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EU escalates 'visa war' with US


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10 minutes ago, Argus said:

There is no visa war. The US doesn't give a damn if the EU wants to force Americans to get visas. Trump will just tell Americans to stay home because its better for the US economy. And the major European countries that rely on tourism will never vote in a visa for Americans on the basis of America needing visas from the likes of Romania.

And add to that the reality that with a strong dollar Americans want to travel and will spend more....... Every US  dollar not spent in the EU will get spent somewhere else. 

 

As Canadians, we should be supporting the EU vs US visa war, because guess who sees some benefit from that?

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On 3/15/2017 at 4:17 AM, Michael Hardner said:

I don't think you could offer social services to migrants without revenue support for that.  The business people can do business without borders now, why shouldn't people be able to move along with the money ?

That's an excellent point. Unrestricted movement of labor is a natural extension of unrestricted trade in goods. Its fundamentally no different whether you move cheap labor to where the production is, or if you move production to where the cheap labor is. Both will depress wages by the same amount to the 10th of a cent. Guess free trade worshippers never thought of this.

Its a toss up really. If we move production to where the cheap labor is, we don't have to provide social services. On the flip side we also don't collect any tax revenue from these workers and shell corporations and have less opportunity to supply materials to fuel that production.

 

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11 hours ago, dre said:

That's an excellent point. Unrestricted movement of labor is a natural extension of unrestricted trade in goods. Its fundamentally no different whether you move cheap labor to where the production is, or if you move production to where the cheap labor is. Both will depress wages by the same amount to the 10th of a cent. Guess free trade worshippers never thought of this.

Its a toss up really. If we move production to where the cheap labor is, we don't have to provide social services. On the flip side we also don't collect any tax revenue from these workers and shell corporations and have less opportunity to supply materials to fuel that production.

 

It seems like we're over the hump when it comes to downward pressure on Western wages due to globalization. For decades, companies could realize orders of magnitude savings in labor costs by moving production to Asia. Asian countries had infrastructure, peace, a pro-business environment, and industrious/educated populations, but were further behind the development ladder. Moving production to these countries left you with a reasonably reliable, reasonable quality, supply chain for a much lower cost. But these countries have mostly developed, from China to India to Bangladesh, wages are rising, and now the labor savings you get by going there are maybe a factor of 2-5, not a factor of 10-100. And a factor of 2 in labor cost is a lot less competitive when you consider the increased complexity of your supply chain, international regulations and taxes, shipping, quality control, etc.

Meanwhile, the next set of countries where massive differentials in labor costs still exist (mostly Africa) is not yet ready in terms of infrastructure/education/peace to become the world hub of manufacturing. Further, Africa has a much lower population than Asia, and so it will not be nearly the seemingly inexhaustible mass of cheap labor that Asia was throughout the 70s to early 2000s, even when it does reach the necessary level of development. 

What does all this mean? Manufacturing is already showing signs of returning to Western countries, a lot of new companies that enter the manufacturing arena aren't bothering to outsource or build overseas factories since the cost savings no longer outweigh the difficulties, and wages in some of the more dynamic Western economies are starting to rise at a decent pace again. Ironically, just as the backlash against globalization is materializing (Trump, etc), it seems like we've already gotten through most of the bad parts. Globalization has lifted about a billion people in Asia out of subsistence farming and into a global middle class and propelled these countries into the modern economy enough that their labor costs have risen. And now wage growth which has stagnated in the West for decades is set to start up again.

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1 hour ago, Bonam said:

....What does all this mean? Manufacturing is already showing signs of returning to Western countries, a lot of new companies that enter the manufacturing arena aren't bothering to outsource or build overseas factories since the cost savings no longer outweigh the difficulties, and wages in some of the more dynamic Western economies are starting to rise at a decent pace again. Ironically, just as the backlash against globalization is materializing (Trump, etc), it seems like we've already gotten through most of the bad parts....

 

Agreed....China and other economies have developed into primary markets instead of just cheap labour pools.    China's balance of trade is shifting to reflect this reality.   When my previous company provided technical transfer to China in exchange for market access, it was a big gamble that has paid off.  

Other factors have led to a backlash in offshoring IT and other services unrelated to manufacturing.   The present challenge is the mass baby boomer retirement impact on labour and more importantly...consumer consumption.

Trump is right...but for the wrong reasons.

Edited by bush_cheney2004
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Yeah 

5 hours ago, Bonam said:

 

It seems like we're over the hump when it comes to downward pressure on Western wages due to globalization. For decades, companies could realize orders of magnitude savings in labor costs by moving production to Asia. Asian countries had infrastructure, peace, a pro-business environment, and industrious/educated populations, but were further behind the development ladder. Moving production to these countries left you with a reasonably reliable, reasonable quality, supply chain for a much lower cost. But these countries have mostly developed, from China to India to Bangladesh, wages are rising, and now the labor savings you get by going there are maybe a factor of 2-5, not a factor of 10-100. And a factor of 2 in labor cost is a lot less competitive when you consider the increased complexity of your supply chain, international regulations and taxes, shipping, quality control, etc.

Meanwhile, the next set of countries where massive differentials in labor costs still exist (mostly Africa) is not yet ready in terms of infrastructure/education/peace to become the world hub of manufacturing. Further, Africa has a much lower population than Asia, and so it will not be nearly the seemingly inexhaustible mass of cheap labor that Asia was throughout the 70s to early 2000s, even when it does reach the necessary level of development. 

What does all this mean? Manufacturing is already showing signs of returning to Western countries, a lot of new companies that enter the manufacturing arena aren't bothering to outsource or build overseas factories since the cost savings no longer outweigh the difficulties, and wages in some of the more dynamic Western economies are starting to rise at a decent pace again. Ironically, just as the backlash against globalization is materializing (Trump, etc), it seems like we've already gotten through most of the bad parts. Globalization has lifted about a billion people in Asia out of subsistence farming and into a global middle class and propelled these countries into the modern economy enough that their labor costs have risen. And now wage growth which has stagnated in the West for decades is set to start up again.

Yeah I notice this in my industry quite a bit. When I started offshoring I worked with Bangalore and I could get a guy with a degree in com-sci for about 7 bucks an hour. Costs went up there over the course of a few years so we moved to Manila. Right now costs are about 16 per hour for a decent developer and inching up.

At some point these productive powerhouses will be the "first world", and we will have to "onshore" to lower production costs.

To your point about lifting people out of subsistence farming. No question about it you are right. Its been a huge win for them. For us though its a little less clear.

Edited by dre
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Agree with Dre and BC here.  This is why the "slice of pie" analogy fails for global trade and immigration too.  Economic activity is not static, not a zero-sum game.  

Gartner reported offshoring to be dead in 2012.  13 years after it knocked me out of my career as a mainframe contractor.  https://www.forbes.com/sites/ciocentral/2012/12/28/the-death-of-outsourcing-and-other-it-management-trends/#f99bc6e43487

But I don't get what Trump is right about here, except for the fact that he wants to build up the middle class that lost good paying jobs to Globalization and automation.  

 

 

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