Economically Speaking

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Economically Speaking

#1 Post by FranktheFrank » 10 Apr 2018, 13:43

“Now here's somebody who wants to smoke a marijuana cigarette. If he's caught, he goes to jail. Now is that moral? Is that proper? I think it's absolutely disgraceful that our government, supposed to be our government, should be in the position of converting people who are not harming others into criminals, of destroying their lives, putting them in jail. That's the issue to me. The economic issue comes in only for explaining why it has those effects. But the economic reasons are not the reasons”
― Milton Friedman
Now to me Milton Friedman is an intelligent and educated man, but he's a stupid man to propose this argument. Let's look at the moral side first, Marijuana is a noxious substance when smoked, it has an effect on the health of a person. This is a well know fact and I won't discuss those effect here, but simply say detrimental to long term good health of a person. So, to me, it is immoral to advocate in general the smoking of this substance. Because this substance is detrimental to health it has been banned, because it has been banned, like prohibition with alcohol, it has been seen by criminals as a way of making money. I may have sympathy for his argument against jailing users, there are other punishments, but for the providers of this noxious weed there can only be a jail sentence with a heavy fine. Economists generally are not immoral, the balance has to be between the greater good of society, economics is a social science, and the cost of administering the law. If the weed is made lawful to use then one could speculate it would have an adverse effect on 20% of our youth, measure this against the cost of administrating the law. It may seem less expensive to let people use the weed without restraint, but then there are the long term health care of people damaged by this substance. Let's look at the criminal activities of those who supply this product, it is grown mainly in South America, those Roman Catholic countries that do not really understand democracy, we would say poor countries because the individual has few rights in law and their economies are stagnant. They have never seen to invent anything of value, they are not innovators in the development of wealth for their nations yet they are rich in oil, their ruling elites milk of the proceeds and leave the poor even poorer. These countries wage a kind of war against the USA in the growing harvesting and supply of marijuana. The USA has gone to war in the past against these criminal gangs in different South American counties at great cost, the justice system in the states is in crises with so many cases, law enforcement cost huge sums of money to fight the distribution of this weed. It would be easier to just give in. I think in a moral society one that advocates Christ as God and democracy it is nobler, despite the cost involved, to ban marijuana and try to stem the damage to our young people. People must be protected against their own foolish behaviour.
Men cannot not live by exchanging articles, but producing them. They live by work not trade.
John Ruskin
John Ruskin is a rather famous person, educated at Oxford , but not strictly speak an economist. His quote at first glance seems clever, well thought out, but does not stand close inspection. To trade one has to have something that has been either produced by nature or made by man. And manufacturing is a vitally important function is modern society, the question is who makes it and who sells it. Eskimos have a surfeit of fish products, but they could not make muskets, the American made musket but wanted Eskimo products, trade was necessary. Trade enriches, what you cannot use you can trade for goods that you otherwise could not make or obtain. Trade makes wealthy men of us all. The Netherlands is a small country with a small populations, they have limited manufacturing resources compared to the USA and especially compared to China and India. They vast quantities of tulips, cheese, fish for herring, and produce large quantities of natural gas. Other than those they produce very little else, do not make their won aircraft and not even their own cars. But the Netherlands does very well by trading. They are in a unique positon, along with Belgium with their great port at Antwerp, in having the great port of Rotterdam and can ship very easily good all over the world, Germany uses that port and the port brings in goods produced globally into Europe. So why doesn't the USA follow the Netherlands example and just concentrate on trade? If the Dutch can do very well from trade why not the USA.
First of all the Netherlands has no choice, they cannot compete with the USA in aircraft manufacture because their industries are well advanced and developed and they have the finance and facilities, research experience to develop advanced aircraft at a relatively lower cost than the Dutch could possibly so. The Americans have a Comparative Advantage. What does Comparative Advantage mean, let's take an example for illustrative purposes. Let's look at the world wide market for say Kangaroo meat, please don't laugh too hard it is worth. It is estimated there is an Australian population of kangaroos of around 50 million, that population can be culled annually by 3-4 million without any adverse effect. The value of exported kangaroo meat is A$270 million, not small potatoes, and has created 400 jobs. These animals runa round wild and need no medical care, i.e. if they are ill they die and are eaten by dingoes. Could the USA compete with wild Australian kangaroos, it is possible but the start up costs would be enormous. Hence we say Australia has a Comparative Advantage in the production and trading of kangaroo meat.
The same can be said of Welsh lamb, welsh lamb can only come from Wales, if it doesn't it's not Welsh lamb, hence Wales has a comparative advantage in Welsh lamb. Iron ore comes from a number of places around the globe, if you don't have iron ore resources you cannot have an advantage, comparative or otherwise. Simple stuff an 001 course in economics will teach your this.
So why is America, the USA, buying mass produced product from China and not producing these products themselves. Simple, because the Chinese have a Comparative Advantage i.e. they have a population four times greater than the USA, 1.2 billion people. The Chinese worker will expect for $1385 dollars a month (average per capita GDP) and the USA worker expects a salary of around $4900 per month (average per capita GDP), source: ... per_capita.

Around 4 times cheaper than an American worker, the Chines have a Comparative advange in the production of mass produced goods, also low technology basics like iron, steel, and soon automobile and aircraft production. So why is the USA buying Chinese good, answer is because they are much cheaper. USA gets a benefit of much cheaper good over a wide range of products. Why would Donald Trump threaten to change this arrangement. Answer because it got him into power as president and he wants to keep his promise. What advantages are there in manufacturing these products in the USA. Answer: although initially it will cause a higher cost to the consumer and inflation will certianly grow in the short term there will be benefits to the rust belt. If heavy indutry starts up again in Pennsylvania it will bring much benefit to that state, near full employment, the reclaiming of desolate cities, Detroit and Pittsburgh come to mind, generate billions in value and reap billions in taxes from a busy workforce. But he USA cannot make all thos eproducts that China already makes, the cost would be prohibitive and affect the consumer. Trump wants heavy indutry to move back from Mexico and especuially the mass production of auto parts, a huge industry in Mexico. This threat is leverage agsint Mexico to clamp down on 1. drug cartels and 2. pay for the building of his wall. With China Trump wants them to lean on North Korea, currently seen as a rogue state.
North Korea has developed a nuclear capability and more frightening the ability to hit targets many thousands of miles away. Most worrying for Japan and South Korea and outlaying provinces of the USA. Nuclear war is hardly an option, it would destroy humanity and the world we live in. Economic nations implemented by Trump are already beginning to work, i.e. North Korea is speaking about meeting and dialogue.
Trump is playing the statesman, he is attempting to 1. satisfy his election campaign promises to the electors who voted for him and 2. address issues that could destroy society, his society the USA, and the world by nuclear war.
To be sure Donald Trump has done himself no great service, like Nixon, by the way he speaks in private, and sometimes in public. The way he has spoken about women is locker room talk, it goes on, it has always gone on, it is unfortunate for him that he was recorded and that recording played back.
But the way I see it, he is addressing, or at least attempting to address important issues: the problem associated with North Korea and nuclear posing bythat rogue state 2. the deindustrialisation of large parts of a nce productive America 3. control of the USA's borders from illegal imigration.

Stating publickly in a poetry forum that you hate him is not 1. Christian 2. does not reflect our cultural values. Is he despicable, possibly, but certianly no different to John Kennedy, his sexual promiscuity is well documented and he even used call girls in he White House, Bill Clinton also has a similar attitude to women, what man doesnt like sex, yet there are bounds for us all including heads of state.

In a democracy it is normal to allow the exchange of views, to me Donad Trump is a largly unknown figure, time will tell if he is effcetive or not. Could he bring the devestation Kennedy andn Johnson brought in the debacle of Vietnam, I hope not.

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Re: Economically Speaking

#2 Post by thomasgoodchap » 16 May 2018, 20:22

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