As I did my Christmas toy shopping, I thanked China:

Given the reality of labor unions and other impediments to manufacturing success here, what do you think we can/need to do in order for you to one day be walking through Toys-R-Us and thanking the fact that Americans make goods so inexpensively?

The way things are going, that is not likely to happen – and that’s ok. American manufacturing is shifting to more complicated manufacturing (like tech, biotech, metalworking) that Americans do better. While there is currently a bit of a shortage of skilled workers in some fields and a glut of older unskilled workers due to massive manufacturing layoffs/buyouts, the incentives that companies are offering employees to enter these trades should eventually make up for the deficit, and the older workers will age out of the workforce.

Also, while labor unions have been a major hindrance to the manufacturing industry, the living standards here and prevailing wages people are expecting likely would not compete with emerging markets even without labor unions.

I think America should focus on it’s strentghs and appreciate the fact that moving manufacturing to developing economies is good for the world economy and helps bring up the standard of living in third world countries through free markets in a more efficient (and free market) method than aid programs.

Services are more labor intensive than manufacturing jobs, so it’s positive to move in that direction.

China has increased it’s manufacturing jobs over the past twenty years, but globally manufacturing has been declining due to automation.

The trade deficit is a common debate point. What I’m not hearing discussion about is the SERVICES deficit. This is a huge issue which started this year. This country seems to be eroding it’s comparative advantage in services.

If we focus on our strengths, one would debate what our strength is if we run a trade, services and net investment income deficit.

Our educational system has faltered dramatically and the ‘average joe’ does not have the skills to move up the value chain.

We cannot move up the ladder without investment in our people. We cannot invest in our people if we do not save. We cannot save with large budget deficits and ever-growing household debt.

Though it sounds simple to just raise the amount on Pell grants, what you and other Democrats fail to take into account is the reaction from your action.

Prices are a reflection of wages and a Pell grant is in essence a wage to someone going to college. When you raise the amount allowed for Pell grants the result is colleges raise their tuition to reflect the injection of new money into the system. It has been proven that one of the reasons college tuition has gone up so much in the last couple of years is due to the fact that interest rates have been low and money cheap. Like the price of homes, tuition has shot up to reflect that students can afford to borrow more money.

When money is cheap or you raise Pell Grant amounts, the result is that that student is right back where they started. Unless your going to start telling Harvard and other schools what they can charge, they will continue to exploit the system by raising their tuition to reflect the fact that students now have more money to spend.

If Democrats are in favor of Pell Grants, why are they against School Vouchers? Wouldn’t using a Pell Grant for say, St John’s University be the same as a parent using a voucher for St Andrew’s Elementary School? Sounds the same to me. Republicans need to stop calling them vouchers and maybe call them Pellementary Grants.

Anonymous,

As a ‘moderate’ and frequent critic of my own party, I will say that it’s still a far more compelling offering than the opposition.

The opposition has been shifting to the right for awhile, culminating with this election (although there is a strong draft of populism in the air) while ‘we’ did not move left.

Your minimum wage statement is a fallacy. State economics is not limited to one variable. I suppose California recovered from the Tech-boom by raising the minimum wage?

On the subject of tuition cost, the Economist today compares higher education in Europe, where it is free or low cost, to the US, which has higher fees. The conclusion – the US has a higher percentage of college educated adults, despite any cuts in Pell grants.

http://www.economist.com/debate/freeexchange/2006/12/yesterdays_new_york_times_spec.cfm

You asked for it!

“The last decade has been marked by rapidly increasing federal aid and ballooning tuition. In current dollars, money for Pell grants — federal grants to less affluent students — rose from less than $5 billion in 1996 to more than $12.8 billion in 2005.

In addition, federal Perkins loans — low interest federally guaranteed loans to roughly the same group that is eligible for Pell grants — rose in current dollars from $892 million in 1993 to $1.3 billion in 2004. The Federal Direct Student Loan Program and Federal Family Educational Loans went from a combined $12.5 billion in 1993 to $52.2 billion in 2004. Tax credits and deductions will add another $9 billion in 2005.

Not surprisingly, this massive influx of student aid has been accompanied by a substantial increase in tuition. In the 10-year period ending in 2004, tuition and fees at public colleges and universities rose 47 percent, adjusting for inflation. At private colleges, they rose 42 percent.

And the trend is continuing. Average tuition and fees for in-state students at four-year public colleges and universities rose 10.5 percent in 2004-05 to $5,132. This marked the fourth straight year where tuition and fees rose by more than 5 percent in inflation-adjusted dollars at public four-year institutions. Private school tuition and fees rose by 6 percent in the same period to $20,082.

Anyone who has taken a remedial economics course knows that if you subsidize something, more people want it. This increase in demand will push up the price. Former Secretary of Education William Bennett recognized this in 1987 when he argued that increases in federal aid have “enabled colleges and universities to blithely raise their tuitions, confident that federal loan subsidies would help cushion the increase.”

The U.S. government has helped to create a cycle where federal aid results in increased tuition, leading to political pressure to further increase aid. This in turn leads to higher tuitions.”

Get the full story here:

http://www.cato.org/dailys/01-15-05.html

Yeah, what does the Cato Institute know?

I think we’ll just agree to disagree. Though I think my piece is stronger then the paragraph you posted, which has nothing to do with the argument nor proves that tuition costs are not connected.

As the Cato article states:

“Anyone who has taken a remedial economics course knows that if you subsidize something, more people want it. This increase in demand will push up the price.”

The problem is either you have never taken a remedial economics course or you just don’t understand the “invisible hand of capitalism”.

I guess you also think that low interest rates and the injection of capital into the mortgage markets have nothing to do with the price of homes going up either.

Interesting theory.

Especially since Adam Smith’s, The Wealth of Nations, is still relevant today unlike your beloved Communist Manifesto.

Candle Man,

It’s called China. They’re imploding about 10% a year.

You should try it sometime.