One of the things that seems to be fixating some of the folks is that
"the profits will go to xxx" or "the profits will stay in America".
Well, two things happen with "profits" to make them of interest:
1) They get invested by the company to do something (i.e. build a plant,
upgrade facilities, design new models, etc.). This activity is "country
independent" in the sense that it doesn't matter where the company is
headquartered, the country that benefits is the one where the work is
being done.
2) They get returned to the shareholders in the form of dividends. Again
its country independent, depending on where the investor is located
The third thing that can happen to profits is that the company sits on
them as a cash reserve. In that case they benefit no one.
Sooo, just because a company is "foreign" owned, it doesn't mean that
the benefits from the profits are going to leave the country where the
work is done. The converse of that is that just because a company is
"owned" in the USA, it doesn't mean that the investment of the profits
will necessarily take place in the USA; the "big 3" send lots of $$$s
out of the US, to Mexico, Canada and other places to build factories,
etc.
The trade deficit has no notion of "profits" in it, but rather just the
price of the goods, thus making it an "interesting" but worthless as a
true indicator of whats happening domestically. A country could run a
trade surplus with the US, but still be broke as the cost of goods sold
exceeded what they received for them. It also doesn't take into account
any of the services sector, which is where the "economy of the next
decade" will be. We've already seen the progression from selling raw
materials to finished goods, and now we're seeing the move from making
things to selling people the know-how to make things themselves. Its a
lot easier to have a good standard of living doing things that a limited
number of folks can do rather than something that just about everyone
can do, because there is always someone who will do it cheaper than you
are willing to do it for. In my opinion, the way to preserve the
standard of living is to stay out in front of the "commodity work" pack,
rather than putting up artificial barriers and trying to rely on the
unions or government to "protect" you. Given recent events, government
protection doesn't seem to have worked very well in the far east or the
former USSR now does it...
Craig
-----Original Message-----
From: Rekker21@aol.com [mailto:Rekker21@aol.com]
Sent: September 23, 1998 8:07 PM
To: dakota-truck@buffnet.net
Subject: Re: DML: Demons that lurk in the Dark
<snip>
Again, you must not have been following the posts so Ill clue you in.
GM,
Ford, McDonalds, Burger King, Kentucky Fried Chicken and Dominoes may
all be
international business', but the profit stays here!! Daimler-Chrysler
profit
goes to Germany. And yah yah yah, I read the line about how it doesnt
matter
where the profit goes because the dollar always has to come back here.
Well,
do you remember the trade deficit? do you understand what that is all
about?
Im not totally sure on this, but I think its when foreigners sell more
to the
states, taking the profit, and then not spending much over here or
buying our
goods abroad. I dont know, its something like that. Maybe we should
look
into that to see if our dollar does come back or not!! Hmmmm, curious
^_^ (I'm ribbing you here. Don't take it too
personally.)
Ditto!!! =0)
Eric
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