I've posted about RP elsewhere on the forum, but it's interesting that you made a connection to RP based on one position.

When I have a block of time, I'm planning to continue the Gilligan story on why the Fed is a bad thing.

ShinKen, you made another post years ago that I've never forgotten and wished I'd made a copy of it. Our discussion at the time came about by a number of people saying that no one should ever buy goods that are not American-made. Your explanation about how buying only goods from America, while sounding reasonable, actually had a trickle-down effect that most folks don't consider. If I recall correctly, your analogy used vegetables grown locally and clothing produced locally.

I'd really like to hear it again, and I think other folks would too.

-nab

NB, I’m flattered beyond words.

I think I remember the discussion. I don’t think I can reconstruct what I said exactly, but I can make the argument again roughly.

Suppose Jane Consumer walks into a department store to buy a skirt. After looking carefully, she narrows her choice between two skirts of equal quality. The only difference between them is that one is made in America and costs $60. The other is made in China and only costs $40.

For most people, there would be no question of going with the cheaper skirt, but Jane hesitates. She has heard that when people decide to buy foreign goods, they are sending American jobs overseas. She doesn’t want American garment manufacturers to go out of business, so she decides to buy the more expensive skirt. She goes home, believing she is a conscientious American.

Is Jane right? The answer is yes and no.

Jane has certainly helped American garment makers, and she has every right to feel good about that, but she doesn’t realize her choice has consequences she hasn‘t considered.

What would have happened had Jane chosen the cheaper skirt? She would have a skirt of equal quality, but she would be $20 dollars richer. What would Jane have done with that $20?

Perhaps she and her husband could have gone to the movies. If so, her decision to help American garment makers has hurt the local theater owner.

Perhaps she might have gone out to eat. If so, her decision to help American garment workers has hurt the local restaurant.

Perhaps she might have given it to the United Way. If so, her decision has hurt charitable efforts in the community.

Perhaps she might have gotten a manicure. If so, the nail salon around the corner has less business.

Perhaps she might have bought her son a computer program that he’d been wanting. If so, an American software manufacturer is the lesser for it.

To bring home the point: People see a garment factory close its doors and point to foreign competition as the culprit. They don’t look at the success of the restaurant down the street and attribute it to cheap Chinese skirts.

I should say something about the overseas exodus of American manufacturing jobs. It’s usually regarded as a bad thing, and often it is bad. But sometimes it is actually a good thing because of shifting Comparative Advantage.

Comparative Advantage means we are all better off doing what we do best, whether as individuals or as nations. For instance, Alabama has a comparative advantage in growing peanuts, while Hawaii has the advantage in growing macadamias. Instead of Alabama farmers trying to grow peanuts AND macadamias, it is to their comparative advantage to concentrate on peanuts, then trade peanuts for macadamias with Hawaiian farmers. If a macadamia farmer in Alabama goes bankrupt because he can’t compete with Hawaiian farmers, we don’t say he was driven out by foreign competition, or that his job went to Hawaii.

A lot of people decry the fact that America doesn’t make anything anymore. But if movement to a service economy means we actually have cheaper goods and services available to us, then that is evidence of an advancing quality of life. It means that American labor is more skilled, and some low skill manufacturing jobs are better performed by people in emerging nations where the populace is not so skilled or educated.

Of course, as I mentioned, it is sometimes a bad thing that jobs are going overseas. It is bad when government regulations and protectionism drive industries out of the country. I fear this is more the case today.

The sad irony is that China, which is a communist nation, is gradually becoming more free and less restrictive. As it does, it’s becoming more industrialized and the Chinese people are becoming richer. Meanwhile the USA--once land of the free--is becoming more restrictive and regulated. In a decade or so, China is going to be the major economic powerhouse in the world, and the US is going to be a bankrupt welfare state chock full of civil unrest from all the entitlement seekers who are surprised to find the government promised more than it could deliver.

ShinKen for President!!

But seriously, you make things that are really complicated for me to grasp much more understandable. I don't know if you ever were or are a teacher, but you'd have made an awesome one.

So, are you still behind Ron Paul? Though I do find him fascinating and certainly admire his unwavering record of voting his beliefs (especially his foreign policy of nonintervention and consistent voting against taxes and government spending), I just can't see he has a chance of winning. As a now registered Democrat who did not change my party affiliation (correct me if I'm wrong here), that means in the primary I must vote for a Democratic candidate. However - again I hope I'm right - in the November election I can vote for anyone, correct? I wish politics and the entire election process weren't so frustratingly complicated to me.

Thanks for your interesting and simple explanation of the common misconception that always buying American is always the best thing to do.

-nab

You sound like Warren Buffett


http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/10/352872/index.htm

Excellent post

The difference between the two is that ShinKen breaks it down to a level that even a middle school student can understand. I would have loved to have had a Gov/Econ teacher like this when I was in High School. Maybe I would not have slept through class and would have actually learned a lot more about our government and economics. He would be an excellent teacher IMO.

The difference between the two is that ShinKen breaks it down to a level that even a middle school student can understand.

Exactly. I started reading the Buffett article and lost interest (okay, got lost) after the first few paragraphs.

-nab

Well, I'm blushing and very gratified by the comments.

When I was a teenager, I read Einstein's book on Relativity that he wrote for the layman. I was amazed that he could explain such abstract concepts in such a way that anyone of average intelligence could grasp it. I've forgotten most of the physics I ever learned, but I can tell you about relativity to this day.

Any complex subject can be broken down into smaller, easy-to-grasp parts, and I don't think we should take for granted anything a so-called "expert" says unless he can break it down and you can see for yourself if it fits with common sense.

A few things about Warren Buffett: He is probably the most successful investor of all time (only because Jesse Livermore died a pauper, so few people have heard of him today.) However, Buffet is not very smart on economics in general. The difference between understanding investing and economics is like the difference between a stock car driver and a mechanic. It's possible to be good at one job without knowing much about the other.

Buffet's parable about Thriftville and Squanderville is dead on, but IMHO his tariff remedy is less than worthless. A simple sound money policy would be much more effective, but it would force the government to curtail spending, which no one seems to want to do (except Ron Paul).

I watched a news story on CBS the other day on W's economic stimulus plan, which includes a proposed tax rebate. The reporter commented that if people didn't take their rebate and go spend it, there wouldn't likely be a stimulus effect. If you go back and read my Gilligan story, you know that this is crap. However, this is what passes for conventional economic wisdom, and it is one of the reasons we are living in Squanderville. Government policies and the media ENCOURAGE squander.

NB, to answer your question about Ron Paul: I'm behind him more than ever. He is doing much better than anyone expected, and as the field of candidates narrows, I think he will begin to pick up more support when it begins to look like he is the only anti-war candidate left standing, especially if Hillary pulls ahead of Obama. But even if he doesn't win, he has done more to bring essential issues into the fore of national debate and is beginning to inspire others to run as "Ron Paul Republicans."

http://sabrinforsenate.com/

http://en.wikipedia.org/wiki/Jesse_Lauriston_Livermore

I didn't care for his trade credit idea either, but I opted to link to the entire article, as opposed to croping it to the squanderville part.

I was hoping you would give your opinion of the credit idea. Thanks

And thanks for the links. Too cold to play outside. Might as well broaden my mind.

I am seeing more and more Ron Paul sign and stickers every day. I think people are so tired of the same of crap from the front runners and are starting to look for that person they can believe in. I for one am getting more and more excited about the things I am seeing on the street concerning Ron Paul.