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Exports on the rise: It's a load of garbage!

  1. Mar 6, 2008 #1

    Ivan Seeking

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    But here's the catch
    http://www.pbs.org/newshour/bb/business/jan-june08/dollarsworth_03-04.html
    streaming video optional

    So, where will the long-term balance of trade leave the US standard of living?
     
  2. jcsd
  3. Mar 6, 2008 #2

    russ_watters

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    Relative or absolute?

    From the quote:
    I have a nice air conditioned townhouse, nice car, nice telescope, and I golf whenever I feel like it. Why would I care if people overseas start to approach that level of prosperity? Am I that vain that I have to feel like the richest person on the block?

    No, I really don't care whether it "feels" like Europeans and Chinese are getting richer than me. Good for them. All I care about is my absolute level of prosperity. If I lose my house, that would be bad.
     
  4. Mar 7, 2008 #3

    Ivan Seeking

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    How about if you lose your job and can only get one that provides half the income? People don't worry about how rich the Chinese are getting, they worry about things like their homes and not getting overextended on credit because they can't keep up with the bills. Welcome to the real world.
     
    Last edited: Mar 7, 2008
  5. Mar 7, 2008 #4

    russ_watters

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    Then my absolute level of prosperity goes down.
    Yes, I know - that's what I said. But that isn't what is implied by the quote. To answer your question before though:
    It will continue to increase. The "feeling" many people have that they aren't doing as well isn't the overall reality for the country. The reality is that over time, the US economy grows and the absolute prosperity of Americans rises. Welcome to reality.

    Are you saying that you predict there will be a long-term economic contraction accompanied by a reduced average standard of living in the US? That the dollar will go down faster in the future than it has the past few years (which will be necessary to stem the tide of our economic growth)?
     
    Last edited: Mar 7, 2008
  6. Mar 7, 2008 #5

    ShawnD

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    The illusion of poverty, from my experience, is caused by the lack of disposable income. Standard of living has little to do with it.

    People of today are still incapable of saving money in some cases, even though the standard of living goes up. You can't buy a small 1950s house, save money, and feel wealthy; you need to buy the huge houses that are on the market. Yeah it's a bigger house, but you're still not saving any money. My dad offered to give me his old beater car, for free, if I wanted it. I ended up buying a brand new car because it was literally the same price. I would either pay $500 per month for gasoline for the beater, or $200 for gas and $300 for the car payment of a new car. In either case, I'm paying a huge amount of money for a car that I need in order to hold a real job. Money is not being saved.

    I may have a really good standard of living, but I don't have any money. I can't go see a movie for the hell of it, I can't afford to go on a weekend ski trip, I can't afford to go camping. Basically I'm poor, but my living conditions are much better than someone living in the 70s or whatever.
     
  7. Mar 7, 2008 #6
    The sky is falling...
     
  8. Mar 7, 2008 #7

    Astronuc

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    Fed reports household net worth down 3.6% in fourth quarter
    Housing prices have certainly fallen in our area, and it's anecdotal, but job opportunities are slim. Of course, if one accepts mimimum wage without health insurance and retirement, there are plenty of jobs.
     
  9. Mar 7, 2008 #8

    Art

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    I wonder how they measured the 20% increase in exports, in dollars or volume or what? If in dollars then it seems a little meaningless with it falling so heavily. In essence you could halve the value of the dollar and thus double exports without shipping an extra single unit. On the other hand if it is measured by volume then the title of this thread may be very apt. To fill empty containers returning to China many countries are exporting their waste for processing in China.

    Most raw materials have international commodity pricing and so in general the only production cost reduced by a falling currency is labour and as labour typically accounts for only 10% of total costs it's not a major factor. Even this small gain is offset by the higher cost of imports and the medium to long term threat of higher wage demands to pay for the inflated price of imports leading to inflation.

    I guess this is why most countries see the maintenance of a strong currency as an important economic policy goal.
     
    Last edited: Mar 7, 2008
  10. Mar 7, 2008 #9
    I hope you are right. The last time this happened (inflation/recession) in the 1970's everyone's prosperity took a tumble. Of course we recovered eventually....
     
  11. Mar 9, 2008 #10

    Ivan Seeking

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    Oh really, what is the average debt to income ratio? What is the percentage of ownership of homes? What is the average household disposable income?

    Living on credit does not count as prosperity - eventually someone has to pay. And we have how many baby boomers about to retire with nothing but SS to live on. Do you know what SS pays each month?

    Show me proof that the standard of living must increase.

    Why do most households now require two incomes when for decades we only had one?
     
    Last edited: Mar 9, 2008
  12. Mar 9, 2008 #11

    Ivan Seeking

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    So how do you define the standard of living, and why do you think you're better off than someone in the 70's?
     
  13. Mar 9, 2008 #12
    Russ, from your past posts, I haven't seen much in common between us, and even kind of polar opposites, but this is just spot on. :smile:
     
  14. Mar 9, 2008 #13
    As you save money you decrease your expenses and therefore lower imports, right? And if we spend less, save more and import less our standard of living will increase? NO. People spend money to maintain a high living standard.
     
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