Courtesy of Mish.
Here is a fascinating look at auto manufacturing at Telsa. Reflections on “Real Problems” follow. I will tie the two seemingly unrelated ideas together.
Link if video does not play: How the Telsa Model S is Made
“The Real Problem”
Please take that video into consideration when considering a rant from Paul Craig Roberts called The Real Crisis Is Not The Government Shutdown
Roberts claims the “The real crisis is that jobs offshoring by US corporations has permanently lowered US tax revenues by shifting what would have been consumer income, US GDP, and tax base to China, India, and other countries where wages and the cost of living are relatively low. On the spending side, twelve years of wars have inflated annual expenditures. The consequence is a wide deficit gap between revenues and expenditures.”
I will grant him that war-mongering is a huge problem. As for the loss of manufacturing jobs, I would point out that even China is losing them – to automation.
More importantly Roberts fails to understand the relationship between Fed policy and Nixon closing the gold window for the initial outsourcing. Roberts also fails to understand that unions wrecked GM and that GM is on the rebound because of wage reductions made in GM’s bankruptcy.
Gold and the Trade Deficit
For an explanation as to how gold is related to the trade deficit, please see Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold’s Honest Discipline Revisited
Roberts continues with his mostly-nonsensical rant:
The real crisis is the absence of intelligence among economists and policymakers who told us for 20 years not to worry about the offshoring of US jobs, because we were going to have a “New Economy” with better jobs.
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