Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Lower Standards - The Downsides to Outsourcing to China

ConsumerWatch / China Economy Aug 04, 2007 - 07:50 AM GMT

By: Andy_Sutton

ConsumerWatch

We were greeted this week again with something that is becoming rather familiar and worrisome; a recall of yet another Chinese-made product. This time it was toys which contained paint with unacceptable lead levels. Most if not all of us remember the recent pet food scandal in which melamine was found in pet food. This substance was responsible for the deaths of an untold number of pets, our own included.


This is but one of the many downsides of outsourcing. Unfortunately, it is one of those inconveniences which are rarely talked about when trade agreements are foisted on the American populace. Or, in the case of China, one of the downsides never talked about when the terms 'cheap products' and 'cheap labor' are mentioned.

Talk radio was quick to poo-poo the idea that high levels of lead in paint is any big deal, citing the well-known situation in the 1970's where children got sick from eating paint chips. As usual, they missed the entire point, preferring to blame parents for letting their kids eat paint chips. Of course it is easy to teach a kid not to eat paint chips. That should be common sense. However, try teaching a kid NOT to put toys in their mouth. That is another matter entirely.

Lower Standards?

One of the biggest problems with allowing goods to be made in foreign countries are sometimes huge differences in the standards used to manufacture those products. For many products, the difference in standards are imperceptible. However, when you start talking about food, children's products, pharmaceuticals and similar types of products, these differences can become glaring. China, in their stage of rapid growth is clearly interested in pushing out products. We are as much responsible as the Chinese because we are just as eager to borrow to consume them as they are to send them to us.

Having a need for safe children's toys myself, I decided to do a little research and see if my conception that almost all toys were made in China really was true. In one minute's time I found a website that contains a somewhat often updated list of toys made in the USA. The website does urge consumers to check labels as companies are constantly switching their suppliers and many of these suppliers are outside the United States. Simply copy and paste the link into your browser.

http://www.seanet.com/~bross/usamade.htm

Other Downsides...

Paulson in ChinaThe major players in the US financial system have been visiting China with increased frequency during the first part of 2007. Most recent was Treasury Secretary Henry Paulson's visit seen below:

Ben Bernanke was in China a few months ago. The spin is that Paulson and Bernanke are trying to prevent a trade war between the US and China. Congress appears intent on irritating the Chinese with sanctions, tariffs, levies etc. Whatever their real mission is, I certainly don't believe they are over there complaining about melamine or lead paint in kid's toys. My guess is that the real reason for these visits underscores our need for cooperation in a slow and timely unwinding of the dollar versus its Chinese counterpart.

Perhaps the largest economic downside to outsourcing is that unless a trade balance can be maintained, it results in the amassing of large quantities of US Dollars which are then used to buy US assets like stocks, bonds and real estate. On first glance this might appear to be a good thing as it provides a much-needed prop under our equity, bond and real-estate markets. However, what happens when we no longer own our own companies and land? What happens when foreigners own the roads, bridges and infrastructure? These are big picture questions and the ones we should be asking elected officials as we continue exporting our productive capacity.

 

By Andy Sutton
http://www.my2centsonline.com

Andy Sutton holds a MBA with Honors in Economics from Moravian College and is a member of Omicron Delta Epsilon International Honor Society in Economics. He currently provides financial planning services to a growing book of clients using a conservative approach aimed at accumulating high quality, income producing assets while providing protection against a falling dollar.

Andy Sutton Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in