gasoline prices

[xr7g428]

Retro, think about this. It may not come easily but I think you will get it if you don't try to rationalize your way free of the logic.

 

Imagine that you are completely self sufficient: you grow your own food, build your own house, sew your own clothing. As an average person, you are better at some tasks than others.

 

Perhaps you are a very skilled carpenter. You can build a house better and faster than anyone else. But you only need one house, so after you have completed yours. it doesn't matter, that is if you could find the time to work on your house. Unfortunately, you suck at growing food. And as a seamstress you are lacking. So you sit in your very nice house, hungry and poorly clothed.

 

However, your neighbor is an amazing farmer, and can't seem to figure out how to drive a nail without hitting his own thumb. And he can't sew either. So he is sleeping under the stars, praying that it rains on his fields but not on him, and both of you are dressed in old flour sacks.

 

Down the street is another totally self sufficient person. Only he can sew, or at least he could if he wasn't starving to death in the cold.

 

What is missing here is the exchange of abilities. The more time people spend doing what they are good at, the more productive they are. In simple terms, it is better to have a good carpenter building houses while a good farmer grows food. If every one can specialize and do what they are best at. the total of the goods and services they provide goes up. If our three self sufficient neighbors each do what they do best, the result is that they will share a much better life style than any one of them can achieve by themselves.

 

This is what happens when countries do what they are good at. The quality of life for everyone goes up. But there is a catch. IF you are not good at anything, and you are not willing to work, every one else will pass you by. This is what is happening to some people today, and it has been happening since the beginning of time. The bottom of the barrel is always the bottom, no matter how tall the barrel becomes.

 

We have a bunch of liberals, socialists, and communists that have spent years trying to convince us that the bottom of the barrel wouldn't be so low if only the top were closer to the bottom. You can't make the poor rich by making the rich poor: you just end up with more poor people. Does it feel good? Probably not, Does it work for the vast majority of people? Absolutely compared with any other system in the world. Look at what has happen in China since they decided to give our system a try. Look at what has happened to us since we started trying to give their old system a try.

Edited May 11, 2011 by xr7g428

[retro-man]

Retro, think about this. It may not come easily but I think you will get it if you don't try to rationalize your way free of the logic.

 

Imagine that you are completely self sufficient: you grow your own food, build your own house, sew your own clothing. As an average person, you are better at some tasks than others.

 

Perhaps you are a very skilled carpenter. You can build a house better and faster than anyone else. But you only need one house, so after you have completed yours. it doesn't matter, that is if you could find the time to work on your house. Unfortunately, you suck at growing food. And as a seamstress you are lacking. So you sit in your very nice house, hungry and poorly clothed.

 

However, your neighbor is an amazing farmer, and can't seem to figure out how to drive a nail without hitting his own thumb. And he can't sew either. So he is sleeping under the stars, praying that it rains on his fields but not on him, and both of you are dressed in old flour sacks.

 

Down the street is another totally self sufficient person. Only he can sew, or at least he could if he wasn't starving to death in the cold.

 

What is missing here is the exchange of abilities. The more time people spend doing what they are good at, the more productive they are. In simple terms, it is better to have a good carpenter building houses while a good farmer grows food. If every one can specialize and do what they are best at. the total of the goods and services they provide goes up. If our three self sufficient neighbors each do what they do best, the result is that they will share a much better life style than any one of them can achieve by themselves.

 

This is what happens when countries do what they are good at. The quality of life for everyone goes up. But there is a catch. IF you are not good at anything, and you are not willing to work, every one else will pass you by. This is what is happening to some people today, and it has been happening since the beginning of time. The bottom of the barrel is always the bottom, no matter how tall the barrel becomes.

 

We have a bunch of liberals, socialists, and communists that have spent years trying to convince us that the bottom of the barrel wouldn't be so low if only the top were closer to the bottom. You can't make the poor rich by making the rich poor: you just end up with more poor people. Does it feel good? Probably not, Does it work for the vast majority of people? Absolutely compared with any other system in the world. Look at what has happen in China since they decided to give our system a try. Look at what has happened to us since we started trying to give their old system a try.

Hate to point out the obvious, but there's 300,000,000 of us. I am familiar with the concept of comparative advantage. How old are you? Do you even remember what it was like when we made everything here? Most striking to me, is that I have watched Japan follow down the same path over the last 30 years. Everything on their shelves used to be made in Japan - now it is made in China. They have gone from economic miracle to economic malaise in the exact same time-frame. They have closed their factories and put shopping malls in their places. Believe me, I follow that business and I can tell you that the heyday of those malls was short. You know why China is doing so well? Because they make their own stuff! Most of what is driving globalization (and our horrendous trade deficit) is not the need for what somebody else makes (with the exception of Arab oil - but I would like to see what domestic science and industry would come up with if that were not so freely available. We'll find out the answer to that soon enough), but rather the need for ever greater profits. With 9% unemployment (wildly understated), record profits, and record productivity, it is clear that those record profits are not creating jobs. Nor will reducing taxes on corporations. Reducing corporate taxes will create additional profits, not additional jobs. Demand for goods and services will create jobs. Demand comes from people who are living above subsistence level (that would not be people making $27k / yr. at GM's new plant, or those 50,000 new McDonald's employees ranger mentioned in another post). Actually, much of that record profit for US companies is from overseas. Link

But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.

 

"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.

 

American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated — think semiconductors and software, not toys and clothes.

 

So much for "comparative advantage". Pretty soon the only comparative advantage the US is going to have is going to be cheap labor. Is that something that you'll take pride in as an American? Most people don't see it getting better anytime soon. Here: Poll study that. Mine is not a minority view. Your heros like Boehner (the self-made man who worships his creator) in congress have an approval rating somewhere between Pol Pot and E Coli, and people are profoundly suspicious of banks and corporations - rightly so. This is not the sunny, self-satisfied picture that some on here try to paint.

Edited May 11, 2011 by retro-man

[RangerM]

Retro, at this point, I'm not sure exactly what you're looking for.

 

I can only surmise you're looking for something that simply isn't going to happen. That being, our people can reach adulthood with the same (or similar) skillset that they did 60 years ago, and expect to have the same standard of living in perpetuity. And as the rest of the world catches up with us, our country can simply become more isolationist, because this is America. People will simply fall over themselves to hire our people (even if they don't have and haven't attempted the necessary skills), purchase our goods (over a lower-priced, but equally competitive product), and pay an ever higher cost of doing business.

Edited May 11, 2011 by RangerM

[grbeck]

More or less they way it should be. But on the other hand, I imagine that a burger flipper today is worse off than a burger flipper of 50 years ago.

 

I've known a few old timers who got by and raised families on jobs that today would barely support a single person.

 

This is true for the lower end jobs (retail clerk, for example). On the other hand, our expectations are much higher, and fulfilling these expectations costs more money. Today even many poor people, for example, have computers and cell phones.

[grbeck]

China is only doing well in relation to its past, not in comparison to us. The average Chinese person has a standard of living far below that of the average American. China is about where we were in the late 1800s and early 1900s.

 

If the concern is about increasing corporate power, then instituting tariffs would be the last step to take. Tariffs ensure the dominant players remain dominant, which allows them to grow fat and lazy at the expense of everyone else. That is why, during the late 1800s and early 1900s, Democrat William Jennings Bryan, the "Great Commoner" and the person who basically revived the Democrats in the wake of the Civil War, spoke out vehemently against tariffs. He argued correctly that tariffs hurt consumers and people who weren't connected to the protected industry. The Republican Party, which was the party of big business, supported tariffs. Supporting tariffs is also supporting corporations.

 

Most people aren't lining up to support tariffs because they understand this. They protect entrenched players at the expense of everyone else. They can also backfire, as happened during the 1930s, when President Hoover signed into law the Hawley Smoot Act, a series of draconian tariffs designed to protect American industry. Other countries retaliated by enacting their own tariffs, and American businesses (especially agriculture) that needed the export business were denied it while domestic markets were withering.

 

Competition DOES benefit consumers, and competition from overseas competitors benefits consumers as well. We can look at the auto industry, where the Big Three enjoyed a de facto monopoly until about 1980. Throughout the 1970s, the build quality and reliability of their products steadily dropped, performance worsened and prices still increased. Foreign competition forced them to improve quality and productivity. Of course, now semi-literate high school dropouts can't get a job on the line at Ford, because customer demands for better quality, performance and safety (without a corresponding increase in prices) mean that UAW workers must be prepared to use ALL of their skills.

 

And we've ALL reaped the resulting gains, not just top management and stockholders, as a 2012 Focus is safer, cleaner, more fuel efficient and better performing than a 1980 Mercedes S-Class. This has benefitted the people who buy new cars, and it has benefitted society as a whole.

 

How?

 

*Air pollution levels have declined dramatically since 1980, even as more people drove more vehiles more miles than ever before. The air in the Los Angeles area is so clean that a resident who died in 1965 and somehow came back to life simply would not believe that he or she was in Los Angeles.

*Lead has been virtually eliminated as a major air pollutant.

*The death rate per 100 million miles driven is about 1/3 of what it was 1980, even as people drive more miles than ever before, and we've completely abandoned the 55 mph speed limit.

*Cars can be expected to last 150-200,000 miles today, while in 1980, a car was basically used up by 100,000 miles, and many vehicles didn't even last that long.

*Rust is simply not an issue for most vehicles well before 150,000 miles.

*In 1980, a car was considered to be luxurious if it had power assists for the windows, seats and door locks, and an AM-FM stereo system. Today most Honda Civics and Ford Focuses have those items as standard equipment.

 

And please note that we are not getting poorer. Since 1980, total income for the bottom 20 percent has grown by 26.4 percent. It has grown by 29.1 percent for the next 20 percent, and 36.9 percent for the middle 20 percent. Studies that show income dropping for these groups are flawed, because they are not adjusted for household size and taxes (or no taxes).

[retro-man]

Well, a couple of simple questions - to hit the reset here:

1.) What are you going to do with those semi-literate high school graduates (or the 25% of the population who have an IQ lower than 90)? Alms houses? Refrigerator box under a bridge? Their family's problem, not mine? Nobody has ever answered this one for me.

2.) How is the logical and inevitable result of a globalizing labor market (which is what free trade really is - not "comparative advantage") not going to be an averaging of our standard of living against that of 1.3b Chinese and 1.1b Indians?

 

I just realized: That equitable distribution of wealth I'm always calling for? It's happening, only it's the whole world being driven to a split parity - with 6.7b peasants on one end of the pole, and a few million elites on the other. "Country" is a fading illusion. Mid-20th Century America was nothing but a fleeting dream. Hm (I think I'm having some kind of existential realization here).

[RangerM]

Well, a couple of simple questions - to hit the reset here:

1.) What are you going to do with those semi-literate high school graduates (or the 25% of the population who have an IQ lower than 90)? Alms houses? Refrigerator box under a bridge? Their family's problem, not mine? Nobody has ever answered this one for me.

Let's assume that we ignore the portion of that population that is truly disabled.

 

Now what is it that is supposed to be "done with them"? (Sorry, but that seems like a bit of a condescension to me) They may not have a high IQ, but it doesn't mean they're stupid. It also doesn't mean they don't have the ability to recognize what work is and what a paycheck is. I have had a couple of people in this catagory working for me. They could perform tasks, think freely, and generally conduct their lives in much the same manner as you or I. They just weren't going to be doctors, engineers, or computer programmers. And you wouldn't expect them to earn beyond a certain point based on their limitations. But they can survive.

2.) How is the logical and inevitable result of a globalizing labor market (which is what free trade really is - not "comparative advantage") not going to be an averaging of our standard of living against that of 1.3b Chinese and 1.1b Indians?

Many intellectual tasks are easily outsourced. Much labor is local. Why is the laborer who builds a house, landscapes, or farms a field less admirable than one who punches a timeclock at a factory?

[xr7g428]

Retro, I had done some editing to try to keep things on topic. Please correct me if you think I have changed your meaning.

 

 

Hate to point out the obvious, but there's 300,000,000 of us. I am familiar with the concept of comparative advantage. Most striking to me, is that I have watched Japan follow down the same path over the last 30 years. Everything on their shelves used to be made in Japan - now it is made in China. They have gone from economic miracle to economic malaise in the exact same time-frame. They have closed their factories and put shopping malls in their places. Believe me, I follow that business and I can tell you that the heyday of those malls was short.

 

Comparative advantage doesn't go away whether there are 3 of us or 6 billion of us. Comparative advantage includes more than individual skill, it also includes education, and resource availabilities and infrastructure. Your make the case for me with the example of Japan: they had virtually no competitive advantage other than low labor costs. As the labor rates increased the economy became limited by several of the Japanese cultural norms that make business less efficient there than in other places. The Japanese standard of living has stagnated, in no small part to the persistent effects of a real-estate bubble fueled by absurdities like 100 year mortgages; it almost makes our bubble look sane.

 

I have personal experience doing business in Japan, as you do as well, so we both know that being better and cheaper are minor considerations when it comes to getting the deal. Japan has so much inefficiency built into the system that it could do nothing but stagnate: comparative advantage requires an actual advantage.

 

How old are you? Do you even remember what it was like when we made everything here?

 

I have been in manufacturing in the US for most of my life and so the answer is yes, I do remember that. For that matter I still live that manufacturing life every day. I am so completely puzzled at the romanticism for manufacturing jobs. Back in the real world, most manufacturing work is characterized by low pay, physical exhaustion, and mind numbing sameness. Almost no one who works in a factory wants to be there after the first week. Even today when jobs are scarce, not to many people are lining up for hard work with no mental stimulation and low wages. Making coffee makers and pop corn poppers and all that other stuff than is now made in China, never was a good job. The high paying manufacturing jobs haven't left for China, they are being eliminated by automation. If you care to absorb the facts, we still manufacture the same amount of stuff, we just do it with less people. The extremely high paying manufacturing jobs are self eliminating. They create a vacuum that is either filled by technology or people who are willing to work for less. Society benefits less from an over paid assembly worker than they do from an average police officer. People don't see value in paying above market rates for products, or the labor that goes into them because they don't see the benefit, and that is because there isn't one.

 

 

You know why China is doing so well? Because they make their own stuff! Most of what is driving globalization (and our horrendous trade deficit) is not the need for what somebody else makes (with the exception of Arab oil - but I would like to see what domestic science and industry would come up with if that were not so freely available.

 

By any measure, relative to the US, the Chinese PEOPLE are not doing all that well. They build a lot of cheap stuff, because they can do it for less than anyone else. They have the right combination of low labor costs and education and resources and infrastructure. But they have crappy factory jobs that Americans would never accept.

 

I am glad you mention oil, our entire trade deficit goes away if we stop importing oil. Your people don't seem to grasp that short of food, energy is our most critical need. So because new wells won't product for a few years, you won't allow any to be drilled. The best time to drill was 10 years ago. The second best is right now. The drilling we do today buys us the time we need to develop the replacement.

 

 

 

We'll find out the answer to that soon enough), but rather the need for ever greater profits. With 9% unemployment (wildly understated), record profits, and record productivity, it is clear that those record profits are not creating jobs. Nor will reducing taxes on corporations. Reducing corporate taxes will create additional profits, not additional jobs.

 

Ever greater profits? How about finally making a profit at all after years of losses? To have investment you MUST have profit, MUST. By what mysterious mechanism will higher corporate taxes (a misnomer, as they are merely passed on to consumers in the form of higher prices), create jobs? Lower corporate taxes give companies a competitive advantage, something ALL of our foreign competitors enjoy. How does making our companies less competitive improve things?

 

Demand comes from people who are living above subsistence level (that would not be people making $27k / yr. at GM's new plant, or those 50,000 new McDonald's employees ranger mentioned in another post).

Wait, I thought you were talking about how well China was doing, and $27K would be extraordinarily high for ANY manufacturing job in China and most manufacturing in the USA.

 

So much for "comparative advantage". Pretty soon the only comparative advantage the US is going to have is going to be cheap labor. Is that something that you'll take pride in as an American?

America will never have a comparative advantage in labor costs. If you were an employer, you would realize that our comparative disadvantage is that the only deals you can do have to be extremely profitable if they involve having to pay employees and provide benefits. If we want to develop our comparative advantages we need to make it easier to hire people, not harder.

 

 

Most people don't see it getting better anytime soon. Here: Poll study that. Mine is not a minority view. Your heros like Boehner (the self-made man who worships his creator) in congress have an approval rating somewhere between Pol Pot and E Coli, and people are profoundly suspicious of banks and corporations - rightly so. This is not the sunny, self-satisfied picture that some on here try to paint.

 

I guess you were counting on us not looking at the poll? You are right, people are not happy. They are not happy with the current administration, That would be your team. Outrageous government spending, staggering debt, and a head in the sand attitude that we can increase spending even more.

[grbeck]

Well, a couple of simple questions - to hit the reset here:

1.) What are you going to do with those semi-literate high school graduates (or the 25% of the population who have an IQ lower than 90)? Alms houses? Refrigerator box under a bridge? Their family's problem, not mine? Nobody has ever answered this one for me.

 

For working people, I would continue to support the federal income tax credit, which makes it worthwhile for them to work. I also support some form of federal health insurance - with co-pays - along with subsidized daycare for parents with children.

 

Sometimes, however, I get the impression that the real beef with some of these people - and their advocates - is that they can't afford all of the things that middle-class and upper-middle class people can afford. Well, I have no problem with the federal government helping people keep a roof over their heads or food on the table. It's not the government's (meaning - in other words, our responsbility, as we pay the taxes that support government programs in the first place) responsibility to make sure that they can afford to buy a brand-new car every four years, or eat out every week.

 

Many of these people work in retail, which really isn't impacted all that much by foreign competition. Target or Macy's can't outsource their cashiers to Bangalore, and any foreign retailer will have to set up operations here, and staff it with American help. They are impacted by immigration - illegal and legal - so that issue must be addressed.

 

People living under bridges and on the street generally have serious drug or alcohol addictions, or serious mental health problems. A higher minimum wage, for example, isn't going to help them, as they really can't hold a job in the first place.

 

2.) How is the logical and inevitable result of a globalizing labor market (which is what free trade really is - not "comparative advantage") not going to be an averaging of our standard of living against that of 1.3b Chinese and 1.1b Indians?

 

We have to leverage our other advantages against those countries. A few of them are - less corruption in government at ALL levels (making it easier to get permits or comply with regulations); superior copyright and patent protection; better infrastructure; and nicer living standards (Philadelphia, which is hardly a glamorous city, is a paradise compared to, say, Calcutta or most Chinese industrial cities - and let's not even compare the Philadelphia suburbs to those places).

 

I just realized: That equitable distribution of wealth I'm always calling for? It's happening, only it's the whole world being driven to a split parity - with 6.7b peasants on one end of the pole, and a few million elites on the other. "Country" is a fading illusion. Mid-20th Century America was nothing but a fleeting dream. Hm (I think I'm having some kind of existential realization here).

 

I don't care how rich someone else is - what I care about is the opportunity to succeed, and my standard of living, and those are impacted more by tax laws and regulations that stifle or discourage investment.

Edited May 12, 2011 by grbeck

[Ralph Greene]

http://www.fool.com/investing/general/2011/05/12/profit-from-this-energy-paradox.aspx

 

Not sure this discussion matters.

[mustang_sallad]

Do you really think that ExxonMobil registers its domains through GoDaddy.com?

 

Now, if you have contrary information refuting that 2 cents profit per gallon claim, I ask you to provide it.

 

I wasn't talking about dailymarkets.com, i was talking about the Exxon Mobil blog that they got the two cents number from, or did you not even read the one paragraph that accompanied your colourful maps?

 

According to this post on Exxon Mobil’s Perspective Blog , “For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents.”

 

http://www.exxonmobilperspectives.com/2011/04/27/gas-prices-and-industry-earnings-a-few-things-to-think-about/

 

From that blog:

"The main component of the price at the pump is the cost of a barrel of crude oil".

Image from the ExxonMobil blog:

 

At the very least you can look at the source of the info rather than a selective quote from some random godaddy page. But I reiterate, a blog post from ExxonMobil is not the first place I'd look for an objective analysis of this situation. Fair enough to hear their points, but when their basically whinging that they "only make 8 cents for every dollar of revenue", i find it hard to feel sorry for them and angry at the government.

 

Given that not all products are made locally, how do you expect that to work?

This solution doesn't work in every situation, therefore it's not a solution at all!! That's the spirit!

You're lying through your teeth if you're saying you don't buy foreign products on a weekly basis simply because they're cheaper. I try to buy local but sometimes it can be hard to justify the price difference. If an increase in gas tax tips the scales in favour of buying more local products, I'd argue that's a good thing. If there are no banana plantations in your region, well either stop eating bananas or suck it up and pay for the luxury of having them transported 1000s of miles to your neighbourhood.

[goinbroke2]

The only thing I will say is;

 

Any time you purposely inflate prices to socially engineer the buying public, the buying public is at the mercy of whoever is artificially inflating the price. The only ones who actively socially engineer is the government and that's because of lobbiest's.

 

So, if the left lobbiest have the sway, gas/big business/evil rich people will be spurned and if the right have the sway then feel good/welfare/unemployable will feel the heat.

 

The important thing to remember in all of it though is that you are losing your freedoms/rights as you are being socially engineered!

 

NEVER CUT YOUR NOSE OFF TO SPITE YOUR FACE!

 

"let's voluntarily raise the price of gas so less people will use it" ARE YOU F&*ING SERIOUS??? Why don't you gouge out your eye's while your at it so you won't have to buy glasses from those big evil, rich glasses companies? You know they make a lot of profit, they must be evil!

 

The fact that someone has to actually type this out on a forum because other's don't seem to grasp it is scary. Holy frig people, what the hell do you think your forefathers fought for?

[RangerM]

I wasn't talking about dailymarkets.com, i was talking about the Exxon Mobil blog that they got the two cents number from, or did you not even read the one paragraph that accompanied your colourful maps?

 

At the very least you can look at the source of the info rather than a selective quote from some random godaddy page. But I reiterate, a blog post from ExxonMobil is not the first place I'd look for an objective analysis of this situation. Fair enough to hear their points, but when their basically whinging that they "only make 8 cents for every dollar of revenue", i find it hard to feel sorry for them and angry at the government.

Then give us all the benefit of your insight (and ability to use your most-favored "objective" source) and refute the number.

 

Truth is that 2 cents number is not only true for Exxon, but most oil companies. 8 cents on the dollar (NOTE: that's overall profits, NOT gasoline) is still less than the government (Federal and State) takes in even at $4 per gallon. Yet, even though the oil company is the entity doing all the work to earn the profits, the oil company is reaping a windfall.

 

And while you're blasting the "windfall profits", can you please provide the nearest liberal blog (as left-wing as possible) that laments the 25% profit that Apple Computer made in the 1st quarter? I couldn't find one liberal blog with the word "windfall" or "tax" anywhere. Oil company profits are only large in terms of raw numbers, but are perfectly in line with (often lower than) other corporate sectors.

This solution doesn't work in every situation, therefore it's not a solution at all!! That's the spirit!

You're lying through your teeth if you're saying you don't buy foreign products on a weekly basis simply because they're cheaper. I try to buy local but sometimes it can be hard to justify the price difference. If an increase in gas tax tips the scales in favour of buying more local products, I'd argue that's a good thing. If there are no banana plantations in your region, well either stop eating bananas or suck it up and pay for the luxury of having them transported 1000s of miles to your neighbourhood.

Yes, I'd be lying through my teeth, but I'm not, so why even bring it up?

 

I buy the products that make the most sense for me. If the cheapest option makes the most sense, that's what I get. If I'd prefer something of higher quality, I might buy something else. Whenever I buy bananas at my local grocery story, I AM paying for the luxury of eating bananas. North Carolina bananas don't exist.

 

What is the problem, you don't LIKE the fact that I'm rich enough to buy bananas? I might enjoy myself more than someone else? If the idea is to tax me so I'm not so advantaged over someone else, then I guess the people who work for me will just have to find something else to do. If I'm not allowed to enjoy the rewards for high achievement, I might as well not achieve.

Edited May 13, 2011 by RangerM

[grbeck]

If there are no banana plantations in your region, well either stop eating bananas or suck it up and pay for the luxury of having them transported 1000s of miles to your neighbourhood.

 

And here I thought that companies built the cost of transportation into the final price of their products. Apparently they have been generously eating this cost all of these years. I'm still trying to figure out exactly how this is bad...

[mustang_sallad]

my point is not that cost of transportation isn't factored into the price of goods, but that it could be a good thing if that cost went up in such a way to encourage us to support our local producers more often rather than being easily enticed to buy things from the other side of the planet.

[RangerM]

my point is not that cost of transportation isn't factored into the price of goods, but that it could be a good thing if that cost went up in such a way to encourage us to support our local producers more often rather than being easily enticed to buy things from the other side of the planet.

Everything is relative.

 

If prices go up, you raise the cost of living in your locality, and then subsequently wages must rise in order to maintain the standard of living. That means the cost of producing those local goods will also rise.

 

And it doesn't mean the cost to produce those foreign goods has risen at all; only the price has. But if the cost remains the same, the final retail price will still be lower.

 

In order for your theory to work, the only option is for the standard of living to go down; and that's not a good thing.

 

I see it every year, when I do work in Washington State. The cost of living is higher there due to the $8.55 State-mandated minimum wage. I benefit from work that I take away from the citizens there, by bringing it back with me (to N.C.) where my cost of living is lower. Thanks to Washington State, my standard of living has improved to the detrement of their citizens (due to their lack of ability to compete with me). Thank you, Washington.

Edited May 13, 2011 by RangerM

[grbeck]

my point is not that cost of transportation isn't factored into the price of goods, but that it could be a good thing if that cost went up in such a way to encourage us to support our local producers more often rather than being easily enticed to buy things from the other side of the planet.

 

That's nice, but I live in Pennsylvania, so we can't grow fruits and vegetables all year, and banana trees can't survive here for even part of the year.

 

Meanwhile, the benefits of eating lots of fruits and vegetables - including bananas, which help maintain healthy potassium levels - on a daily basis are well documented. I guess we could subsist on beef, chicken, lamb and pork, as they are all locally raised and easily available all year, but, the last time I checked, vegetarians were telling me that is unhealthy, and bad for the planet to boot.

 

Driving up the costs of bananas and other fruits and vegetables to the point that they become less affordable will have detrimental effects on our health. So, until the cost of that scenario is taken into account, I'll enjoy the benefits of year-round availability of healthy fruits and vegetables.

Edited May 13, 2011 by grbeck

[aneekr]

http://www.fool.com/investing/general/2011/05/12/profit-from-this-energy-paradox.aspx

 

Not sure this discussion matters.

It definitely matters; Dr. Royal explains the Jevon Paradox, along with one key benefit of high oil prices, very well. However IMO, Royal overstates the impact of "...dangerous long-term headwind of rising energy prices" on Ford and GM stock.

Edited May 13, 2011 by aneekr

[jpd80]

It definitely matters; Dr. Royal explains the Jevon Paradox, along with one key benefit of high oil prices, very well. However IMO, Royal overstates the impact of "...dangerous long-term headwind of rising energy prices" on Ford and GM stock.

Exactly, that "headwind" is actually a hurt felt by drivers and is reflected in the desire to have running costs (fuel)

controlled to a level that seems acceptable, that perception can change but is determined by either the number

of times people fuel up or the actual cost of a tank of gas.The cost of fuel is inflationary and touches most things

consumers buy so it's inevitable that people's wages and salaries will rise to compensate for fuel increases.

When that happens the auto makers can then justify the cost of new technology as affordable and necessary.

 

And then the cycle repeats.

Edited May 13, 2011 by jpd80

[retro-man]

That's nice, but I live in Pennsylvania, so we can't grow fruits and vegetables all year, and banana trees can't survive here for even part of the year.

 

Meanwhile, the benefits of eating lots of fruits and vegetables - including bananas, which help maintain healthy potassium levels - on a daily basis are well documented. I guess we could subsist on beef, chicken, lamb and pork, as they are all locally raised and easily available all year, but, the last time I checked, vegetarians were telling me that is unhealthy, and bad for the planet to boot.

 

Driving up the costs of bananas and other fruits and vegetables to the point that they become less affordable will have detrimental effects on our health. So, until the cost of that scenario is taken into account, I'll enjoy the benefits of year-round availability of healthy fruits and vegetables.

You're supposed to live on root vegetables and grains - barley, oats, spelt, rice, winter wheat (archeologist have brought still edible grains thousands of years old out of the pyramids in Egypt) - as well as fish and game animals during the winter. Raisins are higher in potassium than bananas, they will keep all winter, and you can grow them locally. Apples will keep a good long time and, after all, we do have canning technology. Apple sauce? Berry preserves? There's pickles (you can pickle almost any vegetable), sauerkraut.... Chickens lay eggs all year, right? Fish, game, .... jerky, sausages, bacon ....... Wouldn't winter ice cream sweetened with honey from your own hives and flavored with blackberry preserves be great? Then, imagine how good fresh strawberries and raspberries would taste come Summer! Green Beans, Peas, Lettuces...... Come to think of it, let's throw away the fridge too. You overstate the need for transport. Here: LINK is what people in your part of the country were eating in colonial times. Wendell Berry is an articulate spokesman for regional values.

 

Berry's nonfiction serves as an extended conversation about the life he values. According to him, the good life includes sustainable agriculture, appropriate technologies, healthy rural communities, connection to place, the pleasures of good food, husbandry, good work, local economics, the miracle of life, fidelity, frugality, reverence, and the interconnectedness of life. The threats Berry finds to this good life include: industrial farming and the industrialization of life, ignorance, hubris, greed, violence against others and against the natural world, the eroding topsoil in the United States, global economics, and environmental destruction.

 

p.s. As proof that I actually am able to change my mind (just hasn't happened since 2000): as a college student, I was a critic of Berry's ideas, which I thought were flawed. Ensuing years and events have brought me around. Maybe not all the way around, but I now see the validity of his ideas. As a matter of fact, I think we need some long distance transportation capacity and commercial infrastructure in place as a hedge against periodic localized famines that used to plague the world. On the other hand, when somebody in Chicago forgets to wash their hands at the packaged salad factory and people in 43 states come down with e-coli within 3 days, it is clear we are out on a limb. It's all about balance. There is no balance in our world, just a push toward gigantism and global monoculture. Not healthy. Also, I just don't need strawberries from Chile in February. I really don't. Strawberry shortcake is a Summer food and still, I find, much more enjoyable that way.

Edited May 14, 2011 by retro-man

[goinbroke2]

" If I'm not allowed to enjoy the rewards for high achievement, I might as well not achieve. "

 

AND THAT YOUR HONOUR IS THE MONEY LINE!

 

As long as the left wingers think that rich=evil then they will never understand this. Like a kid who has never felt the elation of being first in something readily agree's to "everybody gets a medal for playing" and "no scores are kept"

 

Some just don't get it. Those who have never worked around the clock for weeks/months/years on end to get their own business successful, will not understand why rich people get to keep all this "offensive amount" of money when there are others out there who are hungry. (even though the "hungry" have never applied themselves or ever gave 110% in anything they ever did)

 

Ranger, your comfortable in life because of choices you made. GOOD FOR YOU! Since you made choices to ensure you would be comfortable if you worked extra hard or extra smart, you are now entitled to appreciate the fruits of your labour. The only problem is, there are those who have not worked as hard/smart as you and are suffering. Instead of accepting responsibility for their own situation, they've decided to lash out at other better off then themselves.

 

This works at every level when you see;

Janitors jelous of their foreman. ($6 per hour vs $8)

Mechanic jelous of the supervisor ($15 vs $20)

Supervisor vs owner ($20 vs $40)

Owner vs doctor ($40 vs $200)

 

And up and up the scale it goes. The difference is, when you do start getting into the higher brackets, they do understand the hard-work-equals-more-money idea. Perhaps that's why it's not as common to hear of people bitching about "rich" from those who are well off. (kinda like why you don't bitch about someone making $500,000 a year, you UNDERSTAND the person has worked for it and deserves it)

 

But the others will continue the left wing rants about how anybody with money must be evil and should be taxed or have wages garnished so everybody has the same.....even though everybody hasn't expended the same amount of work for that level of living.

 

Like you I've scrimped/saved/invested and most importantly WORKED MY FREAKING ASS OFF SINCE 5 DAYS AFTER I GRADUATED HIGH SCHOOL! I've never been on unemployment/welfare/etc even though I had several jobs. I've always paid my taxes and once I started getting a bit of money, I started using tax loopholes to further myself. Never broke the law but I'm getting quite large tax returns now. Yay me!

 

So when I retire and tow my racecar to the states for the winter with my motorhome and some left wing welfare bum cries because "those rich snowbirds shouldn't be allowed to spend 6 months in the states" I'll smile and say FUCK YOU and quote your line " If I'm not allowed to enjoy the rewards for high achievement, I might as well not achieve. " :shades:

Edited May 14, 2011 by goinbroke2

[jpd80]

That must be why most people aspire to mediocrity...

 

Me, I do my own thing and just don't tell anyone what that is.......

[Roadtrip]

Retro, think about this. It may not come easily but I think you will get it if you don't try to rationalize your way free of the logic.

 

Imagine that you are completely self sufficient: you grow your own food, build your own house, sew your own clothing. As an average person, you are better at some tasks than others.

 

Perhaps you are a very skilled carpenter. You can build a house better and faster than anyone else. But you only need one house, so after you have completed yours. it doesn't matter, that is if you could find the time to work on your house. Unfortunately, you suck at growing food. And as a seamstress you are lacking. So you sit in your very nice house, hungry and poorly clothed.

 

However, your neighbor is an amazing farmer, and can't seem to figure out how to drive a nail without hitting his own thumb. And he can't sew either. So he is sleeping under the stars, praying that it rains on his fields but not on him, and both of you are dressed in old flour sacks.

 

Down the street is another totally self sufficient person. Only he can sew, or at least he could if he wasn't starving to death in the cold.

 

What is missing here is the exchange of abilities. The more time people spend doing what they are good at, the more productive they are. In simple terms, it is better to have a good carpenter building houses while a good farmer grows food. If every one can specialize and do what they are best at. the total of the goods and services they provide goes up. If our three self sufficient neighbors each do what they do best, the result is that they will share a much better life style than any one of them can achieve by themselves.

 

I have a real-life example that dove-tails into what you're talking about. My main warehouse guy, Jorge, is a Mexican immigrant who came here 17 years ago. He was illegal at the time; he literally swam across the Rio Grande and then made it -- by foot! -- to Colorado to live with relatives. He later gained his permanent residency ("Green Card") and came to work for our company about eight years ago.

 

Jorge has some amazing skills, as well as an amazing work ethic. He can drywall a house, lay a concrete driveway, patch a roof, and fix the plumbing. He does this kind of work on the side when he's not working 50-60 hours a week in the warehouse. He's rebuilt the engine on his Chevy pickup. He's a problem solver and a quick study. We got him a workstation and taught him Excel so he could submit dock reports, and Jorge's command of English has gone from poor when he first started to excellent today. And he's so organized, I'm jealous. We have barbeques for our employees every now and then, and Jorge is always the chef, because his carne asada is the best anyone around here has ever had -- and considering our own local cuisine, that's saying a lot.

 

A few years ago, I pointed out to Jorge that I appreciate his skills, and asked him why he risked his life to come to the U.S. in the first place. He said, "Everybody in Mexico can do these things. I came to this country to make money." He came here knowing full well that getting a job as a mere burger flipper would earn him more money than he could ever possibly earn in Mexico, in spite of all his skills. And now he's making $17 per hour plus overtime plus a big-time benefit package -- something he probably never envisioned (but then again, maybe I don't know him as well as I think I do).

 

The reason a mere burger flipper in the U.S. can earn more than someone of Jorge's enormous skills in Mexico is what economists call division of labor. Jorge got a job with our company as a warehouseman, and his work is concentrated toward a specific goal, and because he is good at it -- in fact, he's the best in the world at what he does at this specific job -- he does this work efficiently and effectively. Efficiency and effectiveness is what adds value, not just to the firm, but to the overall economy. Added value in the workforce is best achieved by dividing work down to its simplest components and then allowing workers to achieve efficiency and effectiveness at what they do.

 

Division of labor is a sort of a second cousin to specialization (or vice versa). Division of labor applies to all workers, but the benefits of which do not apply to all countries (which is partly why we continue to have an illegal immigrant problem). Specialization, however, occurs in pretty much all countries. Even North Korea has doctors and engineers. North Korea also has division of labor. Part of the problem there, though, is that the state dictates the wages -- which is why nobody is risking his or her life to immigrate there.

[Cocheese]

my point is not that cost of transportation isn't factored into the price of goods,

 

Huh????

 

It's bad enough Mark pretended to go to Law School, please don't pretend that you went to business school.

 

Whether they list the freight cost on the invoice (like a vehicle's MSRP sticker), or bury it in the final price, a freight factor is always included in the price of the goods. Do you actually believe companies just "eat" that cost?

Edited May 14, 2011 by Cocheese

[RangerM]

" If I'm not allowed to enjoy the rewards for high achievement, I might as well not achieve. "

 

AND THAT YOUR HONOUR IS THE MONEY LINE!

 

As long as the left wingers think that rich=evil then they will never understand this. Like a kid who has never felt the elation of being first in something readily agree's to "everybody gets a medal for playing" and "no scores are kept"

 

Some just don't get it. Those who have never worked around the clock for weeks/months/years on end to get their own business successful, will not understand why rich people get to keep all this "offensive amount" of money when there are others out there who are hungry. (even though the "hungry" have never applied themselves or ever gave 110% in anything they ever did)

 

I appreciate the sentiments.

 

I think that some people have a hard time justifying (in their minds) the way or the amount that some people are compensated, when others' efforts seem to be greater for a far lower standard of living. It's not lost on me that there truly are people who are overworked/undercompensated.

 

However, this impression that many people get is myopic, imo. Peoples' compensation reflects what others value their total contributions to be.

 

A star NFL football player is paid to play football, but that's not what his compensation is based on. His value is in his ability to get you (the consumer) to purchase football tickets, team jerseys, pay-per-view, an NFL Network subscription, and anything else that the team can make money on.

 

A singer is paid to sing, but his true value is how much he can get you to spend your money on things that he touches (concerts, products he endorses, etc)

 

I don't deny there are those (particularly in the financial sector) whose compensation seems completely out of whack with what you and I can observe in the general population, but that too is myopic. People may not understand why an investment banker (who's lost a bunch of other peoples' money) gets a bonus. I admit I don't either. But I'd imagine the same rules apply (who's best to separate you from your money) I'm also not stupid enough to hand over my money to someone without knowing what I'm getting into. In business, there is no room for faith in other men. First rule of business, get it in writing.

 

I think many on the left allow their emotions to run wild, thinking that to obsess over others' compensation is akin to social justice/injustice.