Outsourcing and the economy – how to fix it?

HT: http://wemeantwell.com/blog/2011/11/30/us-sells-21-tons-of-tear-gas-to-egypt/ Blogger himself means well, but totally got the Egypt thing WRONG. Beware of snarky sarcasm, it can come back to bite you!

 

Here’s a bit of email correspondence IFO conducted recently.

It’s so cool when people ask for your opinion! IFO thinks you might be interested in the topic.

The video proposes that buying only American products will boost the US economy. Not a new idea.

For more information, Google the Buy American Act.

Below is the conversation, earliest message first:

From: J, a friend
Subject: FW: Watch this video – Made In America!!!!

I found this video interesting but am wondering just how accurate it is.
https://youtube.googleapis.com/v/4FrGxO2Fn_M

Reply from: IFO
Subject: Re: Watch this video – Made In America!!!!

I like his notion that we can skip the politicians. He’s right about that. Some of his premises were incorrect or missing details of what caused the outsourcing in the first place, so your doubts were right about accuracy. Individual actions, even if multiplied by millions won’t change things as fast as what is already happening right now.

Wages in Asia are rising. This is making the population buy more stuff – American stuff. At the same time, average American wages, while very high compared to the rest of the world, are stagnant. This means we are moving into some kind of parity.

Buying American makes us feel good, but doesn’t do much else. I boycotted products made in Communist countries until the Berlin Wall fell. That was easy, because they didn’t make many consumer products and most of what they did make was shoddy.

Today, who can afford to deliberately pay more for goods? Only higher earners and savers can do that.

Right now most governments in First World countries are keeping interest rates low. They think this will stimulate borrowing. It hasn’t happened in Japan for the past 30+ years, but they ignore that demonstrable fact and push ahead.

The U.S. has not raised taxes much lately, but Europeans (Spain, Greece, Italy and France) have been and that is driving their faltering economies further into the hole they are falling into.

Taxes are going up in order to hire more government workers. Only savings out of excess production can be used for additional private and productive investment, if the goal is to have a rising economy.

Sometimes I think that is not the real goal of progressive governments around the world. I think the real goal is to make everyone equally poor. Even if that isn’t their goal, that is what is happening, except for a few of their pals.

There’s more, but you get the point.
IFO

Thank you, my erudite friend.
J

Investment note: This conversation is not company-specific. We think people need to have an overhead view (macro-economics)  before getting down into the weeds.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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