Re: Instead of focusing on revenues imbalance,
- From: "The Trucker" <mikcob@xxxxxxxxxxx>
- Date: Wed, 7 Dec 2005 10:33:06 -0800
"Brablo" <gestureofrespect@xxxxxxxxx> wrote in message
news:1133963341.107997.266620@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
> why not focus on the *earnings/profit* imbalance?
>
> Suppose that China has sold us $1B worth of low-margin goods such as
> socks, plastic toys, and t-shirts. On average, let's say that the
> profit margins on these goods are 5%.
>
> On the other hand, we sold them $0.7B worth of steam turbines,
> management consulting services, software, and other high margin
> goods/services. On average, let's assume that the profit margins on
> these goods/services are 25%.
>
> The trade imbalance is $0.3B in China's favor. NOTE: This does *NOT*
> (IMHO) represent how much more money they have after executing these
> transactions, because the bulk of this money is going back to recover
> costs.
>
> But the earnings imbalance indicate that the USA has $0.175B VS.
> China's $0.050B. This means that the USA has $0.125B more free cash
> than China.
>
> Am I missing something here?
Yes. Who actually got the benefit of all of these transactions?
The Chinese seem to have a lot of T-Bills and a lot of
dollars left over after these "small" profits are realized. That
does not seem to support the idea that they are less profitable.
Their economy (as measured in productive capacity) is
growing much faster than ours and that does not support
your thesis either.
Also it will be seen that these profits do not inure to the
benefit of the middle class in either nation. Profit is nothing
more than a growing authoritarianism because it is simply
a measure of the growing distance between the owners of
the means of production and the real people in the
society. This is true here AND in China.
--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org
.
- References:
- Instead of focusing on revenues imbalance,
- From: Brablo
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