[Vision2020] Dispel the anti-growth myth

[Jeff Harkins]

Andreas,

Yes, the fixing of the Yuan/Dollar exchange rate does create price 
differentials that impact selected market sectors (consumer electronics, etc.)

But it is difficult to regulate consumer consumption - remember all 
the problems with food stamps - some would sell the stamps and use 
the cash to buy booze and cigarettes.

Before I bought my first home, I had to scrimpt and save and deny 
myself other consumption goods in order to be able to afford my 
home.  But I did it.  That was more than 30 years ago.

Despite low interest rates and other means to help folks get into a 
home (low income and subsidized housing) affordable housing remains a problem.

I haven't seen recent numbers on the cost of food, but aren't we 
still producing most of the food we consume in the US.  That would 
explain the high food cost.  To our rescue the large retail chains 
have helped to keep prices relatively low or at least dampen the 
effect of increasing food cost.

Housing is easy to explain - significant increases in wood products, 
copper and other building materials prices are still feeling the 
demand pressure from Katrina and other natural disasters.

But again, it may be as simple as folks just not wanting to buy a 
home, rather some opt for rentals.  That is certainly the case for my 
daughter, age 24 - college grad, good job, no car, lives in a shared 
commons facility.  She doesn't want the responsibility of a house.

And locally, many of us are having some significant issues with the 
cost of health care and the reneging of the UI on its health benefit 
insurance promises to its employees.

But you raise good points.  Let me reflect a bit on your comments - 
I'll see what I can learn from reviewing some data and recent research results.

I appreciate the civil tone of your post. Thanks.


> > Nice way of framing.
> >
> > Market participants are going to take advantage of market
> > inefficiencies in capital and/or labor irregardless of whether I
> > support it or not.  That is the nature of the invisible hand and the
> > nature of the forces that drive a market to efficiency.  If the
> > factors of production are underpriced, competition between
> > capitalists will drive prices to their appropriate market
> > values.  Similarly, overpriced resources will tend toward idle
> > capacity hence lowered prices.  Relatively unfettered free markets
> > tend toward equilibrium.
>
>I'm trying to wrap my head around your argument that a market with a
>universal 35% subsidy is somehow "free." The overvaluation of the yuan
>is (1) damaging the buying power of everyone living in China, (2)
>distorting markets worldwide, and (3) vacuuming manufacturing out of
>the United States.
>
>While this is good for many Americans, in terms of access to
>manufactured consumer goods, the generalized effect cheap Chinese
>goods have on "buying power" is a really insufficient measure of its
>effects on the American economy. The Heritage Foundation, for
>instance, just recently did a study that found that the American poor
>have much more effective access to consumer goods (televisions,
>refrigerators, DVD players, XBoxes, et cetera) than the poor did in
>the 1970s. From this, then, they concluded that America did not have
>any poor people.
>
>This is nonsense. The problem is that, compared to the 1970s, consumer
>goods are far cheaper and far better. Housing, however, is not. Food
>is not. The cost of medical care has gone through the roof. Which is
>to say: we now live in a society, largely due to the overseas movement
>of consumer manufacturing, where the poor can afford a big-screen TV
>but not decent housing.
>
> > Am I a free market advocate?  Yes.
> >
> > Are you?
>
>Free markets are the best known mechanism for generating wealth, and
>wealth is the best known mechanism for generating social welfare.
>Insofar as a market accomplishes those goals, I'm in favor of them. I
>am not, however, in favor of markets where the well-informed "economic
>man" with unlimited choice is a laughably poor substitute for the real
>consumer (like medicine) or markets wholly composed of rent-seeking
>(like military contractors).
>
>-- ACS