The value of the tech transfer (knowledge) is substantial but it has to be weighed against the cost of acquiring it. There's a price that any company would be willing to share it for and the hard cap of that is premium you'd have to pay to buy a controlling stake in the company (ie: above what it otherwise trades at).

The 50% requirement doesn't imply that the equity is being given away. Chinese investors still have to buy it at (internal) market prices.


Because boeing has more of a stranglehold on it's respective industry and stands to lose a lot more from giving up the information. None of the car manufacturers individually stand to lose nearly as much from divulging their trade secrets, and so the price they're willing to accept for it is much less than the cost to the industry as a whole.

grunching here but a few thoughts,

all countries seem to have a reasaonable degree of protectionism although most call it something else. farming/agriculture seems like a huge culprit.

china cheats/lies and is very bad on many levels.

having said that, one thing that is not mentioned much is american consumers, especially the poor, have really benefitted from buying at WM, dollar stores etc... tons of that stuff is made in china and do we really want to make alot of it in america again. i.e. do we really want low wage plastics manufacturing jobs to come back?

where high quality - but probably not that sustainable - jobs have been lost is in the automotive sector. those jobs have been lost to mexico, perhaps china, but much much more to automation.

automation has killed tons of jobs. i don't think trump could get those jobs back if he was president for the next 20 years

canada and the USA have had a great relationship. i think it's worked out well for both countries even if it's not near perfect................ the world has been pretty quiet about trump/mexico/NAFTA from what i've seen. the opposite of canada/trump verbal war.

Yes.

I hate this argument. Every society has members who are incapable of doing higher skill, higher paying, jobs. Walmart can only employ so many greeters. The fact is there are people in our society who are incapable of performing higher skill, higher paying, jobs. We still need to provide jobs for those people or they become unemployed and a burden to society.

Come on. You know that's not what he or I meant. Trump said he wants a trade relationship with no tariffs or subsidies or quotas (I specifically used all three terms). You can't think what he meant was that Canada isn't allowed any of those but the US is.

But unemployment is already at a multi-year low, and the labor market is already tight. It seems our economy already has plenty of low paying job opportunities requiring relatively little skill. Its new businesses that could benefit from American innovation and technological leadership in science, technology and engineering that need more support.

Going after our North American and European allies won't change the fact that our trade relationship with China is far and away the most distorted.

Trump kept bringing up Ag tariffs, so I thinking what Ahnuld is implying is that the chances of US farm subsidies being removed are somewhere around 0%.

Am I missing something obvious or are you guys missing something obvious?

Trump said that he suggested to Canada a trade policy of no tariffs, no barriers, and no subsidies. Canada did not accept. What do you think Trump meant when he said that (at like the 8-minute mark of the press conference video in this thread)?

ME: Trump wants to abolish tariffs, barriers, and subsidies.
YOU: But what about subsidies?

The problem of IP theft was a lot worse when there was a huge turnover at Chinese companies. The theft wasn't formal - the government declaring it was theirs or blatantly allowing companies to do it. It was informal, people moving companies every six months because wages were rising faster than pay raises.

Over the past 10 years things have stabilized, the turnover problem doesn't really exist and also the gpvernment has cracked down on IP protection as its national industries have grown to the point that they need protection.

The whole IP theft thing from China is like 20 years ago. Like if you haven't considered moving stuff out of China because of high wages, then you've missed the boat.

The answer to the question posed, "Is Trump accurate in saying we're getting fleeced on free trade?" is no.

Free trade may be good or bad, but the fundamental Trumpian premise - that the trade deficits that we have are evidence that it is bad - is flawed.

And for the explanation, I go back to one of the few things Toothsayer posted that wasn't copied and pasted from America's state run media.

This is accurate. Our economy is evolving past the "we have 300 million people capable of screwing two pieces of metal together" phase and into the "we design robots to screw pieces of metal together" phase.

So the followup question...

... is answered quite simply. When we tell a Chinese factory to screw two pieces of metal for us, the export of IP doesn't count as an export but the assembled material counts as an import.

Of course we run trade deficits with poor countries because only physical goods count as having value.

I previously posted on the IP protection, and, yeah, it was a problem. It was a pretty big struggle at one point, and a small struggle now, to keep the IP away from being given away. But companies have learned to deal with it and managed it and that's kind of beside the point anyway.

Increasing trade deficits doesn't mean we're losing. Nor does decreasing our trade deficit mean we're winning.

Using trade deficit as a scoreboard is wrong. Trump is wrong in that regard, even if he is overall right about our trading deals being bad.

callipygian,
The ignorance is your posts is pretty amazing. These two in particular are comical:

And of course directly contradicted by both reality, what companies say, and authoritative studies on the matter, like the USTR report.

I can't even begin to fathom what you must thinking to actually type out the second.

What "counts" is the flow of money and capital. Directing people to do something doesn't count as anything. Flows of money are what matter. In your model of business, the company losing the most money is crushing it.

If you replace the word "losing" with "spending," then I agree and think you have hit the nail on the head, albeit accidentally.

Companies spend money. They get goods and services in return. If you disregard what you get in return and solely look at the money, then the companies that spend the most are crushing it.

But but but, the protectionists whine, why don't you spend that money on Americans instead? And the answer is simple, I'm not going to pay an American more to do the same job an illiterate foreigner will do for less. The value of what I get in return is the same. (Well, more or less the same - let's just say it's same enough with respect to the price differential.)

And if it's not same enough? Well then MAGA and ****. There's definitely stuff that I keep in USA #1 because USAers are #1. And then there's cases where I export my money to China because a Chinese illiterate monkey costs less than an American illiterate monkey.

The key, which protectionists all over the world can't seem to grasp, is to not be an illiterate monkey.

There are much cheaper ways to employ these people than creating pointless jobs. AI improving their productivity is one option. Universal income another if nothing else.

And who is going to create these pointless jobs, the government? And do you think people will want to pay say $75 for a pair of trainers that used to cost $50? 50% inflation is not something people strapped for cash are ready for.
Also, China destroyed its environment chasing high GDP growth.
Do you want to bring the environmental destruction back too? Of course not and it wouldn't even be possible because of the regulation (never say never under Trump). So that would cost a lot too. And when you add it all up, you realize why low-skilled manufacturing moved out in the first place.

As for high-skilled manufacturing, work on your education system first. But regardless, deficit is a better solution than living to work.

https://www.nytimes.com/2012/01/22/b...pagewanted=all

hm.. I am sure I would trust Warren Buffett/Charlie Munger rage against corporate compensate/stock options then anyone else in the business. Just because the top of the top guys are always under pay doesn't mean the majority of the head is. Sometime you get to the top of a company and the structure of it makes it so profitable that anything you do doesn't matter effect it +ev.

edit: https://www.amazon.com/Outsiders-Unc...tal+allocation
Pretty good book with examples of relative skill set that set apart the top dog in the corporate world

1. No one here is protectionist - that's a fantasy in your head. In fact, I'm more free trade than you are in that I think it's important for free trade/competition to end one sided protectionism.

2. All of the above that you wrote applies equally well to a China that plays by the rules on free trade/doesn't steal IP or force tech and wealth transfers. Given that, you've COMPLETELY missed the point and failed to understand what the actual problem is and how it relates to free trade.

We are not rich enough for that yet. Not even close. You're putting the cart 15+ years before the horse. The US is $20 trillion in debt, most of that because of China. These "pointless" job are in fact a source of wealth. If you want to use **** you have to make it, or make what other people want in return and have their markets open so you can sell it.
The free market if it's actually free, and not cheated so that China comes out ahead where the US would if China didn't cheat.
False equivalence. No reason clothing can't be made overseas. Or any other labor intensive stuff.

You know what China's #1 export area is? Computer chips.



The US developed these from scratch, had all the factories and knowhow for these, and these were largely sunk costs - making and exporting them was pure profit and wealth for the US. Having these duplicated and then local factories shut down due to the overcapacity achieved precisely nothing but wage stagnation, slower economic growth and spiraling debt.
The US was doing fine environmentally in the late 90s before the rise of globalization and China. We'd gotten very good at clean manufacturing.
A large deficit is not a solution, because it eventually ends in future generations living to work while not even owning the means of production.

I never advocated creating pointless jobs. I was advocating for retaining some low skill jobs which we've been shipping overseas. I was making that point in response to the claim that the US shouldn't try to retain low skilled jobs because we should be employing our people in higher skilled jobs and increasing education. You reiterated the point about how we should focus on increased education. While I agree wholeheartedly that we should be increasing education, we will always need low skilled jobs because there is a segment of society that is incapable of higher learning or performing high skill jobs. Just pushing them aside is a net negative.

Even if the government has to subsidize these low skilled jobs, so you can continue to afford new trainers every couple of months, it's better than saying just let the government completely subsidize the people who'd otherwise be unemployable. We also have a social obligation to them.

With regards to the environmental destruction I hope you realize that just because we shipped it overseas doesn't mean we aren't already paying the price, or that we won't be on the hook for the ever increasing problem in the future. The damage to the air, the ocean, the wildlife, and global warming aren't aware that the destruction should be continued to China because that's where it's being created.

I'd say there's a good chance in 20 years we'll wish we'd prevented China, and other countries, we've exported our highly polluting manufacturing to from taking over the manufacturing. I expect the long term cost to be much higher than if we'd retained the manufacturing and enforced the regulations we know are necessary to prevent environmental damage. Or at the very least forced other countries to institute environmental regulations in order to manufacture and export products to us.

It's really dumb to think just exporting unhealthy, environmentally damaging, manufacturing overseas is a solution. It's akin to throwing garbage in the ocean and thinking it won't be a problem because the ocean is so big and you can't see the garbage once you toss it. China didn't just destroy their environment, they destroyed ours too.

Then there's fact that there are 50 million people in the US with an IQ below 85. Their only way to be economically useful and build an independent economic future for themselves is low skilled jobs.

because US ag subsidies are a sacred cow that Trump never really said he'd touch. So yes im saying Trump wants Canada to remove barriers yet he wants to continue with farm subsidies.

There isn't actually a way for Trump to get rid of ag subsidies. Even if he promised to do so, he would have no actual control over whether that happened or not. There is 0 chance that we get rid of farm subsidies anytime soon. We should though.

right it would have to be driven by congress. so yeah agreed 0 chance. Hence my comments on why canada wont unilaterally get rid of their farm protectionism policies and why you cant blame them

But those export/import stats contain the full value of the product, not just value added in China.

Guess how much of the iphone, for example, is actually made in China from Chinese components.

I am uninformed on the topic and have a question I've never seen answered: What is being used to pay for the trade deficit? IOW, is it that American consumers are paying out of their incomes or is it that Americans are selling assets to pay for it?

When you buy something produced from another country that is an import

Americans are paying out of their future earnings.

Americans pay the Chinese in USD. USD are a call on the future economic output of the United States. Thus if $300 billion are net flowing to China each year, China is gaining $300 billion in claims on future US output, or existing US wealth such as land or gold or businesses.

To put it another way - every year, we give China the combination of Ford, Coke, and the entire US steel industry, which they then own in perpetuity and we lose in perpetuity.

Or to put it another way - every decade we give China enough assets to own about 1/10th of the real estate (including buildings, land) in the entire United States.

This is purely the trade deficit, adjusted down 30% for excess counting, and doesn't count the amount of IP transferred, which is a larger number than the trade deficit and just as much of a wealth drain, maybe even a more important one.

Warren Buffett did a good job of explaining the problem of deficits in a simple way in a 2003 article. You'll understand why these flows matter and why they need to be stopped ASAP and why the fake news media are nuts to be bashing Trump for something that must happen.

http://fortune.com/2016/04/29/warren...foreign-trade/