Tuesday, May 20, 2008

Things you think of.

In the Jaws of the Dragon by Eamonn Fingleton

I read the first 1/5? of this book on Sunday while walking Orclette around in circles. It makes me think.

Now I don't care much for Eamonn's very harsh view of the East-Asian countries. He takes the information he has and paints a bleak picture of Asia abusing the US.

I agree that the trade/debt flows are not good. Are very very not good. But my first thought isn't that they are abusing us... its that we're being lazy.

When I, an economic layman, view our nation's economy/trade relationship I'm worried.

#1 We're in debt. Debt is -bad-. Not hmm okay.. but BAD. It is a lazy habit, borrowing is. It shows lack of patience.
#2 We're out of budget. I think. All I hear is that oh this side or that side will fix our budget. Not sure here but yeah. If we are out of budget then we need to stop spending money, or make more somewhere.
#3 We're operating with a trade deficit with other countries. Trade ideally should bet 50/50, sure we might have a 70 in/30 out with one country but we should make it up with others. If we are buying more than we're selling then obviously we're going to run low on money at some point.

Now for #1 and #2 the 'simple' solution is stop spending money, and make more. Obviously this isn't simple as different people have different views on what should be cut and where we should get money from.

My view is we should place trade taxes(these are called tariffs?) on the trade coming from countries where we have a deficit. This would fix the deficit a tiny bit I think.

I'm also in favor of withdrawing from overseas military commitments when possible. These never seem to be worth the cost in money or in lives.(Please note, I fully and entirely believe that our nations troops are doing a good job and deserve our full support. I just don't believe that many of our engagements have been necessary or productive.)

I would like Maglev trains. Electricity isn't very dependant upon gas/oil that I can tell and electric trains are cool.

I would like the US to have a huge per-capita savings rate. Something like 20%. That would be nifty.

I would like to see the US debt free before I die.

I would like to see a 'tax' on Credit cards. Like an extra 1-3% intrest that goes to help pay off the US debt. Yeah that would be nice.

I agree with Rhys. Our gas prices are ridiculusly low compared to the rest of the world. I'm not sure how we pull that off but bleh stop whining about it. Instead whine that you can't think of a many American products that are better than anything any other country makes.

All I can come up with is the iPod, and I would have said Boeing but I believe they have outsourced their latest plane. Maybe personal computers. But those seem to be made entirely with pieces from other countries.

Btw... my facts might be entirely wrong on some or all of this. And I ramble. I just felt the need to express my worries/concerns out here.


Gwaendar said...

I would like to see a 'tax' on Credit cards. Like an extra 1-3% intrest that goes to help pay off the US debt. Yeah that would be nice.

Thing is, you'll be hard-pressed to find a way to do that which doesn't immediately put 5-8% additional cost on the consumer...

Dammerung said...

@gwaendar, my first and most immediant response was "that would be fine". But this may be because I've been spending 20-30% of my income trying to get out of personal debt faster.

I really can't say that I have a complete grasp on what a 5-8% cost of living increase would do. But it sounds acceptable to me if it would get the US out of debt.

Daxenos said...

Trade imbalances are not the issue you think they are. If China can get me rice for $1/lb, why would I want to pay a US company $2/lb? Even worse, with a tariff of $1/lb on Chinese rice, you've just doubled my cost of rice, with no associated benefit to the consumer.

If you'd like some really good economists to read, I'd highly recommend Walter E. Williams and Thomas Sowell.

Gwaendar said...

The thing is, 5-8% more cost is going to be an issue for all the families to which the proposed gas tax holidays (I know that's a current topic in your country :) ) would really make a difference.

The subprime crisis sent much of the world economy into a tailspin, and just looming behind it there is a credit card crisis. I don't know if the statement that the average American household is only 2 weeks away from bankruptcy still holds true today, but it is being said that in general, the stereotypical American consumer relies enormously on credit cards (running on a permanent 2-3 salaries debt) instead of debit cards.
A 1-3% tax wouldn't merely be passed onto the consumer, but knowing financial institution greed, inflated to more as hinted above, and that could provoke yet another crisis hitting the lower and middle income segments of the population.
Which in turn hurts consumer business and will merely accelerate the current economical problems.

I think the way out (and that's actually valid for any nation, my own country is also in debt) starts with passing laws forcing efficient governance on elected officials. Proposing a deficit budget shouldn't even be allowed at whatever level, be it local, regional, state or national level. Deficit spending should trigger investigations and possibly jail if incompetence or neglect is to blame - if you are in charge of public funds, you should really be expected to treat these with even more care than your household income.

Beyond that, there needs to be an economical climate fostering consumer business along with a new edition of the Clinton surplusses (to pay off the debt first and foremost).

The following will mark me as worse than a commie to the average American reader, but I also believe the purely financial economy needs to be reigned in and taxed. Investing in a company's growth should be rewarded. Pure speculation and day-trading doesn't create jobs nor value, and the profits from such activities should be taxed accordingly.

I'll stop before this becomes too much pinko-commie talk (note that from where I hail from, that's merely relatively mild social-democrat policy).

Dammerung said...

@gwaendar I fully and completely support any legislation that blocks/prevents attempts to operate with a budget deficit and wish I had thought of it. Not sure on the day trading tax.

@Daxenos I shall have to look them up. I was attempting to try and cause more purchasing of US products so that US companies would have more money to spend on R&D and wages. Thinking about it though I suppose if they are spending it badly then more won't help anything.

Part of the plan with the credit card tax was an attempt to fiscally discourage the use of credit cards. I really really despise the industry. Debt has done more damage to my friends and family than almost anything else. In a similair manner to ciggarette/beer adds, credit card adds paint a rosy picture where you can get -anything- you need by swiping a card. They never show you destroying your finances and life with thousands and thousands of dollars worth of bills. They do not point out that saving your money and living frugally early is your best way to have that life you are wanting. Grrr.

Anyways a tax was me hoping to get people to stop. Not that taxes work like that.... just look at the cigarettes I mentioned. Loads of taxes and little effect.