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[2dye4]

I begin to find economics very interesting these days. Not the highly extrapolated academic stuff but the more broad issues that may be attacked with common sense analysis.

I have read frequently more thoughtful analysis on this site than can be attained anywhere else. No we are not economists and don't pretend to be. We certainly don't want economists designing bridges and engines. But there are three reasons we could do moderately well at informing each other about economic idea.

1 We don't have a reputation or ax to grind. (its not our profession)

2 We do have a much above average ability to see dynamics and establish cause and effect of things.

3 We are located at the source of business although used as a service to this but we have a distance that allows us to see a little more than the stakeholders.

As a benefit to ourselves the more we understand the free market and its direction the better we can guide our careers .

 

[dcasto]

The one thing engineers can not model are peoples emotions (or if in an autocratic government, the single leader). If we could model this, then I could model the stock market and predict price changes....

But, because emotions run us we get to the ultimate where we protect ourselves at any cost. I'm not being heartless about this because the protection also covers lawsuits for emotional reasons. So the globalization is moved by (feel free to add on), resources, customer location, work force availability, and emotions.

I like the rust belt model, resources declined, customers moved, work force didn't want to move, and emotions said; no more ships, no more factories, people have rights to stay where they want, boom no more steel mills.

 

[KENAT]

Didn't the 'level playing field' issue come up in a previous thread?

Essentially is it 'fair'/reasonable/economic sense that:

In country A there are government imposed costs of business including health and safety rules, environmental rules, taxes for retirement/health benefits etc

In country B these costs either don't exist or are smaller/enforced less rigourously.

Items can be imported to country A from country B without any significant import duty.

Due to this country A loses jobs to country B.



To me it's one thing if country B were cheaper just because the people accepted a 'lower' standard of living. However when the government in country A causes a big chunk of the cost difference by rules that aren applied to country B isn't it a little different?

KENAT, probably the least qualified checker you'll ever meet...

 

[Ashereng]

Gymmeh,

Nope, I didn't forget. Governments, ideally, are supposed to protect the people. The problem is, often, you protect one group of people at the expense of the another.

Like I said, even in an ideal situation where people are trying to do the very best, the devil is in the details. Which group do you protect?

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376 to make the best use of Eng-Tips Forums?

 

[GregLocock]

Should the rust belt steel worker's job be protected, so the price of American steel rises, so that the price of American made refrigerator is higher than it would have been, so it is uncompetitive against imported units made from overseas steel, so the American refrigerator industry goes bust, as well as the American steel industry? Exactly where do you want your job protection scheme to stop?

I find it hilarious that people from the land of free enterprise end up backing socialist solutions like job protection schemes, however implemented (tarriffs, anti dumping laws, unique market regulations etc).

The argument about OHS is a red herring, Australian occupational safety standards in dangerous occupations are generally higher than US ones (do all of your workers near forklifts wear fluoro jackets yet?), yet our steel is cheaper, and has long been subject to all sorts of anti-import actions by the USA. As third world economies get richer they will introduce the same sort of OHS and environmental legislation as first world countries, for the same reason.

You can have hours of fun data mining on

http://laborsta.ilo.org/

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[csd72]

Greg,

I agree with the OHS comment. In my experience both Australia and the UK have far more stringent Health and safety standards than the US.

I would, however, agree to a restriction of trade with countries that have shown a particularly poor level of health and safety. This I would not see so much as a barrier as a kick up the pants to get their act together.

csd

 

[KENAT]

Greg, what can I say having spent the first 20 or so years of my life under a conservative government in the UK I may have the odd socialit tendancy.

Eventually things in a free market should find their equilibrium but the time that takes, and the interference that happens from various governments can make it real painful for the people caught up in it.

As to your comments about OHS, up to a point you're correct although the level of regulation in the US, especially here in sunny CA seems higher than I'd been led to believe.

One problem with putting a tarif on countries that don't meet say 66% of the level of your OHS, benefits, environmental laws... is that some of the poorest nations may suffer most along with some that could perhaps do better. Then again, maybe part of the reason some could now do better is because historically haven't. Certainly 50 years ago, was the US & Europe much worse than China & India are today? I remember driving into the capital of one european city less than 20 years ago and seeing what appeared to be a shanty town.



KENAT, probably the least qualified checker you'll ever meet...

 

[csd72]

KENAT,

I disagree with your arguement regarding the poorest countries being disadvantaged.

The poorest countries have the lowest production cost, so all it serves to do is level the playing field. All countries that want to sell goods would have to meet the same minimum standards.

I believe that if it increases the prodution cost of the goods then this may actually have a beneficial result on a poor country. More money will be going into this country and probably more workers will be required increasing employment.

csd

 

[KENAT]

CSD, I probably agree with you, which is why I said may not will.

It's an argument I think I've heard from others but I'm not sold on it.

Hopefully it would force them to improve conditions but...

KENAT, probably the least qualified checker you'll ever meet...

 

[Gymmeh]

Greg, Touche! (I knew that was coming)…There shouldn’t have to be a real “protection scheme,” ultimately the market will adapt (you can’t fight change). The hardest thing is changing people’s mindsets and adjusting to change, accept lower pay or working more efficiently.

The problem is that in the “land of free enterprise” there are rules to protect business/consumers. Such rules prevent/limit company X from stealing company Y’s design/ideas/research. Would you like to work on a project spending $$X/ your time to develop a product, put it in the market, and then have a foreign company, make the exact thing you are, and sell if for less because they stole your design, then lose your job? They can sell it for less because they did not have to spend the time/money/materials developing the product. This is technically free market, but what is the point in developing anything if someone can copy it and make all the money. The same is for protecting consumers; foreign toys with lead in them, is a current issue. So these toys are produced cheap and unsafe. This draws money away from the companies they play by the rules, which may force them to lay off people to stay competitive.

So an answer to your question, Exactly where do you want your job protection scheme to stop?

I would not ask for a “job protection scheme,” more of a free/fair market scheme. Which insures bad business practice aboard is regulated or those products kept out of the country.

The labor market will adjust.

 

[patdaly]

Greg said: "Australian occupational safety standards in dangerous occupations are generally higher than US ones (do all of your workers near forklifts wear fluoro jackets yet?)"


No, but our CEO's and upper management get paid much better than yours.............. Sorry for the smart alec comment.

As usual, I concur.

 

[csd72]

Gymmeh,

This is a separate issue altogether. Western countries should refuse to allow importation of these good which violate the copyright law of any other western country.

Western countries should also refuse to allow importation of goods that do not follow sufficient standards of quality control. Particularly if the results may be hazardous.

If this was done, then countries like China and India would lose a large chunk of their market from non-compliance.

I see this one as a black and white issue that has nothing to do with free trade (or otherwise).

csd

 

[Gymmeh]

csd

I am confused, what "this" is,
This is a separate issue altogether. Western countries should refuse to allow importation of these good which violate the copyright law of any other western country.

Are you saying the discussion on importation regulations is a separate from free trade?

I am a little confused...

 

[GregLocock]

When I worked on something that might have been worth patenting, the advice I got was that patenting was more or less a gamble, and probably not worth it unless we were prepared to get good lawyers.

The first developer of a product has an advantage that no copier has - he knows WHY that design is the best, and so knows how to design the second generation more effectively. In other words, constant innovation is a good defence against copiers.

For examples look at the iPod. There's a thousand rip-offs of it, yet Apple is selling them very succesfully, and with a decent profit margin.

To be honest the USA government's stultification of creative freedom at the behest of Disney's lawyers is one of the more disgustingly unethical acts I've seen them perpetrate. And that'd be a long list...



Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[csd72]

Gymmeh,

'Are you saying the discussion on importation regulations is a separate from free trade?'

In a word, no.

I am saying that imported good should be subjected to the same restrictions that a locally produced product would.

csd

 

[2dye4]

Good responses. Thanks
The discussion has been heavy on the side of the ethics of free trade. And it is of course a strong issue for engineers as some of us export, and some of us work for industries supporting domestic consumption.
On the issue of free trade there is no doubt that it is beneficial for trade to occur where there is a surplus of ability in one location and demand in another. I still have two questions.

In a third world country that is rapidly industrializing do the people who continue their present lifestyle find it difficult to do so given the changes brought about by the changing economy. For instance if there is a mass movement to industrial production do their customers diminish? Or do they find they can no longer afford to purchase items for the labor input they used previously? In essence do they have a choice, or is industrialization of the workforce destroy their ability to act economically independent of the change.

Second is it possible that the division of labor that makes the economy run inherently limited. Or does the system become unstable after a sufficient degree of division of labor occur. For instance, when efficiency dictates centralizing production in ever larger and larger and more dominant manufacturing centers because of efficiency, is there a possibility of domino effect if a transportation route closes? The essence of the game is to stretch resources so there is no waste. We all know that in engineering design you can't predict how to trim all the fat without making an unstable design. Does the economy do the same?

 

[Dinosaur]

csd72,

I agree that in practice some government oversite is necessary to protect against monopoly practices. Your question however, did appear confrontational. It made me think you were strongly against capitalism, but I may be mistaken.

Good Luck.

 

[csd72]

Sorry everyone for being confrontational, just trying to challenge peoples views on this.

Anyway, I believe that capitalism (as well as communism) is an ideal that does not necessarily work in the real world. Both have their flaws, and I believe that the best solution is somewhere between.

csd

 

[moltenmetal]

Markets are the best way we've found to distribute resources and to organize an economy. But capitalism is inherently unstable without government taxation and regulation and the rule of law to act as a counter-lever in the public interest. Capital naturally accumulates power which tends to centralize both in the hands of a few. Monopolies and oligarchies result, such that the market no longer functions properly. Ultimately, the rich get greedy enough to really p*ss off the poor to the point where there's a revolution, where numbers trump power.

There is no such thing as a truly free market, locally or globally. Both capital AND governments interfere to make sure markets are neither free nor fair. Case in point: most western nations maintain significant trade tarrifs against agricultural products from Africa, yet let Chinese manufactured goods flood into their countries with only minimal duties. Who benefits in each case, and who suffers- and who has the power to change that, and why don't they?

Capitalism without the rule of law is a disaster. The biggest thief and the most unethical dealer wins.

 

[kontiki99]

livingston (Mechanical) 6 Nov 07 7:17
It seems to me that companies take globalization to mean make or buy your products where labor is the cheapest. I don't see how that helps anyone.

This is the issue, you're talking about subsidizing usually a small group of trades people at the added expense of many more consumers.

 

[PSE]

I would not limit that to just Capitalism. As you allude to, law provides the tools with which political entities compete with each other and the various arena's in which companies compete with each other. All can be subject to unethical behavior as individuals or companies seek to attain advantage in the grey areas or "in between" areas of the law. At times it seems there are attempts to circumvent statutory law by establishing a chain or path of case law in an attempt to get around the obstacle.

Participating on the global scale provides the largest (and most complicated) arena. It is going to be a disruptive place for quite a while. Countries with inexpensive labor pools attract "investment" by companies to produce goods thereby helping their "local" quality of life. This in turn may put greater demands on raw resources. This may make competition even more difficult for developed nations as due to higher standards of living, their margins become narrower.

Question is, will we end up in economic boom, bust cycles on a national basis where a "first world" nation's economy self destructs into a 3rd world economy, or will there be a levelling effect as 3rd world nations improve their status and 1st world nations learn to reduce their reduce their currently disproportionate resource demand? How/can we as engineers, influence or guide economics on such a scale? Every country is a variable in the global equation with subvariables/equations within themselves. If you were to start determining how to characterize a country, what variables would you use? Population, resources, government type, education level, infrastructure, local interaction with other nations, global interaction, estimation of net worth, rate of economic growth. These are just a few I can think of for a single country. Multiplied by the number of countries and there would be a lot of work involved.

Regards,