Thursday, November 4, 2010

Rebutting a Conservative about California's Initiatives

The following debate was held between myself and a Sharron Angle supporter on the Facebook wall of one of my friends. It broaches issues ranging from marijuana legalization to trade policy, and while I am a little embarrassed at my own gaffes (I had class in less than an hour and was thus in a rush, causing grammatical errors and confusing statements about the nature of Proposition 23), Zach "Sharron Angle" Golden has much more about which he should be mortified.


Cheryl Dawn Dearborne

YESSSSSSSSSSS Prop 23 was defeated. Way to go Cali, ya'll are wack for not voting for prop 19 but at least you are keeping Texas oil companies out of your way. I need beautiful weather to come back to.

Zach Golden
Prop 19 was a joke. It would have still been a Federal crime, so marijuana would still have been illegal. As far as Prop 23, California can kiss manufacturing jobs goodbye. The costs will just be too much and those companies will pack up and leave for states with lower costs. Why do you think jobs go to Asia? Lower costs. Plain and simple math. If I don't move my company, my competitor will and he will charge a lower price since his costs are lower and he will put me out of business. It's a vicious cycle, but business is cut throat....

Matthew Rozsa
Dear Zach,

1) While it is true that possessing marijuana would still have been a federal crime, the question is whether Washington (as made manifest, in this case, by President Obama and Attorney General Holder) would have attempted to enforce it. The signs on that front are mixed (Obama has vowed that he wouldn't and Holder has said that he would), but either way, the notion that a state law which contravenes federal mandates is automatically nullified by them doesn't hold up. There have been plenty of other instances in recent and distant American history wherein state sovereignty on specific policy matters was held to be superior to the will of the national government. Had Proposition 19 passed, it would have simply forced that principle to be tested on the issue of marijuana rights.

2) While you are correct that Proposition 23 will cause many manufacturing jobs to be lost in California, this is NOT, as you claim it to be, a case for rejecting what was clearly a morally and practically necessary initiative. Rather it is a reason why America's currently lax free trade policies need to be tightened, so as to provide American companies with disincentives to export jobs overseas or (if necessary) make it downright impossible for them to do so. Why should the environment in this country take a hit just because companies are so avaricious that, if not allowed to have their way on every particular and thus maximize their profit margins to the greatest possible extent, they'll pack up and leave?

Similarly, tariffs on foreign products should be raised so as to make it impossible for nations like China to flood our marketplace with cheaper goods that benefited precisely because American companies screwed over the working class at home.

Zach Golden
Prop 19 was poorly contstructed and would have been a nightmare to implement. I personally don't care if people want to smoke weed, but it was a bad bill.

Prop 23 -You obviously have no understanding of international trade nor do you underst...and the factors that play into companies decisions as it relates to operations. I work in manufacturing and have some insight. Let me lay some things out to you.

There is no such thing as a "disincentive to export jobs overseas". You need to understand why jobs go overseas. Jobs go overseas for multiple reasons.
- Expanding overseas opens up a companies ability to do business in that country. A local presence, in say, Brazil means you have access to distribute your products into the Brazilian market. Your Brazilian workers understand how to do business in Brazil so you are better off than having Americans trying to run things remotely.

- Other countries offer tax incentives for expansion into their country. For example, Intel is building a $1 billion dollar plant in China. They were recruited by the Chinese with low tax incentives, low legal hassles, very cheap land, not property taxes, and the costs to operate the plant in China are low as the Chinese government provides housing and healthcare to their citizens. That same plant in the US would have cost Intel $4-$6 billion dollars to build, the regulations and state taxes, federal taxes, property taxes, along with the high pay for American workers means it will take A LOT LONGER to earn your money back that you invested in the plant. Companies ultimately make decisions based on how long it will take to earn their money back and start making a profit off of any money spent. They have to do that or else they will fail. Go ask any business owner.

- Another thing, plants in places like China are mainly manual labor, so workers can be hired or laid off as demand goes up and down. In the US, many of the plants contain lots of expensive machines because they are cheaper than US workers, but those machines can't be laid off when demand goes down.

-Also, if you don't find a way to make your product cheaper, then your competitor will. Then your competitor will cut prices and take your customers putting you out of business. This is nothing new. This not only happens with jobs going overseas, but also jobs leaving California or Northern union run states and those jobs transferring to the South. If Intel doesn't open that plant in China, then AMD, or Lenovo, or a European compnay will and then Intel will be less competitive. Consumers want a better price and someone will give it to them.

-As far as Tariffs and international trade, raising tariffs will do nothing but cause a trade war. We will not win that war. We are at a competitive disadvantage. Did you know that almost 50% of all business activity of the S&P500 companies is done outside the United States? The world market of consumers is many, many times larger than the consumer base in the US. If you start tariffs, then other countries will retaliate and then US goods won't be competitively priced internationally. The sales of US companies will go down, and then the US companies won't have a need for all of their accountants, logistics, supply chain, factory workers, customer service, marketing, etc employees because their business activity will be much smaller. This will result in layoffs. The US consumer market is only about 200 million of our 320 million population. Europe, Asia, Indai, Brazil, etc are 15 times larger than that. The US consumer base could NEVER make up for the lost international business. My company does 97% of it's business outside the US. Start tariffs and we will lose a large amount of sales and we will have to lay off many people as there just won't be enough work for all our people to do.

This happened in the Great Depression and is exactly what caused the US's recession to go global and cause a great depression. History repeats itself because we forget or say "this time it's different".

Matthew Rozsa
‎1) I fail to see how Proposition 19 would have been "a disaster to implement"... and your response doesn't elucidate that at all. It just makes a blunt assertion that you assume everyone else is supposed to take at face value as factual, all the while not addressing any of the points I raised.

2) Your condescending attitude on economic matters notwithstanding, you are woefully lacking in an understanding of how greater economic policy is formulated. Indeed, you make the classic mistake of many conservatives on these issue - i.e, you believe your personal work experience gives you wisdom, when in fact it merely reflects on the manner to which your ideological paradigm has been rendered myopic through the reinforcement of the intellectual banality in your craft.

And what of your points?

a) Your first point is irrelevant. We aren't discussing why companies expand branches into other countries or attempt to tap into overseas markets; rather we are discussing why jobs that could be given to Americans are instead moved overseas and given to citizens in those nations. Obviously that is not a category that would apply to jobs which are inherently localized in foreign markets... and this, by the way, you no doubt, which raises questions as to your intellectual integrity in bringing up what amounts to a red herring.

b) You are indeed correct that China lures American businesses over with a variety of incentives that this country, due to its fair treatment of laborers, social welfare state, and various liberal social programs, is incapable of matching for practical fiscal reasons. Naturally conservatives use this as a basis for dismantling much of the good that progressivism has done for the American people through these programs; liberals, on the other hand, argue that we should deal with it by imposing taxes and other restrictions on American-based companies that will make it so costly for them to move their jobs to other nations that those disincentives will ultimately outweigh the advantages you just listed. Which, of course, brings me to Point C.

c) A trade war would only work to the disadvantage of people at the top of our current socioeconomic system - CEOs, business executives, and other high-ranking managerial types whose profits would plummet if they were cut off from lucrative foreign markets. That said, American consumers (who account for a much larger size of the economic pie than you depict due to the fact that their incomes and spending patterns cause them to consume at a significantly greater rate than individuals in other countries) would still need the various goods and services that they currently purchase, and likewise companies based here would still have a vibrant market for selling them. While layoffs would initially occur, the sheer size of the demand for existing goods and services would easily pick up the slack and put many of the now-unemployed back to work, albeit in different industries... and that, by the way, is the worst case scenario. The LIKELY scenario is that, despite what you just said, foreign companies would not want to lose access to a market that remains extremely lucrative, so that while the more porcine bigwigs would bitch and whine about the trade war (looking at you, kid), the majority - though displeased - would still trade with this country, since it's still more profitable to earn less money in America than no money in America.

Matthew Rozsa
d) The cause of the Great Depression, despite your assertion, was best described by the Federal Reserve chairman at the time, Marriner Eccles:

As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation s economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

That is what happened to us in the twenties. We sustained high levels of employment in that period with the aid of an exceptional expansion of debt outside of the banking system. This debt was provided by the large growth of business savings as well as savings by individuals, particularly in the upper-income groups where taxes were relatively low. Private debt outside of the banking system increased about fifty per cent. This debt, which was at high interest rates, largely took the form of mortgage debt on housing, office, and hotel structures, consumer installment debt, brokers' loans, and foreign debt. The stimulation to spending by debt-creation of this sort was short-lived and could not be counted on to sustain high levels of employment for long periods of time. Had there been a better distribution of the current income from the national product -- in other words, had there been less savings by business and the higher-income groups and more income in the lower groups -- we should have had far greater stability in our economy. Had the six billion dollars, for instance, that were loaned by corporations and wealthy individuals for stock-market speculation been distributed to the public as lower prices or higher wages and with less profits to the corporations and the well-to-do, it would have prevented or greatly moderated the economic collapse that began at the end of 1929.

The time came when there were no more poker chips to be loaned on credit. Debtors thereupon were forced to curtail their consumption in an effort to create a margin that could be applied to the reduction of outstanding debts. This naturally reduced the demand for goods of all kinds and brought on what seemed to be overproduction, but was in reality under-consumption when judged in terms of the real world instead of the money world. This, in turn, brought about a fall in prices and employment.

Unemployment further decreased the consumption of goods, which further increased unemployment, thus closing the circle in a continuing decline of prices. Earnings began to disappear, requiring economies of all kinds in the wages, salaries, and time of those employed. And thus again the vicious circle of deflation was closed until one third of the entire working population was unemployed, with our national income reduced by fifty per cent, and with the aggregate debt burden greater than ever before, not in dollars, but measured by current values and income that represented the ability to pay. Fixed charges, such as taxes, railroad and other utility rates, insurance and interest charges, clung close to the 1929 level and required such a portion of the national income to meet them that the amount left for consumption of goods was not sufficient to support the population.

This then, was my reading of what brought on the depression.


Listen, you're clearly extremely talented at bullying those who disagree with you into submission through the arrogance and implied swagger of your rhetoric and your brandishing of what you consider to be impressive personal credentials (which, I imagine, render you an "expert" in your own mind). Whether others have been able to see past this facade to the core of intellectually void bullshit that lies beneath it I can't say; I do know, however, that you're pretty transparent to me... and this isn't because I am some kind of rocket scientist. It's because, unlike you, I read - historians, economists, policy pundits, etc. Not ONE of the ideas or hypotheses is original to me; they have all been repeated ad inifinitum by experts who are far knowledgeable than me. Incidentally, they are also more knowledgeable than you, although give your attitude, I doubt you would ever make such a concession (then again, you'll probably do that in your response to this letter, just as a way of "showing me" by trying to counter the already obvious lack of humility you possess).

My prediction? You're going to respond to this with more bravado, more swagger, more crowing, and then top it all off with pseudo-humility and limp policy arguments that conceal your real motive, which is to make as much money for yourself as possible.

Bring it on. Like my hero, Franklin Roosevelt, I love a good fight with a bad debater.

Not surprisingly, Zach "Sharron Angle" Golden didn't respond to my last post. If there is one thing I have learned about bullies, it's that they prefer targets who don't fight back - and this applies to right-wing bullies (Rush Limbaugh, Sean Hannity, Ann Coulter, Glenn Beck) just as much as it does the ones you find on a playground.

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