of economic discussion and the latter only of the relevant sciences such as geology and physics. - Actually they are interlocked.  While economics does not find alternatives for oil depletion, it provides the motives for finding those alternatives.  As oil becomes scarce prices will go up, which will spur on the search for alternatives, or the techonologies to do more with less.
jeffbiss: Also, in discussing stagnant wages without any context, such as how nothing we do is sustainable, is to choose to discuss economics in a vacuum. For example, as human population increases we will exponentially degrade the environment and use finite resources and simply exacerbate the degradation we have caused to this point. - two points, I think I listed some context, and what is yours?  It is obvious that you are here to argue against me, but what is it that you are arguing in favor of?  Are you coming out against "free trade", or are you going to prove that wages have stagnated?  I am not sure what you are trying to do.  If you could articulate with some supporting data that would be a useful starting point.  Merely saying that something is not sustainable doesn't cut it for me, as it would appear that mankind hasn't killed itself off just yet, so yeah up until now it has been sustainable.  Don't worry chicken little the sky hasn't fallen yet.

tmoney wrote:  "If raising wages would make any country more prosperous overall, you would see every leader embarking on that strategy"

poly replies: That's very true. Wages can't be higher than a nations productivity..

What's also true is, wages can't be lower than a country's productivity. When that happens, stuff can't be bought and domestic production slows or ceases unless it can be sold abroad.

If a  Haitian factory paying Haitians 3 cents for their labor input into a $40 Disney logo tee shirt had to sell them, in Haiti..the factory would shut its doors within a day. Haitians, like Americans, aren't paid enough to buy their own production.

We can't even buy our own food production...and utilize food stamps to fill in the gap and to avoid  14% of our population  dying of starvation or disease associated with manlnutrition..Besides,... it keeps the transnational food giants happy..Drop food stamps entirely, and ConAgra and a few other giants   would lose a fortune in profits..

Congress voted last week to reduce food stamp benefits...without lowering the food stamp outlays.. It can't afford the several million more people projected to be entering the program within the next several months...so its cutting back on their food..The same amount of food stamps.. divided among more people.

Can't feed people and guarantee banksters $11.4 trillion in bailouts and guarantees ..The choice was obvious..Banksters/financiers insist on an austerity program to keep the financial economy making record profits.. Otherwise, they'd have to be taxed to pay for their own toxic paper guarantees. That wouldn't be fair....so they say..

Tea Party folks don't understand how things work.

 Retired Monk - "Ideology is a disease"

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PC2: If a  Haitian factory paying Haitians 3 cents for their labor input into a $40 Disney logo tee shirt had to sell them, in Haiti..the factory would shut its doors within a day. Haitians, like Americans, aren't paid enough to buy their own production. - I have seen you say something to this affect before but I am not fully grasping it.  My guess is that Boeing workers can't buy airplanes, but I don't see Boeing going out of business.  I guess I am not necessarily making the connection.  I can't buy the million dollar tooling that my company produces, so......

PC2: We can't even buy our own food production...and utilize food stamps to fill in the gap and to avoid  14% of our population  dying of starvation or disease associated with manlnutrition..Besides,... it keeps the transnational food giants happy..Drop food stamps entirely, and ConAgra and a few other giants   would lose a fortune in profits.. - My guess is that if we didn't subsidize farming in the first place we wouldn't have most of the issues we have with food supply, but you are right that ConAgra and others are probably happy to be subsidized on both ends.

PC2: Can't feed people and guarantee banksters $11.4 trillion in bailouts and guarantees ..The choice was obvious..Banksters/financiers insist on an austerity program to keep the financial economy making record profits.. Otherwise, they'd have to be taxed to pay for their own toxic paper guarantees. That wouldn't be fair....so they say.. - Bailouts are the name of the game when you have a lender of last resort, aka the Federal Reserve.  The bankers are merely the junior players in this game, they get taken care of, but they aren't in control. 

Tea Party folks don't understand how things work. - I am not one of them, but I agree with some of their message.  Anyway I thought you lefties were supposed to be tolerant of other peoples views?  Also I think they get it, more than you would like to believe.

Hey tmoney13 (or any one else who's interested) - The Foundation for Economic Freedom just pushed a great podcast out on the Austrian business cycle theory.  The lecture is by Paul Cwik.  Also, if you want to be a total geek (like me) you can follow the power point slides that accompany the lecture.

For the most part economics hasn't provided any motives for finding alternatives. It is used in isolation implying that viable alternatives exist and that people will find them. For the most part, economics has not been used to explain human behavior, as seen with "market forces" arguments, but to promote ideologies, such as the free market ideology.

That economics is dealt with in isolation of the real world, and is used to promote an ideology rather than explaining human behavior.

I'm not arguing, I'm discussing what I see as the inappropriate use of economics. I see the need to use it to explain how we behave and perhaps to inform policy that will help prevent catastrophe at worst and ensure sustainability overall.

I am merely saying that economics should be used to explain human behavior and inform policies. Therefore, it should have shown that free trade would have created a giant sucking sound of jobs from the U.S. It didn't. Most economists argued that our economy would move into a new phase and we would grow high tech jobs and become a nation of engineers and managers of cheap foreign labor. That they performed so poorly indicates that economists overall were simply using their dreams to create policy as human nature should have informed them that free trade would have resulted in what we are experiencing today.

Oh, and it also should have informed them that improving the standard of living of impoverished nations simply uses resources up and causes environmental devastation at a faster rate, which should have led them to inform policy appropriately. However, all they argue is that lifiting all boats results in everybody doing well when in fact it leads to greater environmental devastation as we would need more than one earth to allow the impoverished to live at the level equal to ours. The only reason that the earth can support so many people is that so many do with  so little.

So much for economists living in reality.

I would say that proof that nothing we do is sustainable is borne by the fact that we have entered peak oil and coal, or will shortly, in addition to the overall environmental degradation we have caused and are causing through our activities. You can't sustain activities that are based on a finite resource that we are using up and that enter decline, especially when alternatives are mere theories.

The cause of the economic meltdown was Greenspan's slashing of interest rates following the collapse of the dot-com bubble, which led to a gross misallocation of resources in the form of citizens spending outrageously beyond their means and Wall Street swapping CDOs and flipping houses (which was a correlation of the boom/bust, not the cause). See the following on the Austrian Theory of the Business Cycle':

http://mises.org/daily/672

The Austrian Theory of the Business Cycle, and how Greenspan/The Fed caused the crash, is the topic of "Meltdown" by Thomas E. Woods Jr., which I highly recommend: http://www.amazon.com/Meltdown-Free-Market-Collapsed-Government-Bailouts...

www.mises.org has an endless wealth of information on this as well.

^19th-century economist Frederic Bastiat had an essay titled "What is Seen and What is Not Seen." That essay was updated in 1946 by Henry Hazlitt in the form of "Economics in One Lesson" (which is the singlest greatest introduction to sound economic thought ever written). The thesis is that when various interventionist policies are introduced into an economy, people praise the "seen". They are not aware of the "unseen". In the case of protectionism, we see Employee X's wage go up from $5/hr to $15/hr. What we do not see is the increase in the price of the consumer good he is producing. The increase in price will generally cause people to either not buy or to buy less of the good, thus *decreasing* its production, which hurts other or the same workers. If consumers end up buying the $15 good, that is money spent which will not be spent elsewhere, which if it had been spent would have increased production in another line and raised the wages of the other line's workers. More money is circulated. Less wealth is created. Society is poorer, objectively.

The idea that protectionism was responsible for the middle-class is utterly fallacious. It's a post-hoc-ergo-propter-hoc fallacy based on zero economic theory. What caused the rise of the middle class was the END of the New Deal-era spending and most of its machinations. The death of the middle-class, contrary to what Hartmann says, is a gradual process that has taken place due to the Federal Reserve's steady devaluation of the currency ever since 1933 (moved to a gold exchange standard) and 1971 (complete separation from the gold standard). Now, obviously people in fixed incomes are greatly hurt by this. But this is a correlation, not a causation, of the decline of the middle class.

The middle class is not one homogenous group that all works at a Ford plant. It is an abstraction used to refer to millions of individuals who are not in poverty but are not living in Beverly Hills either. Policies don't just harm the middle class as a whole. Individuals are affected differently in countless different ways.

(A couple other points:

-The debt bubble, of course, is the result of fiat curreny and the fractional-reserve banking fraud that would never exist in a free market)

-my trade deficit with Target Stores is massive. How exactly am I poorer and worse off because of that? Keep in mind that 1) this a rhetorical question, and 2) the economy is just the aggregate of individual trade balances

-every wage that "stagnates" from trade is counterbalanced by wage increases elsewhere in the world due to the extra spending/saving that is permitted as people are able to buy things for cheaper. If the American dollars purchase Chinese goods, the Chinese now have American dollars that they can then use to purchase.....American goods, and thus raise American wages).

People can argue details of what caused the collapse all they want, and there is a grain of truth to just about every theory. However, the big picture reason is that an "every man for himself pursuit of profit at the expense of others" brand of capitalism will always have a boom/bust cycle that ultimately results is a huge bust after a huge boom.

Until we design a system that doesn't exploit labor, that will always happen. Unfortunately, the winners of the current game gain so much power that the busts don't hurt them much, and so they use that power to just start the cycle over.

Labor is not exploited. The labor theory of value was gravely mistaken, and that is the entire basis for the theory. All voluntary economic relationships are mutually beneficial, or else they would never have taken place.

Modern "capitalism" will always have booms and busts as long as central banking/fractional-reserve banking and/or a government-backed banking system (as in the 19th-cent) exists. Booms/busts are literally impossible without these things.

Of course the qualifier is "voluntary". However, labor is exploited in many cases as in the undereducated as seen with temp agencies. Many of these people are forced to accept any employment that comes along to survive and so as far as I'm concerned "voluntary" doesn't quite fit.

There are a lot of things we are "forced" to do in order to survive, and we all must economize and make decisions that we believe are in our best interests, but accepting employment is voluntary no matter how you look at it.

One makes a choice between a number of options, which may be limited to a few poor job choices, and so while the person may choose to accept a low paying job in which he or she is exploited this doesn't fit the definition of "volutary" MrB54 implies in the quote I posted. Labor is exploited. All "voluntary" economic relationships are not mutually beneficial, and yet they take place.

jeffbiss: All "voluntary" economic relationships are not mutually beneficial, and yet they take place. - I would argue that they are mutually beneficial but not necessarily to the same degree to each party.  If there is no benefit to one party, then there would be no reason to make the trade. 

Probably the benefit of eating by working for a low wage outweighs the benefit of starvation by refusing it.

Tmoney wrote:   "As countries begin to adopt free trade, they see a rise in general welfare.  Compare China, India, etc now vs. 50 years ago."

poly replies:  True. China and India accepted our GDP. They benefited from that. However, neither country has shipped their own jobs/manufacturing/service sectors  to the U.S. The stupidity is one-sided.

QUOTE: The reason fiscal stimulus cannot rescue the U.S. economy has nothing to do with the difference between Barro and Krugman. It has to do with the fact that a large percentage of high-productivity, high-value-added jobs and the middle class incomes and careers associated with them have been given to foreigners. What used to be U.S. GDP is now Chinese, Indian, and other country GDP.

When the jobs have been shipped overseas, fiscal stimulus does not call workers back to work in order to meet the rising consumer demand. If fiscal stimulus has any effect, it stimulates employment in China and India.

Economists who have spent their professional lives rationalizing “globalism” as good for America have no idea of the disaster that they have wrought.

Paul Craig Roberts was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury. 

http://www.counterpunch.org/

Retired Monk - "Ideology is a disease"

poly replies:  True. China and India accepted our GDP. They benefited from that. However, neither country has shipped their own jobs/manufacturing/service sectors  to the U.S. The stupidity is one-sided. - No, it is neither stupid or one-sided.  What we get in return are goods at a lower cost.  If you don't like that then simply buy locally manufactured goods, and I will buy whatever cheaper goods I want.

I argue that a person feeling coerced into or feeling that there is no viable alternative to accepting a job in order to survive is not acting voluntarily. I also argue that "mutually beneficial" is meaningless in such a situation, especially when one person has absolute power over the other. There are people who fit this situation, as with illegal immigrants fleeing abject poverty in their home countries, or those stuck in a region due to poor education and lack of resources such as in Appalachia.

While many people are their own worst enemies, such as those that chose to not finish High School and then gripe about how they're taken advantage of, not all are. That distinction must be made if we are going to have a valid discussion based in reality. Otherwise, the discussion will revolve around economic theory and its foundational dogma.

A lot of good it does to have cheaper goods, tmoney, ...when there is no job providing the income to buy them with.

The U.S. is going into a general economic collapse...and there is no way to extricate ourselves from it. Welcome to Argentina...same stupid economic policies...same collapse.

"Ideological thinking can learn nothing new...even if it is something that has just come to pass".  - Hanna Arendt

I'll stand by Mr. Robert's take on outsourcing. It's reality based.

Retired Monk - "Ideology is a disease'

A lot of good it does to have cheaper goods, tmoney, ...when there is no job providing the income to buy them with. - I guess I will take that risk.  The money I save in cheaper goods will help me when my job gets sent over seas....if that ever happens.  Also couldn't you take your line of arguing to its logical extreme, and make the decision to manufacture everything you need yourself?  If buying from a foreign country is bad then what about another state, or county, or city, or neighbor, etc, you get the point.

I'll stand by Mr. Robert's take on outsourcing. It's reality based. - I don't know about Mr. Roberts, but my job, which is working in my company's international division, is most certainly reality based, and I absolutely no issue with outsourcing.

jeffbiss, I guess we differ on the term "voluntarily".  It is true that in the job market some people are going to have fewer options than others, and the situations that you described are relevant, however, I don't know that having bad choices for a prospective employee necessarily equals exploitation on behalf of a prospective employer.  If I want to employ someone to mow my lawn, and I am only willing to pay $10/hr (because I will do it myself for anything more) that doesn't mean that I am exploiting the person that will do it at $10/hr even though they would prefer $15. 

Indeed we do differ. Your example of mowing the lawn is not the same as a miner having no viable alternatives to working in the only mine in the region, or the illegal worker being farmed out to a company worried about being discovered thus making it possible for the mine or business owner to set the rules to his advantage. These people MUST work to survive. While you consider accepting the job "voluntary", that "voluntary" is only defined as such within the academic framework of your economic discussion as in the mind of the worker they MUST accept the job or not eat or afford their home or...

Also, in reality not all owners would exploit such workers, so the discussion even at the real level, becomes complex, as both sides may have variant perceptions.