[ExI] undercover at Walmart

[painlord2k at libero.it]

Il 14/02/2009 10.31, Stathis Papaioannou ha scritto:

> In that case there would be no advantage in American companies
> manufacturing things in China, since they would be able to so more
> cheaply using the more efficient workforce in the US and saving on
> shipping and other costs.

The workforce is used to do the most productive jobs; the jobs that let
earn more.
So, there is no workforce available for producing low profit stuff.
You could use the same workforce to produce air planes or power tools,
but air planes will let you (and your workforce) to earn more money.
Then, with the money difference you import the power tools from the Chinese.

It is the same thing that cause Bill Gates or Warren Buffet to don't
clean they home but pay someone else to do the chores.
Their times is better spent on other tasks or resting.

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

> In economics, comparative advantage refers to the ability of a person
> or a country to produce a particular good at a lower opportunity cost
> than another person or country. It is the ability to produce a
> product most efficiently given all the other products that could be
> produced. [1] It can be contrasted with absolute advantage which
> refers to the ability of a person or a country to produce a
> particular good at a lower absolute cost than another.
>
> Comparative advantage explains how trade can create value for both
> parties even when one can produce all goods with fewer resources than
> the other. The net benefits of such an outcome are called gains from
> trade.



> The GDP calculation assumes that the exchange rate is a fair measure
> of the worth of one country's output relative to another.

The GDP is always a fiction, sometime it is near the reality, often it
is not.

The exchange rate is very variable with money that is not commodity 
backed. It depend on how much a country export compared on how much it 
import. Not how much any one of them produce.


> In the case of the US dollar there are clearly other factors propping
> it up, such as the fact that it is the world's reserve currency and
> the fact that the Chinese would precipitate a disastrous drop in the
> value of their substantial US dollar investments if they decided to
> pull out.

This is true.
They could simply buy American stuff, if they are permitted to do so.
Like industries, land, oil wells, etc.

Mirco