Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (22539)	12/4/2004 11:09:28 AM
From: bull_derrick	Read Replies (4) \| Respond to of 23153

Again, mindful that we're talking economics here and not politics but the two sometimes do tie together. I read the VW report with interest yesterday also. I have worked in a manufacturing company for 23 years in various capacities so I have a perspective on this. I heard an economist once say that there are only three ways that wealth is created in any society and those are farming, mining and manufacturing. He went on to say in those three situation, the value of the output is greater than the sum of the inputs. Having thought about this at length, I believe the economist was right. In manufacturing, one can add a dollar of material and a dollar of labor and hopefully have three dollars of finished goods to sell. That value added difference is new wealth created for that society. Selling insurance, or even stock trading, does not generate wealth for a society even though it may generate money and allow someone to raise a family, etc. If I sold you insurance and you sold me insurance, the society as a whole would see a net sum gain of zero in terms of its wealth. Only those three activities produce wealth. In the past fifteen years, starting with NAFTA, then WTO and GATT, the US has slowly given up its manufacturing base in exchange for a hope that new markets would open up for US products to be sold. In my estimation, it's a false hope because countries like Japan make distribution very difficult and consumers in these countries themselves tend to gravitate toward products made in their own countries. Lastly, American businessmen are not accomplished at selling overseas. The operation where I work sells 40% of its products overseas and I was responsible for international sales for a couple of years. One has to make a commitment to serve these markets and many businesses do not. Both Republican and Democratic administrations have allowed entire industries like the TV, electronics assembly and textile industries to evaporate in the spirit of open markets. I find little difference in each party's actions, regardless of what is said by various candidates. Now onto currency, a weaker dollar is good as Kodiak said provided it's not in free fall where a perception enters the market that its a fiat currency. America over the past 20 years has allowed its wealth creating base (manufacturing) to erode and it is my hope that the VW announcement is a beginning of other such plans to bring more manufacturing operations back to our shores. Onto the political tangent, it is my thought that the red states are the typical beneficiaries of manufacturing and a weaker dollar as a weaker dollar will benefit the employment market even if prices at Wal-Mart increase (provided the Yuan is ever corrected). If you consider the typical red-blue election maps by county, most of the blue states or counties are tied to metropolitan areas where people primarily sell each other insurance, trade stocks, practice law or other non-wealth producing activities. From a NY lawyer's perspective, a strong dollar means the next Mercedes or European vacation is going to be cheaper and from his perspective it doesn't matter if all the mills in South Carolina are shutting down. Managing the weaker dollar is dicey stuff because there's a line between weakness and abandonment. If this country can walk that fine line, it could improve our economies wealth creation base once again.