Is free trade the best way to beat recession?

[WhiskeyGirl]

The real lesson of the 1930s is that if you think protectionism is in the offing, it makes sense to raise your barriers first. Lord Skidelsky, the biographer of Keynes, says that Britain's economic recovery from the Great Depression was based on three policies - devaluation, cheap money and protectionism. London created a system of "imperial preference" - free trade within the empire but barriers to trade with the rest of the world. Other countries followed suit, abandoning the gold standard so they could devalue and increasing tariffs, and this contributed to the collapse in trade and the prolongation of the slump.

Yet the data shows that Britain had one of the shallowest downturns of all the major industrial nations in the 1930s - a 5% fall in GDP. By contrast, Brown's devotion to free trade and open markets sits uneasily with Britain's massive - and growing - trade deficit. Policymakers today say that the problem with free trade is that the winners often fail to recognise the benefits they are getting from lower prices, while the losers are all too aware when the job they were doing is lost to a textile mill on the other side of the world. The downturn has made not just the actual losers - but millions of potential losers - painfully aware of their vulnerability.

http://www.guardian.co.uk/business/2009/feb/04/protectionism-free-trade-recession

I don't like 'global carpetbaggers' - they don't seem to profit any community other than themselves.

I do like the idea of building a good strong local economy and a national economy that survives the colds and flu symptoms that may affect other nations.  Why should everyone around the globe go down like dominos?

The new Obama White House chef, really the old Obama chef said something that rings true, it went something like this "fresh, local grown organic produce"  from sustainable agriculture...

Is total free trade on a global basis sustainable in the long term? 

I like the idea of "fair trade" - like in coffee.  Pay producers a fair amount for their goods and services.

Fair trade is not the same as free trade.  Imports have an effect on the economy, it's called unemployment and someone has to pay for those benefits.  In many places, they cannot grow coffee or chocolate - import it.

my opinions

[WhiskeyGirl]

H-1B, offshoring supporters get key Obama Administration posts
Commerce nominee Judd Gregg believes H-1Bs help create jobs for U.S. workers

Gregg acknowledged that there has been some abuse in the H-1B program, "especially involving Indian-related companies and their basic flooding of the market in this area and then having people return to India with knowledge that they gained here." But, he argued, that's an issue "that can be corrected fairly easily with minor adjustments in the program."

Indian offshore firms are the largest users of H-1B visas and consider it critical to their delivery model for moving IT functions offshore. It's a point they have made repeatedly in U.S. Security and Exchange Commission filings.

Some observers are critical of Obama's appointments. Ron Hira, an assistant professor of public policy at the Rochester Institute of Technology and author of Outsourcing America, said the Gregg and Farrell picks indicate that Obama "is either ignorant or naive about the real job market for American IT workers. He is doing his level best, with these appointments, to undermine American workers and their livelihoods."

http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9127276

What kind of jobs are American students/workers going to compete for with workers from India and China?  IT and engineering people in the U.S. have struggled for jobs over the past few years. 

Where is the opportunity for them to compete?  What if they lose?  Who pays for their welfare benefits?  Is education and more spending on education a guarantee of a job in the Obama version of the future?

Why not see a future where workers from say Milwaukee compete with those from New York, or perhaps a small town in Canada?

Who will be left to work in America for all those entitlement programs?

jmho

[WhiskeyGirl]

IBM To North American Employees: To Keep Your Job, Move To India (IBM)
Eric Krangel | February 3, 2009 8:48 AM

Recent announcements of mass layoffs have created new scrutiny around the H-1B visa program, which brings foreign tech workers (mostly from India) to the US for work (at below-market wages, critics say). But IBM (IBM) is going with a novel tack: Instead of bringing cheap Indian workers to America, the company is demanding its American workers move to cheap India and get paid India-standard wages.

A better option than being laid off? IBM has been quietly eliminating thousands of jobs over the past few weeks.

IBM has established Project Match to help you locate potential job opportunities in growth markets where your skills are in demand," IBM says in an internal notice on the initiative. "Should you accept a position in one of these countries, IBM offers financial assistance to offset moving costs, provides immigration support, such as visa assistance, and other support to help ease the transition of an international move."

The document states that the program is limited to "satisfactory performers who have been notified of separation from IBM U.S. or Canada and are willing to work on local terms and conditions." The latter indicates that workers will be paid according to prevailing norms in the countries to which they relocate. In many cases, that could be substantially less than what they earned in North America...

"It's more of a vehicle for people who want to expand their life experience by working somewhere else," said [an IBM] spokesman. "A lot of people want to work in India."

http://www.alleyinsider.com/2009/2/ibm-to-north-american-employees-to-keep-your-job-move-to-india-ibm

If jobs are going to India for cheapness, where are the good paying jobs for Americans?  Good paying based on Indian or Chinese standards?

Does India or China really want all these American workers on their doorsteps?

imho

[WhiskeyGirl]

While there seems to be some American bashing regarding "buy American" in the Obama plan, why not?  Should taxpayers be on the hook for other nations?  Why not build America?  Build American infrastructure, industry, and jobs.  Why just build America and forget industry and other jobs?

Many are oriented toward spending on roads and other transportation projects, such as China’s plans to build or renovate airports, subways, and railroads. Others are providing tax cuts for consumers and businesses, as is the case in Canada and Brazil. Russia is trying to restructure the massive debt hanging over its corporations. Some countries, such as France, are aiming the stimulus at key industries, including Airbus, the giant aerospace manufacturer.

If France can target industries and companies like Airbus, why can't the U.S. go on record with "buy American"?  Can someone explain the difference to me?

“The bulk of the spending is for research and innovation to boost investments in the private sector,” points out Adrien de Tricornot, financial columnist for Le Monde.

What private sector investments could the U.S. make?  Lower taxes on new machinery?

China’s massive stimulus package – representing more than 6 percent of its GDP – is partly oriented toward boosting spending, much as the US Senate has proposed giving tax breaks to spur auto purchases. The Chinese measures include a 13 percent discount for rural residents who buy household appliances such as refrigerators and washing machines. The government has also halved the sales tax on autos to boost sales and waived taxes on property sales to try to revive the property market.

How much American business will benefit when the Chinese purchase refrigertors and washing machines?  Any of that stuff made in the U.S.?  Is it wrong to focus on things made in your own country?  Or is it wrong just for the U.S.?

Very few of the stimulus plans seem to have “buy in my country” aspects to them. Last week in Davos, Switzerland, at the World Economic Forum, Japanese Prime Minister Taro Aso vowed, “In keeping with the lessons of the 1929 Great Depression, we will resolutely fight all protectionism.”

That doesn’t mean that countries won’t try to protect their own industries, says Sohn. In November, the White House held a meeting of 20 nations, and every leader agreed not to raise protectionist barriers for a year. “The day after it ended, Russia and India raised tariffs, then Vietnam and Brazil,” says Sohn.

http://features.csmonitor.com/economyrebuild/2009/02/04/economic-stimulus-plans-now-global-phenomenon/

What does the U.S. produce that Americans could buy?  What is part of the local economy?  If your economy/manufacturing base has been devastated over the years, why not support the few industries that remain?

Maybe the WTO could help those countries that are at a disadvantage because they don't make things like appliances, washers, or refrigerators.  If it's wrong to specify "buy American" is it also wrong to target industries/goods/services that are predominently made in your country?

I think stimulus and the targets are unique for every country.  I don't know why any American stimulus package would focus on IMPORTS. 

[WhiskeyGirl]

British and Chinese 'buy/lend' specifics -

British banks receiving government money have been asked by the government to only lend to British-based companies and individuals. The EU is renewing subsidies on some dairy products to protect its farmers. Indonesia last month raised new trade barriers on various manufactured imports.

And China launched its own multi-billion-dollar stimulus package that envisions using China-made steel in scores of public works projects.

http://www.google.com/hostednews/ap/article/ALeqM5j63kh1o26dbJdFV_CklrnpSO9QfwD9650OF80

What's wrong with U.S. made products?

Why isn't the U.S. jumping on the WTO with the British and Chinese?

[WhiskeyGirl]

China raises garment, textile export tax rebate rate(Xinhua)
Updated: 2009-02-05

China will increase the tax rebate rate for textile and garment exports from 14 percent to 15 percent, an executive meeting of the State Council announced Wednesday.

The move would reduce exporters' costs and support the textile industry, the Council said. The effective date of the new rate wasn't specified.

In a national plan to invigorate China's textile industry adopted by the State Council Wednesday, the government would allocate funds for companies that produce textiles or fibers, or operate in the textile printing and dyeing sector, to upgrade technology and develop domestic brands.

Government departments were told to provide financial support and insurance services to small and medium-sized textile plants.

http://www.chinadaily.com.cn/china/2009-02/05/content_7446435.htm

Why aren't those on Capitol Hill (Obama) thinking of creative ways to promote American products for the stimulus?  Maybe some special tax breaks for the steel industry?   American steel at prices that cannot be refused?  Some "green" requirement that give tax breaks to companies within say 1,000 miles of a project? 

How fast will a project be completed if the steel is shipped by a slow boat from Anywhere?  Is that a fast acting stimulus in these dire times?

[WhiskeyGirl]

Maybe it's better to have no stimulus than continue to send trillions of dollars overseas.   

Dollars, that are probably borrowed from overseas too.   

Just say NO STIMULUS!!!    

Where did Obama say those jobs would be created?    Maybe he could offer a detailed breakdown by country?

imho