Alan Greenspan: Is he losing his Jedi powers?

Ambush Bug · Post by **Ambush Bug** » Wed Feb 25, 2004 2:56 am

OK, perhaps only me and Timmain would get the Jedi reference (*wave* "The economy is fine...."), but this latest article got me thinking. First, <a href="http://thestar.com.my/news/story.asp?fi ... test">here is the article</a>, pulled from Google's news search. Search terms were 'greenspan speech omaha nebraska', and I was prompted to search up the speech when I read about it in the latest Time magazine. Next, the Time article, which was about outsourcing. <a href="http://www.time.com/time/covers/1101040 ... html">Here is a link to Time's online version of the article (registration required).</a> I thought the article was fair enough, but it didn't go into depth. I don't know if the online edition includes the sidebars that go into the print magazine, and I bring this up because one of the sidebars was talking about successful US companies that have dealt with outsourcing. RAMBUS was used as an example, and for those of you who know just how slimy RAMBUS is, you'll understand why their mention made me leery of the whole article. Finally, know that I have not been able to find a transcript of Greenspan's speech, which I would very much like to get my hands on. Without it, I can only assume that the parts he was quoted on were indicative of the rest of the speech, which I know isn't always the case. If anyone can find an actual transcript, please link it or paste it into the thread. Now, here's my beef: Greenspan didn't give any details. A couple of quotes from the first article: <blockquote>Quote:<hr> "The protectionist cures being advanced to address these hardships will make matters worse rather than better,'' Greenspan said in a speech to the Omaha, Nebraska, Chamber of Commerce. <hr></blockquote> and... <blockquote>Quote:<hr> "As history clearly shows, our economy is best served by full and vigorous engagement in the global economy,'' Greenspan said, echoing a point Mankiw made in the economic report. <hr></blockquote> No examples. No details. Just statements. (ahem...*wave*) Again, perhaps the press didn't quote them, or perhaps they didn't exist in his speech in the first place. I don't know, and I would like to. But both quotes and the rest of the items Greenspan mentioned didn't sit well with me. How will the 'protectionist cures' he mentioned make things worse? What history? Gimme some dates and examples, man! And the thing that I found very odd was that no mention was made of the cost of living compared to other contries as a contributing factor to outsourcing. Of course it's cheaper to hire Indians, when a pack of smokes costs a quarter, you can feed a family of four a normal dinner for a buck-twenty-five, and cabs cost something like a nickel. As opposed to hiring people in the United States, where cost of living (housing, car payments, car insurance, health insurance, food) is through the roof compared to India, especially the car stuff, since our public transit system sucks if you don't live in a large city. I would think that American workers would bring this up all the time: "How can I compete when I am required, by law, to purchase these things that the Indian workers do not have to?" (I'm talking house insurance and car insurance, mainly, and not as absolute examples but as a general trend.) "Who wants to hire workers that are tied down by such monetary shackles?", the American worker might say. If there's a point to my rambling, aside from Greenspan appearing to not provide any concrete details to back his assertions, it's that it seems to be that a very basic and fundamental reason for outsourcing is being ignored by the press. This irks me, greatly. What do you guys think of all this?

Post by **XMEN Gambit** » Wed Feb 25, 2004 8:20 am

Historically, I've never heard of Greenspan to be long on specific cases of anything.

XMENRudeJelly · Post by **XMENRudeJelly** » Wed Feb 25, 2004 10:01 am

AB, Assuming the e-mail address for you in your EzBoard profile is correct...I just sent you the transcript. <img src=http://www.ezboard.com/images/emoticons/smile.gif ALT=":)"> RJ <img src="http://webpages.charter.net/1ibcnya/mongheesm.jpg" style="border:0;"/>


Spreadin' the love with a butter knife...

XMENrudejellyDTM{FF}

Ambush Bug · Post by **Ambush Bug** » Thu Feb 26, 2004 12:43 am

Got the e-mail, thanks. Where did you dig this up? <a href="http://scribers.neondsl.com/~ambushbug/ ... Speech.doc"> Here's a link to the .doc RJ sent me.</a> -- As for the quotes I referenced above: 'Protectionist Cures': Taken out of context. In-context, it seems like he's referring to other countries doing the same thing to us, should we decide to protect our jobs via tariffs and job quotas. (Not that those two items were mentioned by name, but they seemed like obvious choices). 'As history clearly shows': Not quite out-of-context, IMO. No examples, and none came immediately to mind, either, save for perhaps Chinese workers making all sorts of items. Not once in the speech was higher cost-of-living addressed by Greenspan. This is what irks me, still. I don't have any proof, just a gut feeling and a fairly firm grasp of college-freshman economics (still have my Eco book, too. <img src=http://www.ezboard.com/images/emoticons/smile.gif ALT=":)"> ), but I'm still of the opinion that the cost-of-living here in the US is what's making outsourcing so appealing. I wish some politician would address it. I imagine it's a meat-grinder of a topic to stick one's hand into, though, as cost-of-living covers all the great financial institutions in this country, such as the insurance companies, transportation, banks and so on. No politician worth his tie wants to piss those guys off, and I understand that. Still pisses me off, though. I'm not advocating that we all go back to living like cavemen, but there's got to be something that can help our citizens be more competitive and desirable in the global market aside from waiting for the other countries to catch up with us in costs-of-living. Waiting for that would take at least a century or two, methinks, and our real troubles with outsourcing jobs will come sooner than that, should the current trend continue as it has. Right off the bat, the first possible solution that comes to mind is public education--'don't overextend your finances without a really, really good reason' being the first meme I'd like to see pounded into the general public's skulls. 'Stop buying useless crap!' being the second. Not that either could be worded as such and pass whatever committee is in charge of making the public service announcements. I guess you could say I've got a major beef with materialism. <img src=http://www.ezboard.com/images/emoticons/smile.gif ALT=":)"> Let's just say that when I was growing up, my family went through a few hard times, as well going through my own personal financial troubles while in college. (One year, I didn't make enough to have to file taxes, for example.) Those times made me damn stingy with my money, more of a person that's likely to make purchases of durable goods instead of non-durable goods, and one who carefully takes into account opportunity cost when making other purchases. I mean, I hear about suburban families driving themselves into debt to keep up the Joneses, and it drives me up the wall. Hell, I think a couple of issues of Time ago, there was this article going on how about the 'standard' now in suburbia is to have three cars instead of two. THREE! Two I can understand when you got Father commuting into work and Mother handling the kids... but three cars? Something's wrong with the city layout if that's the kind of thing that's required. Damn, now I got started on our lack of public transit. I'd better shut up for a bit and see what the rest of you have to say instead of babbling on. <img src=http://www.ezboard.com/images/emoticons/smile.gif ALT=":)">

XMENRudeJelly · Post by **XMENRudeJelly** » Thu Feb 26, 2004 7:56 am

The Omaha Chamber of Comerce is where he gave the speech. They had it on their website. I wonder if Warren Buffett had invited Mr. Greenspan to town... <img src=http://www.boomspeed.com/natila/headscratch.gif ALT=":scratch">

Post by **XMEN Gambit** » Thu Feb 26, 2004 8:05 am

First, on the materialism point, I hear and agree with Da Bug. Stupid, stupid, stupid. But I'd like to raise a point. The fact that we in the US can buy cheap imported goods is a major reason that the aforementioned cost of living is as low as it is. If we closed our borders, legally or financially, we wouldn't be able to buy half the things we do now, given the same income. And if you say that our income would go up because everyone has to buy "made in america" items, I would say whoops, there goes the inflation index. Obviously it's not that cut-and-dried, but there's truth there. Open borders and ease of transportation, in a free market, will lead to equalization. Given those open borders, companies, because their primariy purpose is profit, have to be given financial incentives to remain in one location (or disincentives for moving elsewhere). The incentives and disincentives can be legal/regulatory or taxation, but that's pretty much it. The companies will go where their total cost of doing business is lowest. I don't have much of a solution, but I do have a suggestion that I think would help. Legally level the playing field, by defining a certain minimum (relative) standard of employee conditions/compensation/etc., not for companies operating here, but for any company wanting to sell goods here wherever they are located. One of the reasons employee costs are so high here in the US as opposed to say, Taiwan, is things like labor laws. If we made foreign manufactureres adhere to similar rules as domestic companies, labor wouldn't be so cheap elsewhere and we'd be leveraging the powerful US consumer market to reduce the number sweatshops around the globe. Would that raise prices for consumers here? Yup. Just like it did when we created a minimum wage and eliminated child labor. But it was the right thing to do and we survived. And it wouldn't artifically eliminate global competition, but preserve it. <img src="http://www.xmenclan.org/xmengambit.gif"/> XMEN member Card-carrying DTM OKL Fish-napper Though a program be but three lines long, someday it will have to be maintained.  The Tao of Programming

Post by **XMEN Gambit** » Thu Feb 26, 2004 8:48 am

OOhh, I just read a nice article. It's <a href="http://www.groklaw.net/article.php?stor ... 3735733">a transcript of a talk that Eben Moglen, of the FSF, gave at Harvard</a> as kind of a rebuttal to McBride's (of SCO) talk there recently. I bring it up here because there's some interesting tidbits of information, primarily toward the end, regarding zero-margin goods such as software and music. It even touches on the outsourcing issue:<blockquote>Quote:<hr> See, the programmers I worked with all my life thought of themselves as artisans, and it was very hard to unionize them... Software writers at the moment have begun to lose that feeling, as the world proletarianizes them much more severely than it used to. They're beginning to notice that they're workers, ... they are becoming aware of the fact that they are workers whose jobs are movable in international trade.<hr></blockquote>

Ambush Bug · Post by **Ambush Bug** » Thu Feb 26, 2004 11:39 am

<blockquote>Quote:<hr> But I'd like to raise a point. The fact that we in the US can buy cheap imported goods is a major reason that the aforementioned cost of living is as low as it is. If we closed our borders, legally or financially, we wouldn't be able to buy half the things we do now, given the same income. And if you say that our income would go up because everyone has to buy "made in america" items, I would say whoops, there goes the inflation index. <hr></blockquote> I agree with you here--US cost-of-living affecting prices again. Though I'm not sure how the inflation index would be affected--my Econ-Fu isn't that strong. As for this: <blockquote>Quote:<hr> I don't have much of a solution, but I do have a suggestion that I think would help. Legally level the playing field, by defining a certain minimum (relative) standard of employee conditions/compensation/etc., not for companies operating here, but for any company wanting to sell goods here wherever they are located. <hr></blockquote> I'm not sure exactly what the ramifications of doing that would be, though I freely admit I haven't got any ideas other than 'buy less crap' to contribute. First thing that comes to mind is this--perhaps our trading partners would decide that we're not such a good market after all. I mean, let's say we required China, for example, to follow the suggestion. I'd think that would throw a huge monkey-wrench into their economy. Chinese Company A and B both produce widgets. A sells to us, B sells to Japan. 'Global Wage Minimums', for lack of a better name, goes into effect. B's employees make widgets for Japan, and Japan doesn't require the increased pay, so life continues as-is for them. A's employees, on the other hand, really like the idea of having higher pay relative to the rest of their countrymen. But what about A's managers/employers? They probably wouldn't like the idea of shelling out more cash for the same work; wouldn't it be cheaper for them to, for example, buy the widgets from Company B after they've been sold in Japan, and ship 'em back to the US? That idea seems pretty risky, like putting all one's eggs into one basket... betting that the US economy is so 'required' in the global trade that everyone will fall in line. Perhaps it would work--I really don't know, and I can't think of anything better myself.

Post by **XMEN Gambit** » Thu Feb 26, 2004 12:01 pm

<blockquote>Quote:<hr>...wouldn't it be cheaper for them to, for example, buy the widgets from Company B after they've been sold in Japan, and ship 'em back to the US?<hr></blockquote> Note that I said manufacturer, so Company B would still have to meet the standards for its products to be legally sold here, however many companies it went through on the way. There are a number of weaknesses in my idea, and I'll get to them, but first I want to make clear I'm not talking about a global minimum wage. Some countries would have higher minims, others lower, and that's OK. As they're our trade rules we could make them whatever we want/need. I was mainly targeting hazardous working conditions and 84 (12x7) hour working weeks. Problems: The big one is, who checks on all these foreign companies to make sure they're following our rules? I think the company that wants to do business here needs to pay for the certification, or whatever, but it's still a big issue. Who SETS the blinkin' rules? Smuggling. Got that today, too, but not much in the way of DVD players and the like. I know there's more...

XMEN Ashaman DTM · Post by **XMEN Ashaman DTM** » Thu Feb 26, 2004 2:38 pm

I would imagine that congress would set the rules for goods coming into the US. They would argue and bicker and all that, but in the end, they'd have something in place. Something they could all point to and say, "Hey! We made this! It's going to help out our jobs!". As for enforcement, I'd imagine that the FTC would be suited for the job. If not them, then a new agency that operates like a government-run company. I know of several agencies that run some of their facilities as companies: the flight test center at edwards, computer clusters at NASA, test ranges at various military bases. They can rent their facilities and expertise out to companies. The "goods" are sold at or near fair-market value. I also know that NASA does something similar with their wind tunnels and computer clusters. I also think that even though it's an artificial constraint imposed by the US, that it's probably nothing different than a tariff on imports. I also think that if we are really hurting due to outsourcing and cheaper foreign goods and services, then we should do what we can to ensure our well-being.

XMEN Ashaman DTM · Post by **XMEN Ashaman DTM** » Thu Feb 26, 2004 4:30 pm

Here is something that relates to this discussion: <a href="http://www.msnbc.msn.com/id/4365176/">w ...  The US suspended imports of meat products from France.

Alan Greenspan: Is he losing his Jedi powers?

Alan Greenspan: Is he losing his Jedi powers?

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