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Nicky

What would Mexico's failure mean for the US?

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Trump has no intention of imposing a 25% import tax on Mexico goods coming into U.S.  He's forcing Mexican President Pena Nieto to the bargaining table to renegotiate NAFTA.  For the good of both countries.

Pena Nieto knows that if he has to institute monetary reform (i.e. quit constantly devaluating the Peso) then he will be forced to make some tough economic decisions.  Devaluation of currency is one of the oldest tricks in the books that governments use to stave off making serious, free market economic reforms (see China).

And know, that when a government devalues it's currency, the government DOES have more money (at least temporarily) - but the citizens are the ones who get kicked in the teeth.

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15 minutes ago, New Buddha said:

Trump has no intention of imposing a 25% import tax on Mexico goods coming into U.S.  He's forcing Mexican President Pena Nieto to the bargaining table to renegotiate NAFTA.  For the good of both countries.

What are the one or two key things you think would be improvements to NAFTA? Do you mean Mexico agreeing not to devalue its currency, or something else?

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1 hour ago, softwareNerd said:

What are the one or two key things you think would be improvements to NAFTA? Do you mean Mexico agreeing not to devalue its currency, or something else?

The real problem is that we need to get out of all multi-lateral trade agreements, and only enter into bi-lateral trade agreements.  When you have three vastly different economies, such as NAFTA, with varying degrees of taxation, regulation, health care systems, monetary policy, etc.  AND you have transnational corporations with businesses in all those countries, then it's too easy for those companies to game the system.

As I noted, the Peso devaluation (shortsightedly)  helps U.S. importers (Automotive) but it hurts Mexican workers and U.S. exporters (agriculture, etc.).  Mexico's GDP has increased six-fold, and yet 50% of Mexicans still live in very real, third-world poverty.  For the first time, remittance (money sent back from the U.S. to Mexico by Mexicans [legal and illegal] actually accounts for more money than Mexico's Oil export income.  That's not good for either country.

But, the U.S. also needs to drastically reduce corporate taxes, force health care providers to compete across state lines, promote Catastrophic Health Care insurance plans and portable health care saving accounts, quit forcing needless regulations on companies and end the global warming war on energy.  All of these are things that Trump has set into motion.

I truly don't understand all the frothing at the mouth by the anti-Trump yahoos on this forum.  The fact that he got into office without being bought-and-paid-for by the donor class (which includes the Republican establishment) should give us all hope.

So far, I've seen little wrong with what he's put into motion this first week.

The press takes him literally, but not seriously; his supporters take him seriously, but not literally. - Salena Zito, The Atlantic.

Trump reminds me of every developer that I've worked with over the last two decades.  Huge, bullying, Alpha-male egos.  And you cringe every time he goes in front of a design review board, city planners or neighborhood organizations.  But when you are one-on-one with him in a conference room, he's completely different.  Very loyal.  Developers are born negotiators.  I've many times presented horrible designs to neighborhood committees - which get shot down - only to come back and present the design that we wanted all along.  The committee feels that they won!

Edited by New Buddha

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3 hours ago, New Buddha said:

Are you seriously saying that countries don't devalue their currency for political reasons?

I'll respond as soon as you learn about the law of supply and demand, and correct your mistake above. If you're not willing to do that, then there's no point in talking to you.

Edited by Nicky

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9 minutes ago, Nicky said:

I'll respond as soon as you learn about the law of supply and demand, and correct your mistake above. If you're not willing to do that, then there's no point in talking to you.

I don't really care if you respond or not Nicky.  I'll sleep just fine tonight.

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1 hour ago, New Buddha said:

So far, I've seen little wrong with what he's put into motion this first week.

Not necessarily wrong in principle, no, but it's hard to say that much of his policy in fact uses anyone's existing knowledge. He acts as if -no one- has taken the time to think about economics issues, therefore we need to finally look into it. All he has is intuition for real estate development. Not that a rational improvement to NAFTA doesn't exist, there's just no plan I know of from Trump.

We KNOW he doesn't read books. We KNOW he is prone to exaggeration and flip-flopping (read: lying). I don't have a reason to suspect that any resulting plan will be rational, as long as Trump is at the helm. I don't care that he has an ego, no one here should. I care if he has the ability to develop rational plans, or the ability to recognize them.

Renegotiating as you suggest NAFTA or replacing it is, generally speaking, probably a good idea. But, that doesn't mean the terms will necessarily be rational. There's all the reason to think Trump WANTS tariffs and protectionist policies, both of which are anti-capitalist. I don't think anything going on about Mexico is good intentioned. Trump treats it as though the US is under assault by the Mexican army. He's not treating the goal as making the US a better trade partner or ally to pro-capitalist Mexicans.

Edited by Eiuol

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13 minutes ago, Eiuol said:

Trump treats it as though the US is under assault by the Mexican army.

Let's hope that Pena Nieto thinks so too!  Then maybe he will quit forcing Mexico down the drain hole to poverty by pursuing a horrid, disastrous monetary policy that's crippling Mexico!

It's called negotiation, Eiuol.  You know, the Art of the Deal....

Edited by New Buddha

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15 minutes ago, New Buddha said:

Let's hope that Pena Nieto thinks so too!  Then maybe he will quit forcing Mexico down the drain hole to poverty by pursuing a horrid, disastrous monetary policy that's crippling Mexico!

err, do you mean that it's true that the US is under assault, or do you mean it's a lie but a negotiating tactic?

Lying is only okay if used against criminals, and otherwise evil people.

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10 minutes ago, Eiuol said:

err, do you mean that it's true that the US is under assault, or do you mean it's a lie but a negotiating tactic?

Lying is only okay if used against criminals, and otherwise evil people.

I mean that Mexico's President Enrique Pina Nieto is a chicken-shit, weak-minded, rich politician that will sell his people down the river in order to remain in power - in lieu of doing what is necessary to set Mexico on the path to prosperity.

Should we also coddle North Korean's Kim Jong-un and the leaders of Iran?

Really?

Edit:  The U.S. defied the "Diving Right" of a King, Eiuol....

Edited by New Buddha

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37 minutes ago, New Buddha said:

I mean that Mexico's President Enrique Pina Nieto is a chicken-shit, weak-minded, rich politician that will sell his people down the river in order to remain in power - in lieu of doing what is necessary to set Mexico on the path to prosperity.

Be that as it may (I think you also described Trump, especially the weakminded part [anti-intellectualism] ), does that warrant lying?

Kim Jong-un is substantially worse, an actual dictator.

Anyway, you are presuming Trump is seeking a pro-capitalist deal. I think he's seeking a protectionist deal. Do I have a reason to think he'll make a smart, pro-capitalist trade deal?

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49 minutes ago, New Buddha said:

How the heck would I know?  Or care?  Think what you will think.

Because you (seem) to have some reason to think he will. Also because having a debate/argument implies wanting to demonstrate to the other person (or the audience) that your idea is true.

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6 minutes ago, Eiuol said:

Also because having a debate/argument implies wanting to demonstrate to the other person (or the audience) that your idea is true.

No.  I was providing facts that most of the ideas on this post are demonstrably false.

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5 minutes ago, New Buddha said:

No.  I was providing facts that most of the ideas on this post are demonstrably false.

Okay, but if he does seek protectionism, then this idea - the main idea - is true: "destabilizing the Mexican economy is his end game".

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9 hours ago, Nicky said:

2. American companies having access to cheap labor isn't a bad thing. It's a good thing, because it lowers prices for American consumers. 

Prices are set by supply and demand to wring the best price for the seller that the market will bear.  Lower manufacturing costs increase the profits of the manufacturer, and do not lower prices for the end purchaser.

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4 hours ago, Grames said:

Prices are set by supply and demand to wring the best price for the seller that the market will bear.  Lower manufacturing costs increase the profits of the manufacturer, and do not lower prices for the end purchaser.

You don't know how the law of supply and demand works either. You also clearly never had any contact with the world of retail purchasing. It's extremely competitive. The notion that suppliers could just ignore a growth in supply and not lower prices is almost comical to anyone who knows how the supply/retail business works in a large market like NAFTA or the EU.

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8 hours ago, New Buddha said:

I mean that Mexico's President Enrique Pina Nieto is a chicken-shit, weak-minded, rich politician that will sell his people down the river in order to remain in power - in lieu of doing what is necessary to set Mexico on the path to prosperity.

Should we also coddle North Korean's Kim Jong-un and the leaders of Iran?

Really?

This post is based in New Buddha's lack of understanding of the concept of limited government: government action should be limited to the protection of individual rights.

The US limits trade with North Korea and Iran because those are states that threaten Americans' rights. That's what justifies those restrictions, not any kind of judgement of their political system, or their leaders.

But it would take a statist thug to try and limit trade with Mexico, or make such trade conditional on arbitrary demands he has for Mexico's leaders. And it would take an especially deep seeded ignorance of the basics of Objectivism to call free trade with a friendly neighboring country a "coddling of the leaders of Mexico", instead of what it is: the government respecting Americans' right to trade freely with Mexicans.

In general, when it comes to economic matters, here's a good way to differentiate between statists and free market advocates:

-if someone calls government INACTION an act of "coddling" the people or group of people that inaction benefits, that person is a statist;

-if someone calls government ACTION an act of coddling, that person is a free market advocate.

Quote

 Mexico's GDP has increased six-fold, and yet 50% of Mexicans still live in very real, third-world poverty.

Income inequality is indeed the objection most socialists raise against economic freedom. Not sure why you think that would work on an Objectivist forum, though. We

1. believe in economic freedom on principle

2. know that government controls that attempt to fix income inequality actually just hurt everybody, including the poor

Edited by Nicky

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9 hours ago, New Buddha said:

I don't really care if you respond or not Nicky.  I'll sleep just fine tonight.

If you don't care about my response, why did you ask the question?

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9 hours ago, Grames said:

Lower manufacturing costs increase the profits of the manufacturer, and do not lower prices for the end purchaser.

Not directly and not immediately and not in every case. But if prices are kept at some preexisting level when lower manufacturing costs are available, won't that (over time) invite competition which can offer equivalent goods at lower prices?

Isn't that the (long term, wide scale) effect of lowering manufacturing costs on prices -- to lower prices for the end purchaser?

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3 minutes ago, DonAthos said:

Not directly and not immediately and not in every case. But if prices are kept at some preexisting level when lower manufacturing costs are available, won't that (over time) invite competition which can offer equivalent goods at lower prices?

Isn't that the (long term, wide scale) effect of lowering manufacturing costs on prices -- to lower prices for the end purchaser?

In this case if the competition attempts to lower manufacturing costs as well by the same means, that means the entire industry leaving the country.  Once there is once again an approximate parity on end-product price competition resumes.  

But, the entire industry is moved to the detriment of my neighbors and myself.   Decades of emptying America's industrial heartland of industry after industry for the utilitarian collectivist ethos of "greatest good for the greatest number" has only brought into sharp focus the fact that I should care more about the welfare of the people in my country for my own selfish reasons than people in other distant countries.   

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8 minutes ago, Grames said:

In this case if the competition attempts to lower manufacturing costs as well by the same means, that means the entire industry leaving the country.  Once there is once again an approximate parity on end-product price competition resumes.

All right. I'd thought I was addressing the specific idea of lower manufacturing costs resulting in lower prices (for American consumers). And I think that, generally speaking, that's true. By producing goods overseas, for instance, WalMart can (and does) offer lower prices than many competitors with higher manufacturing costs (sometimes accounting to producing domestically). We can agree on that, right?

I was responding in the first place, because while I'm broadly agreed with Nicky on this issue, I didn't like how he dismissed you. You and I have disagreed in the past, and sometimes bitterly (which I regret), but I have never considered you ignorant in any way, shape or form.

8 minutes ago, Grames said:

But, the entire industry is moved to the detriment of my neighbors and myself.   Decades of emptying America's industrial heartland of industry after industry for the utilitarian collectivist ethos of "greatest good for the greatest number" has only brought into sharp focus the fact that I should care more about the welfare of the people in my country for my own selfish reasons than people in other distant countries.   

Doesn't most of that account to bad American policy? (Like regulations and taxes which drive up the cost of producing goods?)

I don't blame you for caring more about the people in your country than those in distant lands, but isn't the solution to work at repealing those policies which make America less competitive? Isn't it a further mistake to try to rectify this situation by limiting the freedom of American companies to move abroad, or taxing imports more heavily?

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1 hour ago, DonAthos said:

Isn't it a further mistake to try to rectify this situation by limiting the freedom of American companies to move abroad, or taxing imports more heavily?

Don,

At the start of NAFTA, 1 Peso was equivalent to  35 cents.  Now, it's only about 5 cents.   The purposeful monetary policy of devaluating the Peso against the Dollar by the Mexican government has hurt both countries.  U.S. manufacturers cannot export to Mexico and Mexican workers salaries are worth less and less each year.  NAFTA allowed U.S. manufacturers to move assembly plants to Mexico, but the result has been unemployment in both countries. Its a race to the bottom. This same monetary policy lead to the Mexican Peso Crisis in 1994.  It was hoped that NAFTA would keep Mexico from pursuing this same policy.

In a vibrant, health economy, with low unemployment, wages go up.  Those with jobs can cross the street for a better offer, and those looking for work often have 3 or 4 offers which gives them a stronger bargaining position for wages and benefits.

But you are right in that the U.S. needs to lower it's corporate tax, regulations, free up the energy market and make health insurance providers compete across state lines.  This will make the U.S. more attractive to foreign manufactures (Toyota, for example).  U.S. workers are still the most productive in the world.

 

Edited by New Buddha

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