Your Maytag repairman speaks Mandarin?

[Meister]

The second wave of Chinese domination is happening by Chinese companies buying up western brand names like Maytag, IBM Personal Computers, Unocal....

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_pesek&sid=azhHIld0A1VE

Why are our governments so concerned about equal opportunity employment etc... , but don't give a crap about the above?

 

[DateMasamune]

The second wave of Chinese domination is happening by Chinese companies buying up western brand names like Maytag, IBM Personal Computers, Unocal....

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_pesek&sid=azhHIld0A1VE

Why are our governments so concerned about equal opportunity employment etc... , but don't give a crap about the above?

Honestly it really is no big deal until a foreign government controls your strategic industries like oil. Hey, in Japan, Nissa is runned by a Frenchmen and Sony is runned by an American. What's the big deal?

PS Li Kar Shing once owned shares in CIBC and almost owning Air Canada. There was also a bid from China for Noranda - a Canadian icon company. Not to mention, Li also owns a large chunk of the Panama Canal.

Welcome to the 21st century of global economics.

 

[Meister]

Honestly it really is no big deal until a foreign government controls your strategic industries like oil.

Unocal is an energy (oil) producer.

Hey, in Japan, Nissa is runned by a Frenchmen and Sony is runned by an American. What's the big deal?

Yes, but they are still Japanese companies.

My beef is that we are funneling so much money to Asia especially China that they don't know what to do with all that money. So, what do they do? They buy American brands. And, after they will have destroyed North Americas manufacturing and R&D our country will be left with warehousing. Oh yes, warehousing, we have become experts at shipping and warehousing. Walmart has perfected the art of logistics.

And, don't get me wrong, I have nothing against Asian people. I am just concerned about the global imbalance that is affecting not only us, but Europe and to some degree Japan also.

 

[someone]

The balance of payments is a basic feature of international economics. Ignoring changes in official reserves (which are minor), changes in the current account (which is primarily made up of trade in goods and services) has to equal changes in the capital account (trade in debt/bonds and equity/ownership). As long as the U.S. is running a large government budget deficit and have a low savings rate, they will be a net importer and will have to finance the trade deficit by selling capital to foreigners. However, if you check you will find that on a year-to-year basis Canada’s higher savings rate and budget surplus puts us in a different situation (in net terms).

 

[Meister]

However, if you check you will find that on a year-to-year basis Canada’s higher savings rate and budget surplus puts us in a different situation (in net terms).

You are correct, I think. Thanks mainly to the auto pact with the big 3 and natural resources we are net exporters. And, btw, if we didn't have the auto pact in Ontario we'd be dead in the water.

Furthermore, the US dollar will drop more in the coming years as the Asians are going to switch their reserves from USD to Euros to protect their assets. This may strengthen the CDN dollar and wipe out any currency advantage the Canadians still have.

 

[Raven_x]

CHINA WILL RULE!

 

[DateMasamune]

CHINA WILL RULE!

No, it's just that we need another power to balance the US like we did in the Cold War with Russia. But anyway, the US needs to be humbled. I am gald the European bloc has already developed some anti-US sentiments, thanks to the French who started it all.

 

[lomotil]

North Americans and their work ethic and productivity is lower than Asia's.
The United States is getting left behind, and even Greenspan, the Federal
Reserve Chair, agrees that playing with the Chinese Yuan currency to give
the Americans an advantage will work not work in the American's favour.
The problems that N. America will have will get worse as the up and coming
bright energetic hardworking Asian youth enter the work force in Asia, and go
against mediocre relatively less productive, yet materialistic N. American youth. The N. American lifestyle of low productivity yet high demand for vacations, consumer goods etc. is the problem, not the hunger for progress,
vitality and hardwork of the Asians, particulary the Chinese.
Soon China will own many of the private resource based companies in Canada.
Learning Mandarin may become advisory sometime soon. China and
Japan own a large amount of US Tbills, thus they subsidize the huge credit
debt of America, suppose Chinas and Japan decide to cash in??.

 

[lomotil]

No, it's just that we need another power to balance the US like we did in the Cold War with Russia. But anyway, the US needs to be humbled. I am gald the European bloc has already developed some anti-US sentiments, thanks to the French who started it all.

France is a nation of wine guzzling cheeseheads with penis envy since they
are not a superpower, just and impotent pain in the ass.

 

[Meister]

North Americans and their work ethic and productivity is lower than Asia's.

That is only partially true. The productivity is obviously better in China due to cheap labor costs. I am not sure if the work ethic is any better. It's called survival for these guys. If a worker ever asks for a raise they will be shown the door and replaced by another migrant worker.

 

[Guy Lafleuer]

Wealth and power must be earned and subsequently maintained. Get complacent, and you will lose it.

History has proven this over and over. China was once great, so was Russia, Rome, etc.

It was British upstarts who colonized America and Canada. These underdogs fought the power, and worked hard to create something special. Unfortunately, their descendants don't have the same work ethic. The land of opportunity is now the land of entitlement. That don't work...

India and China are emerging as economic superpowers. Watch out.

Don't have the same work ethic ? I just got back from China. The women in the factory I visted couldn't have been older than 14. If this is the competition and we're going to allow it, then all our children will be working the cafeteria at Walmart. The other thing to keep in mind is that the byproduct from all of the manufacturing is just dumped untreated into the South China Sea. That's a cost that manufacturer's in North America have to pay. Treating and not dumping the crap into the environment. So I guess if you believe in slave labour and dumping toxic waste into the environment is a good thing. And supporting a Communist country to boot. Go for it. It's a classic example of Capitalism eating it's young !

Guy

 

[someone]

That is only partially true. The productivity is obviously better in China due to cheap labor costs

You reasoning is faulty. In competitive labour markets (China now has a defacto market economy) the real wage rate is equal to the marginal productivity of labour. Cheap labour is a sign that labour is less productive.

BTW, I get the impression that many posting in this thread seem to think that economic growth and international economics are zero sum games. This is not true. We are actually better off when our trading partners become wealthier.

 

[someone]

You are correct, I think. Thanks mainly to the auto pact with the big 3 and natural resources we are net exporters.

Actually, it has more to do with Canadians finally getting their fiscal house in order.

 

[homonger]

It's called a global economy, and if America wants to ship its crappy popular culture abroad, it has to accept foreign investment in its country. Besides, Maytag is a 3rd tier brand nowadays anyway, so who cares? Maybe they can do something more with it than its former owners. It's not like the Chinese bought Coca Cola or Ford or something.

 

[wollensak]

Urban Legend

Actually, it has more to do with Canadians finally getting their fiscal house in order.

Canada is the only G8 country consistently running budget surpluses. Our dollar has gained against the US dollar, but then, so has every other currency, deficits or not. I have not noted any particular extra strength in our currency based on our sound fiscal manangement.

A more likely theory is that the Canadian dollar follows the trend of commodity prices, as we are basically exporters of raw materials. Our currency tanked during the Asian economic crisis, when coincidentally, commodity prices also tanked.

If the Chinese economy goes soft (unlikely, I know), our dollar will get flushed, regardless of how well our finances are managed.

We can count on economists to be completely wrong on the direction of our currency. I well remember the senior economist for one of our banks ( a blonde American woman) saying that unless we replaced our curreny with the US dollar we would see our currency sink like a rock. Our dollar was then trading at 62 cents. Good thing we didn't take her advice. Similarly economists have recently predicted the Canadian dollar at 90 cents and the price of oil in the low 30s. Where else can you get a job you can keep while being mostly wrong most of the time?

Sorry, every time I see the US dollar spike upwards despite US indifference to ballooning deficits, I see the folly of the idea that good management is rewarded in a strong currency. The Americans believe their superior productivity will enable them to absorb their deficits. The markets seem to agree with them.

 

[someone]

Canada is the only G8 country consistently running budget surpluses. Our dollar has gained against the US dollar, but then, so has every other currency, deficits or not. I have not noted any particular extra strength in our currency based on our sound fiscal manangement.

My post had nothing directly to do with the value of the dollar but the balances of the current and capital account (which relates to the exchange rate but that was not what I was talking about). As I have posted elsewhere the basic identities of national income accounting tell you that the trade surplus (or deficit) is equal to the government surplus plus net private savings. As I say, this is an identity, thus given the way the national income accounts are calculated, it has to be true (I actually gave the algebra in another thread). If total domestic savings are positive (government savings plus private savings), a country will be lending to the rest of the world in terms of buying the bonds and equity of other countries. Its net exports will also be positive by the same amount. You can check any G8 country and you will find that this is true.

We can count on economists to be completely wrong on the direction of our currency. I well remember the senior economist for one of our banks ( a blonde American woman) saying that unless we replaced our curreny with the US dollar we would see our currency sink like a rock. Our dollar was then trading at 62 cents. Good thing we didn't take her advice. Similarly economists have recently predicted the Canadian dollar at 90 cents and the price of oil in the low 30s. Where else can you get a job you can keep while being mostly wrong most of the time?

This shows a misunderstanding of what economics is. Private sector and government economists don’t forecast the future because they know it but because they are paid to. They are paid to because for some purposes even bad forcasts are better than none (one example is central banks making decisions on monetary policy). Believe it or not, few economists actually do the type of work you are talking about. When it comes to more fundamental issues like free trade versus protectionism, their predictions tend to be pretty good.

 

[great bear]

I understand that the Maytag repair guy has a yen for Japanese women.

 

[red]

It's called a global economy, and if America wants to ship its crappy popular culture abroad, it has to accept foreign investment in its country. Besides, Maytag is a 3rd tier brand nowadays anyway, so who cares? Maybe they can do something more with it than its former owners. It's not like the Chinese bought Coca Cola or Ford or something.

maytag is a third tier brand? my washing machine is insulted

 

[Meister]

You reasoning is faulty. In competitive labour markets (China now has a defacto market economy) the real wage rate is equal to the marginal productivity of labour. Cheap labour is a sign that labour is less productive.

That would be the case if China was a defacto market economy, but it is not. There is some unfair market manipulation going on. Let me give you some examples:
- Export Prices are kept artificially low by pegging the yuan. By some estimates the yuan would be 40% stronger than the USD if it were allowed to float. For the same reason inflation is out of whack.
- A middle class is not developing because wages are not allowed to rise. For example an engineer or designer still only makes about 200 to 250 USD a month, even in Shanghai.
- Raw materials are cheaper in China than in the US, even if the raw materials are produced in the US and shipped to China, such as plastics, rubber or steel. Go figure.
- There is about a 30 to 40% import duty on many finished goods shipped to China forcing many companies to locally produce if they want to sell in China.

The Congress and other politicians are complaining because it makes for good politics, but ultimately nothing is being done. The large multi-nationals (Coca Cola, MD, GM....) want to get in on the china market and don't want to upset the apple cart.

 

[someone]

That would be the case if China was a defacto market economy, but it is not. There is some unfair market manipulation going on. Let me give you some examples:
- Export Prices are kept artificially low by pegging the yuan. By some estimates the yuan would be 40% stronger than the USD if it were allowed to float. For the same reason inflation is out of whack.

This has nothing dirrectly to do with the relationship between wages and productivity which is what we are talking about.

- A middle class is not developing because wages are not allowed to rise. For example an engineer or designer still only makes about 200 to 250 USD a month, even in Shanghai.

Do you have any evidence that "wages are not allowed to rise". Otherwise, wages likely just reflect productivity which in turn is affected by the relative abundance of labour in China. Given that compared to North American they are relatively abundant in labour and scarce in capital, one would expect their wage rate to be lower.

- Raw materials are cheaper in China than in the US, even if the raw materials are produced in the US and shipped to China, such as plastics, rubber or steel. Go figure.
- There is about a 30 to 40% import duty on many finished goods shipped to China forcing many companies to locally produce if they want to sell in China.

The Congress and other politicians are complaining because it makes for good politics, but ultimately nothing is being done. The large multi-nationals (Coca Cola, MD, GM....) want to get in on the china market and don't want to upset the apple cart.

The above does not directly relate to the productivity of labour in China. As I said, in competitive labour markets (many suppliers and sellers who individually can’t influence price), firms trying to maximize profits will hire labour until what they pay for labour is just equal to the productivity of the last unit of labour they hire. Thus, a low wage rate is a sign of low productivity. Moreover, if you look at their GDP per capita, you find it is low, indicating low productivity per worker. BTW the fact that some goods from China are cheaper than goods produced here is not a bad thing. It allows us to consume more than we otherwise would otherwise be able to afford. Moroever, rising the productivity and hence the income of our trading partners is a good thing for us anyway.