From: richard@TIS.COM (Richard Clark)
Newsgroups: talk.politics.misc
Subject: Re: Wake up call
Date: 15 Oct 92 18:52:39 GMT
Reply-To: richard@TIS.COM
Organization: Trusted Information Systems


	Sorry folks, I was just gonna rave a bit and then go away, but
Jim here makes some convincing-sounding arguements which are simply not
true. So I have to reply:


In article <9210151437.AA14610@TIS.COM>, richard@TIS.COM (Richard Clark) writes:
|> 
|> 	Four, lift the cap on Social Security income taxes. What the
|> hell, the middle class is *already* paying their fair share. Lifting the
|> cap would produce an immediate 14% tax increase on the rich, resulting in
|> them *finally* paying their fair share of the Social Security budget. Or
|> didn't you know that? That SS tax is only collected on the first 50,000
|> dollars of income? In other words, the rich put in only as much as the 
|> middle class.
|> 

jwh@citi.umich.edu (Jim Howe) writes:

>False.  It is true that people only pay taxes on their first $50,000 in
>income, however when benefits are paid, the person who made a million
>dollars a year will not receive any more than the person who made $50,000
>a year.  What you get back is related to how much you put in.  People
>at the top see a lower return than people at the bottom.

	True enough. And we should go ahead and keep it since they don't
need it anyway. And like I said, make them pay more into the system.

|> [...]
|> 
|> 	Six, protectionism. Currently a dirty word in politics.

>As it should be.

	Yeaaaaaaah, riiiiiight. Let everyone else sell freely into our
economy while they tax or ban our exports into theirs. Does this sound fair?

|> But
|> only because foreign companies have *literally bought* our politicians.
|> This alone, is the single most effective way to bring jobs back home.
|> And for what cost? Nothing, zero, zilch, nada.

>Tell that to the people whose jobs depend on imports.  Also, protectionism
>tends to foster retaliation, making exports more difficult.  This costs
>jobs as well.

	Tell that to the people who lost their jobs because foreign
competition knocked them out of the market through dumping and taxing
or forbidding our exports! Protectionism will *create* jobs by fostering
growth internally to supply the new demand.


> In addition, protectionism raises the costs of goods and
>lowers the quality due to reduced competition.  The result is that
>consumers pay more for less.  Not the best way to improve your nations
>standard of living.  Foreign competition, brought on by free trade,
>will reduce the cost of products, increase quality, and make the
>U.S economy more efficient.  People will be able to spend less and
>save more, or get more by spending the same.  Either way, the net
>effect is to help, not hurt, the economy.

	Bzzzzt. Wrong. American products are not usually significantly
higher in price than the competition. Just enough that the consumer tends
to by the cheaper of the choices.

	Quality is unaffected. New businesses start up to fill the gaps,
and competition is re-established internally, on a level playing field.

	The US economy is huge. There are always *many* manufacturers
of any particular product, except in the cases where we have been forced
out by the foreign competition. Need I mention steel and micro-chips?
The Japanese have already been tried, convicted, and slapped on the wrist.

	Net effect, economy grows. Demand is filled internally. American
jobs are created.


>Evidence?  What you are claiming is simply not true.  There certainly
>may be companies who no longer operate in a particular market, but
>I would bet that you can't find an instance where prices have gone
>up unreasonably as a result.  What you are describing is known as
>predatory pricing, and research has shown this practice to be virtually
>none existent and certainly unsucessful whereever it may have been
>tried.

	Read above again. The steel and micro-chip industries are just
just two, to name a few. Get your head out of the sand.

|> And where do you think the remaining American jobs are going? Overseas,
|> and away. Thank you Mr. Bush for signing a free trade agreement with
|> Mexico, so that our businesses can now move there, where the cost of labor
|> is cheaper, the taxes are lower, there are no unions, there is no
|> environmental policy, and on and on... Bring our jobs back home. Tax the

>There is more to production of products than cheap labor.  Labor must
>be productive to be effective.  By almost any measure, U.S. labor is
>the most productive in the world.  Of course, this doesn't mean that
>all work will be done in the U.S.  There is a concept called comparative
>advantage at work.  Even if you are better at doing something, it is
>often better to let someone else do that something because you are 
>*more* productive at doing something else.

	Great. Just wonderful. We have *millions* of people out of
work. They are not doing *anything*. We have to get them to do *something*
other than collect unemployment. We cannot *all* be rocket scientists
ya know.

|> hell out of anything imported into this country. Level the playing field.
|> What the heck, let's teach the Japanese a lesson, and *ban* the import
|> of Japanese cars, stereos, and electronics for two years.
|> 

>Why don't we just pass a law preventing U.S. citizens from purchasing
>imported products?  That is effectively what you are doing.  Of course
>this ignores the fact that we supposedly live in a free country.

	A little too drastic for me. I like the TAX idea because it makes
foreign products more expensive, so only the rich will buy them, which
ends up as begin a tax on those who *can* afford it.

	Besides, we simply want to stop the leaching long enough to
get back on our feet without killing the leeches. Sooner or later we'll
want to trade (fairly) with them again.

|> 
|> 	Whew. Just a raving madman frustrated with politics and the
|> economy and the inability of the former to deal with the latter.

>Sit down, take a stress pill.  Things aren't as bad as you want to
>make them out to be.  Try to get a better understanding of economics
>before making rash proposals.  Try reading Henry Hazlitt's book,
>"Economics in One Lesson", it is short, easy to read, and very
>enlightening.  I can recommend other books if your interested.

	Nah. They really *are* as bad as I think they are. Take a look
around you. Tell me what you see. It ain't pretty, and it ain't going
away. Besides, we both know very well that economists are simply people
you pay to tell you what you want to hear.

>James W. Howe                  internet: jwh@citi.umich.edu
>University of Michigan             uucp: uunet!mailrus!citi.umich.edu!jwh
>Ann Arbor, MI   48103-4943         

	I remain unconvinced. Good try though. Complacency is dangerous.
The cold war is over. We are well into the new economic wars. It is high
time we got people thinking that way.


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 Richard H. Clark				My opinions are my own, and
 LUNATIK - watch for me on the road...		ought to be yours, but under
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Newsgroups: talk.politics.misc