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How our Vehicle Purchase Affects our Schools

Ever wish you could do something to help our school funding problems without having any impact on your current financial status? It’s easy; Buy a product that is American owned and produced. If more Americans bought cars from American companies we could reduce our annual deficit by $50 billion dollar (Bach, 2005) a year. This money could go from funding our trade deficit to funding our schools.

In order to understand why our schools are affected by the national deficit, we must first learn how big our national deficit is. The United States National Deficit reached an all time high in 2006 at $764 billion (Levin, 2006). This was 6% of the United States gross domestic product and 6.5% higher than 2005. Imports from Japan have been the biggest culprit of this increase until recent years. At $88 billion per year they are currently still one of the top 3 countries that contribute to our national deficit. An increased national deficit does just increase what we owe to other countries. Congress noted that we have lost over 3 million manufacturing jobs since 2000 and have funded 90% of our federal debt from overseas investments during Bush’s time in office.

We all know about our schools needing more money, not only for lost music programs, sports programs and school field trips, but also for basic needs. Most people don’t know that schools need replacement of books that are over 15 years old, teachers being paid poverty level wages, and buildings that would be illegal to occupy if owned by the private sector. Fifteen year old students in US schools ranked 28th out of 39 countries in a recent study of industrialized nations (U.S. Government, 2006). Children with a bad education will have a lasting impact on our economy now and in the future. Our national budget for schools has been reduced by $1.5 billion in 2008. This amounts to a 2.6% decrease in school funding compared to the 2007 budget (Oregon Education Association, 2007) which was $1.14 trillion (Wikipedia, 2007). Our current President has stated that he wants to make sure no kid will be left behind. With the reduction in funding eliminating 44 programs, we are guaranteed that thousands of kids will be left behind. The House Appropriations Subcommittee for education spending (Zembar, 2007) suggested increasing funding by almost $2 billion. This would be a great start but where does the money come from? Do we get more foreign aid? Closer to home, the State of Oregon’s Governor Kulongoski, believes $5 billion is not enough for Oregon schools. Oregon tax payers contribute 45% of Oregon’s budget for schools through state led taxes and at this time most voters are not willing to increase taxes to help in school funding. Kulongoski would love to give more, but as he states, “it is all we can afford given our current revenues”. (Kulongoski, 2005)

For the average American, the automobile is the most expensive imported item they can buy. This makes it the biggest single product that affects our deficit and our schools. There are not many products with a large sticker on the window that states where the product is made and what country the company is located. Automobiles account for $237 billion dollars in imports per year, $62 billion more than imported oil (Bach, 2005). In 1995 Japanese car exports accounted for 60% of the US trade deficit (Lowther, 1995). To bring this in perspective, if foreign auto companies had the same percent of US made parts as US automakers, it would equate to an additional 131,000 jobs in the US, thus adding a staggering $268 billion dollar increase to US parts sales (Level Playing Institute, 2006). Though automobiles are a major contributor to our trade deficit, the general rule of trying to buy American owned and made should be practiced with all purchases.

To understand how our country’s trade deficit affects our schools, we have to consider our own personal finances. If you don’t make enough to pay for what you have you use credit to buy what you need. After paying for the debt incurred your available cash for items you need is reduced. The natural answer would be to cut back on things that are not necessary, but the reality will be that you will cut back in all categories out of necessity. If you continue to increase your borrowing without increasing your income you will eventually live on credit or worse, file for bankruptcy. Let’s start with our nations “income”. To create more income we need to create more jobs with better pay. In his recommended budget on education in Oregon (Kulongoski, 2005), Ted Kulongoski recognizes the need for more jobs in the Northwest with companies like Microsoft, IBM & Intel which are all major suppliers to GM, Ford & Chrysler. The automotive sector affects every state and almost every sector of modern day business in the United States.

Even though Japanese companies like Nissan are growing, they are still expecting to reduce their portion of domestic made products (Treece, 2004). In fact from 1996 to 2003, the percentage of vehicles made by Japanese car companies in the US has decreased. GM, Ford and Chrysler have had to eliminate thousands of jobs in the past 30 years because people would not buy their products. That means, as tax payers, we are not only paying for the trade deficit and the interest from it, we are also paying for a higher number of unemployment claims.

To keep up with the current trade deficit, each American citizen, young and old would have to pay over $2700 per year. (Levin, 2006). The average American family of 4 would pay $10,800 a year or 22% of their income (U.S. Department of Commerce, 2007). This is an even tougher amount to pay when someone is unemployed. When GM produces fewer cars and lays off people, their major suppliers like Microsoft, IBM, and other technology based companies follow. To recap; our income has reduced and our payments have increased. Now we need to find money for our schools but at 22% of a family’s income going to pay the national debt that leaves very little left over to pay for schools, road construction, police departments, fire departments, military, and other government entities. Just take the $237 billion dollars from the debt incurred during 2005, and assume a 7% interest rate, that would equate to $16.59 billion dollars. Imagine if our schools got an additional $16.59 billion instead of a $1.5 billion dollar cut. Just like our own budgets, if we out pace our income, problems occur and everybody suffers.

The study of our history is very important to make sure we don’t make the same mistake twice. The sad truth is that throughout history countries have made the same mistake multiple times, or worse yet, never acknowledge the problem as it continues for decades. The trade deficit has been a problem for the United States since the 1960s. But it hasn’t been until the turn of the century that the deficit has put a damper on the countries fiscal ability. In 1995 (Hershey, 1995) the trade deficit grew significantly from Japanese auto imports to a record $11.37 billion for the month of April, far exceeding oil imports of $4.5 billion. Oil and autos accounted for 93% of the trade deficit at that time. The deficit caught the attention of President Clinton and other US Government officials who warned Japan they would consider tariffs but did not. Sixty percent of the US deficit with Japan came from automobiles (Lowther, 1995) though, the total deficit pales in comparison to today’s of $90 billion dollars per year. The Japanese automobiles have created a $54 billion a year deficit that we have never been able to pay back. Assuming a 3% increase per year, starting in 2005 and going through 2008, the automobile trade deficit with Japan would be a staggering $770 billion dollars today. It appears that Americans have not learned that if we can’t afford it, we should not be buying it.

Toyota claims they are as American as Chevrolet. The commercials are convincing, and many American’s believe it. But who really builds cars in the US and who likes to make people think they do. Toyota employs only 32,003 people in the United States which is significantly less than General Motors who employs 147,000 people (Level Playing Institute, 2006). In fact, General Motors employs more people than all foreign automakers combined. GM has 44,000 more employees and what about factories in the US? GM has 27 compared to Toyota’s 6. One of those Toyota factories is actually a joint venture with GM employing UAW workers that build Toyota Corollas, Toyota Tacomas and Pontiac Vibes. General Motors has 6 more auto plants than all foreign automakers combined. When it comes down to the percentage of domestic parts in a vehicle there is no comparison. General Motors, Ford and Chrysler, the Big 3, have 93% more domestic content than their foreign competitors.

There are two ways to show who does the most to reduce our national deficit and who does the most to increase it; Taxable income and the % of imported products. The more people we employee with strong incomes, the stronger our tax base is. The Big 3 employ more Americans with better pay than any foreign manufacturer. In 2007 Toyota sold more vehicles in the United States than Ford Motor Company (The Associated Press, 2008). The Level Playing Institute has determined that the average American company has 34 American employees per 1000 cars made compared to foreign makes at 13 American employees per 1000 cars made. With Toyota it means you have 34,070 generating taxable income verse Ford’s 89,100 workers generating taxable income (Level Playing Institute, 2006). And with Toyota only having 40% US content in their cars, we will have an even higher trade deficit due to product being shipped to the US instead of the work being done in the US. In the end this means more money is needed to pay for the deficit and the interest accrued and less money for our schools.

We all know someone that swore they would never buy an American car because of their quality, cost of ownership, comfort, and publication recommendations. That was true in the 1980s and 90s but not anymore. JD Power has stated that in many cases American owned and made car companies are building more reliable cars in factories that have the fewest defects per car made than any foreign competitor. General Motors and Ford have been acknowledged for selling the best built cars in the Untied States for the past 4 years. In 2007 the JD Power Long Term Dependability study has Buick equal to the vautend Lexus.(J.D. Power and Associates, 2007, 2006, 2005, 2004, 2003). In the past 3 years Toyota has had more recalls than General Motors, even though they sell a 1/3 the number of cars.

To really understand how far US based auto companies have come, we will compare four vehicles from the two largest manufactures in the world, General Motors and Toyota Motor Corporation. Since there are over 200 models to choose from, I thought it would best to pick the two most popular vehicle categories; the midsized sedan and full-sized trucks categories

Sometime companies have a top selling product, not because they build the best, but because of great advertising and an out of date reputation. The Toyota Camry is the perfect example. The Camry is the #3 best selling car in the US (MSN, 2007), but is rarely the “top pick” for any consumer magazine, nor has it been a top pick for any enthusiast publications. This is in sharp contrast to the 2008 Chevrolet Malibu which has been given the 10 Best Awards from Car and Driver (Csere, 2008), picked as Kelly Blue Books best redesigned vehicle for 2008 (Kelly Blue Book, 2007), chosen as the North American Car of the Year, and received a score of 68 in Consumer Guide, putting it above the Toyota Camry. When it comes to quality the Malibu shines above the Camry once again. Since 2003, the Chevrolet Malibu has been in the top three picks for vehicle dependability with J.D. Power and Associates (J.D. Power and Associates, 2007, 2006, 2005, 2004, 2003), only being out done by other GM divisions and the Mercury Sable. This is a list the Camry hasn’t been on in over 5 years. Cost of ownership is a big factor when purchasing a new car. Intellichoice publishes the 5 year cost of ownership and in 2007 the Malibu beat the Camry in both repairs and maintenance (Intellichoice, 2007). Malibu is estimated to cost $415 in repairs and $1,301 in maintenance, and the Camry is estimated to cost $444 in repairs and $1,626 in maintenance. Average gas mileage for the 4-cylinder models are identical on both cars (U.S. Department of Energy, 2007). When you add in a longer warranty, OnStar, turn by turn navigation and road side assistance all standard on the Chevrolet, one has to wonder why any one would pick the Camry over the Malibu, US made and owned or not.

Toyota has put every effort into making the Tundra competitive with US brand trucks but has missed some very important factors. The American consumer insist that full size trucks have durability and reliability beyond the norm, cost of ownership that is low, and it has to take on abuse like no other. The current Toyota Tundra has been plagued with issues including multiple recalls, bed tailgates issues, transmission failures, excessive body shake at highway speeds, and the chassis not being strong enough to have a snow plow attached to it (Toyota Tundra Forum, 2008). The #2 best selling vehicle, the Chevrolet Silverado, has had a completely different experience this past year. Just like the Silverados of the past, the current model is proving to be trouble free and as durable as ever before. That is why it is the nations #2 best seller, behind Ford’s well built F-150 (MSN, 2007). Though Motor Trend has picked the Silverado as the 2007 winner of their Truck of the Year and the Tundra as their 2008 truck of the year, the Silverado beat the Tundra in a direct comparison of the two trucks in a recent issue (Whale, 2007). When it comes to the cost of ownership, the Tundra doesn’t even come close to the Silverado. Not only does the Silverado get better EPA gas mileage ratings with their larger engine by over 2 mpg (U.S. Department of Energy, 2007), it is also cheaper to maintain and requires less repairs costs (Intellichoice, 2007). At the end of 5 years, Intellichoice predicts that the Tundra would cost $532 more in repairs and maintenance over the Silverado. There is no reason to purcahse the Toyota Tundra over Chevrolet Silverado no matter where they have been made.

The top 10 vehicles of 2006 consisted of 5 American owned models and 5 foreign owned models (MSN, 2007). The top 5 foreign vehicles accounted for 1,624,308 vehicles. If we changed those top 5 spots to American owned vehicles we would have an additional 39,000 American jobs, and reduce our deficit to Japan by billions.

American owned and made vehicles now rate at the top in their respective classes in regards to quality, reliability, cost of ownership, and professional ratings. With our national deficit going up every minute from the purchase of foreign goods, and the funding issues our schools have, there is no reason everyone shouldn’t put an American car at the top of their shopping list.


WORKS CITED
Bach, C. (2005). U.S. Census Bureau of Economic Analysis. Washington D.C.: U.S. Census Bureau.
Consumer Guide. (2007). Consumer Guide Automotive. Retrieved 12 31, 2007, from Consumer Guide: http://consumerguideauto.howstuffworks.com
Csere, C. (2008, January). 2008 10Best Cars - 10 Best Cars. Car and Driver .
Hershey, R. (1995, June 22). Trade Gap Swells to Record; Japanese Auto Imports Citred. New York Times , p. A1+.
Intellichoice. (2007, 12). New Car Research. Retrieved 1 1, 2008, from Intellichoice: http://www.intellichoice.com
J.D. Power and Associates. (2007, 2006, 2005, 2004, 2003). J.D. Power and Associates Vehicle Dependability Study (VDS). J.D. Power and Associates.
Kelly Blue Book. (2007, December 11). Kelly Blue Book - Media Center. Retrieved 12 31, 2007, from KBB: http://www.kbb.com
Kulongoski, T. (2005). Governor's Report; Effects of 2005-2007. Salem: Governor's Office.
Level Playing Institute. (2006). Retrieved November 2, 2007, from Level Field Institute: http://www.levelfieldinstitute.org
Levin, S. (2006, February). Congressional Leaders urge Bush to act as 2006 annual trade deficit breaks all time record. House Committee on Ways and Means letter to President Bush . Washington D.C., United States of America.
Lowther, W. (1995). Trading Complaints; The United States has launched a bitter trade battle against Japan. Macleans' , p. 44.
MSN. (2007). America's Bestsellers of 2006. Retrieved 11 2, 2007, from MSN Autos: http://autos.msn.com
Oregon Education Association. (2007). Funding News & Update. Retrieved 11 25, 2007, from Oregon Education Assocation: http://www.oregoned.org
Shepardson, D. (2007, 12 27). Auto recalls up more than 25%. Detroit News .
The Associated Press. (2008, 1 3). The Denver Post - Toyota outsells Ford. Retrieved 1 7, 2008, from The Denver Post: www.denverpost.com
Treece, J. B. (2004, 4 5). Trade Deficit is nonissue for Japanese; In an election year, they're unapologetic about exports. Automotive News .
Treece, J. (2004, 4). Trade Deficit is nonissue for Japanese; In an election year, they're unapologetic about exports to the U.S. Automotive News , p. 1.
U.S. Department of Commerce. (2007). Income, Poverty, and Health Insurance Coverage in the United States: 2006. U.S. Census Bureau.
U.S. Department of Energy. (2007). Find a Car - Fuel Economy. Retrieved 1 1, 2008, from www.FuelEconomy.gov: http://www.fueleconomy.gov
U.S. Government. (2006). Budget of the U.S. Government - Department of Education. Retrieved 11 2, 2007, from The White House, Office of Management and Budget: www.whitehouse.gov/omb/budget/fy2006/education.html
Whale, G. (2007). 2007 Chevrolet Silverado vs 2007 Toyota Tundra. Retrieved 1 1, 2008, from Motor Trend: http://www.motortrend.com
Wikipedia. (2007). Education in the United States. Retrieved 11 2, 2007, from Wikipedia: http://en.wikipedia.org
Zembar, T. (2007). House Appropriations Subcommittee Mark, FY 2008. Retrieved 11 12, 2007, from National Education Association: www.NEA.org
 

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Translation: Buy an American car, so GM's higher profits can be taxed, and those taxes can go towards funding schools.
 

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But surely the smooth dashboard on my Civic is more important than the jobs of 15 factory workers isn't it?

I will be interested to see what kind of responses this gets.
 

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If American consumers were as loyal to our domestic products as Japanese consumers are to their domestic products, our economy would be a lot better shape.
 

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If American consumers were as loyal to our domestic products as Japanese consumers are to their domestic products, our economy would be a lot better shape.
And your prices would be 2-3x higher than what you're paying for now.
Furthermore, the economy would not be as robust as it has been, and we most likely would have been still been mired in the recession that hit in the early 1990's.

Blanket statements like "If Americans just bought American products, we'd be fine," are inherently flawed
 

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why are you so negative? Is it b/c you didn't come up with article?
Because the article makes no sense!!
Furthermore, $50 billion is immaterial in an economy that is worth $14 tillion!

The article posits an argument that buying American will help schools. Fine.
That is a faulty argument on so many levels because it suggests the money "generated" from domestic purchases can go towards schools. But what about other social needs like housing, health, social security?
What about the social aspect of schooling? What about kids simply not caring? How does buying American rectify that aspect?

Then the article devolves trade deficits, Toyota being American, Intellichoice, JD Power long term dependability, then the Tundra. What does that have to do with anything?
All that would be fine, but it never circled back to education.

This isn't an article on schools and domestic purchases.
It's a stream of consciousness.

If this was a college paper, it is deserving of no higher than a C-.
 

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And your prices would be 2-3x higher than what you're paying for now.
Furthermore, the economy would not be as robust as it has been, and we most likely would have been still been mired in the recession that hit in the early 1990's.

Blanket statements like "If Americans just bought American products, we'd be fine," are inherently flawed


I'm not saying that there shouldn't be choices.

Americans car buyers seem to look towards imports first. They look down on domestic products.

How do you figure that the economy would be less robust? The manufacturing sector would be healthier with more jobs. The trade deficit would be lower.
 

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And your prices would be 2-3x higher than what you're paying for now.
Furthermore, the economy would not be as robust as it has been, and we most likely would have been still been mired in the recession that hit in the early 1990's.

Blanket statements like "If Americans just bought American products, we'd be fine," are inherently flawed
Do the Japanese pay 2-3x more for Toyotas? Do the Germans pay 2-3x more for Volkswagens?

The people of those countries are more loyal to their domestic manufacturers (MUCH more in Japan's case), which has helped to keep their manufaturers healthy.
 

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I'm not saying that there shouldn't be choices.

Americans car buyers seem to look towards imports first. They look down on domestic products.

How do you figure that the economy would be less robust? The manufacturing sector would be healthier with more jobs. The trade deficit would be lower.
I believe American car buyers now look towards imports because of a lack of trust from domestic manufacturers after over 3 decades of shoddy workmanship and poor customer service and ill equipped and outmoded dealerships.
It's a reputation and image issue.

There's also a facet of this argument which states that American cars are simply outclassed by the imports.
Another facet of this argument states that American carmakers continue to make reasons as to why their cars are built the way they are.

Ultimately, what we're experiencing here is the changing face of the car customer. They've seen and experienced what is capable from the imports. You don't have to pay $80,000 for high end features. They're in $30,000 cars now.
You don't have to settle for a car that floats and has numb steering; you can buy one that is responsive but still manages to absorb the bumps in the road.
You can buy more contemporary, stylish, and modern designs with equally modern features and more refinement for about the same amount of money.

The manufacturing sector is more susceptible to market fluctuations. America's near exponential wealth starting from the 80's on forward is due to America's shift away from a manufacturing base to a service economy. A service economy requires higher education and has higher pay. Manufacturing can be automated and roboticized.

If America built all its goods, the trade deficit would be lower by a few billion. BUt what percentage of that deficit is all oil? What about America's complete fall from technological leadership? Without using technology from Japan, America would be behind the world.

America wouldn't be in the same position as it is now, if America didn't shift to a service based economy. We'd be more susceptible to recessions because of the manufacturing base. And wealth would not be as great because we'd be paying higher prices for domestically manufactured goods.

Do the Japanese pay 2-3x more for Toyotas? Do the Germans pay 2-3x more for Volkswagens?

The people of those countries are more loyal to their domestic manufacturers (MUCH more in Japan's case), which has helped to keep their manufaturers healthy.
Yes. And their cars offer more features than the American counterparts because of it.
That is what is expected of cars in Europe and in Asia. More features. More customizable options.
In American, all that matters is horsepower, traditionally. But as Americans the more featured, better driving imports, tastes began to shift.

But we will see American car manufacturers pumping more HP, while not tackling the fundamental problems. Everything from Cobalt SS to XLR-V has this issue.

Yes. There is also a stronger sense of nationalism when it comes to Germany or Japan. But nationalism also goes far because in Germany, there are French cars, British cars, Swedish cars, etc.
Americans cant expect their cars to do well in Europe because they're built for Americans in mind. Big HP, crappy handling and driving capabilities. Plus they're poorly contented, and even have the steering wheel on teh wrong side.
 

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Discussion Starter · #12 ·
Because the article makes no sense!!
Furthermore, $50 billion is immaterial in an economy that is worth $14 tillion!

The article posits an argument that buying American will help schools. Fine.
That is a faulty argument on so many levels because it suggests the money "generated" from domestic purchases can go towards schools. But what about other social needs like housing, health, social security?
What about the social aspect of schooling? What about kids simply not caring? How does buying American rectify that aspect?

Then the article devolves trade deficits, Toyota being American, Intellichoice, JD Power long term dependability, then the Tundra. What does that have to do with anything?
All that would be fine, but it never circled back to education.

This isn't an article on schools and domestic purchases.
It's a stream of consciousness.

If this was a college paper, it is deserving of no higher than a C-.
I got an "A" on it.

Being nasty to others is not a good way to influence people or make friends. These kind of nasty comments pushes good people away from this great website and gives us a bad reputation.

I would suggest that if you feel that strongly about it write your own article for others to ponder rather than do all you can to tear someone else down.
 

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I got an "A" on it.

Being nasty to others is not a good way to influence people or make friends. These kind of nasty comments pushes good people away from this great website and gives us a bad reputation.

I would suggest that if you feel that strongly about it write your own article for others to ponder rather than do all you can to tear someone else down.
To be honest, I don't understand why the "A" then.
The paper's structure is quite faulty.
The structural deficiencies in this essay should have been learned and ironed out in the 8th grade.

Considering the paper's title, "How our Vehicle Purchase Affects our Schools," the article should not have devolved into trade deficits, Toyota's attempt at being American, Intellichoice awards, JD Power Long Term Dependability, then the Toyota Tundra. What does ANY that have to do "affecting out schools!!!???"

You're not making a tangible link between the public school education system and vehicle purchases. In fact, "vehicle purchases" could be replaced with "imported oil" or "airlines purchasing Airbus over Boeing." Both of which have more impact on the American economy and trade deficits than the automobile industry.

Take this as constructive criticism. This essay that you wrote creates a supposition but ended up with 5-6 different tangents that are not wrapped up and don't show a relation to the original thesis of the paper.
It's a "C" paper in ever school I've attended.

Perhaps it is also a reflection of the American education system that papers such as this are deserving of an "A," when clearly, it is not.

Irony.
 

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Better yet Mgescuro show us how buying Japanese products will help our schools or our housing or health care. Ever buy a Japanese car from 3 decades ago. Not any better than a domestic was then.

Your argument that domestics would cost so much more if more people bought them had zero evidence to support that belief. Your blanket statements are inherently flawed. Maybe you should be a staff member at Toyotanation.
 

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Better yet Mgescuro show us how buying Japanese products will help our schools or our housing or health care. Ever buy a Japanese car from 3 decades ago. Not any better than a domestic was then.

Your argument that domestics would cost so much more if more people bought them had zero evidence to support that belief. Your blanket statements are inherently flawed. Maybe you should be a staff member at Toyotanation.
Buying Japanese product -- as in Japanese products made in Japan, made from parts made in Japan -- will help our economy because the United States is now an economy dependent on consumer spending. We depend on the complete movement of goods and services -- domestic or foreign -- in order to keep the economy moving. Ever wonder why GW Bush is always talking about stimulus packages to stimulate spending? This is what he is trying to get at!
I don't believe it's an ideal situation to be in. But that's the way the US economy is shaped.

Buying a Japanese product, made in America, obviously helps the US economy more because it affects the value web and operational chains based in the US. Tundra worker, employed by Toyota, gets paid money, so he/she can purchase goods and services to keep the US economy chugging along.

Buying a Japanese product, made in Japan, does in fact help the US economy because there are parts of the Japanese product that are made from US sourced suppliers. For example, buy a Japanese car with Goodyear tires.

Domestic products cost more because America's cost structure is so high. Countries that are more modernized have a higher cost of living, so in order for workers in the country to match that cost of living, the wages have to be able to sustain those workers. What if American companies paid their workers what they make in China? That's about 1/3rd of the current minumum wage. Certainly better that paying workings $40-100,000 annually, isn't it? It's called overhead. That's why America has shipped off jobs to other countries. It's just far too expensive to maintain a domestic worker base, when the exact same work can be done elsewhere for a fraction of the cost. This is overhead. If GM quit using UAW and shipped all jobs to China, you'd immediately see a drop in the cost to manufacture the car, with a corresponding increase in shipping fees. Using UAW costs GM $5-8,000 extra per car. Imagine if $3,000 of that went back into the car's engineering and features. GM can't raise prices to counteract this because in doing so, GM would price itself out of the market. So in order to sell their cars at a more reasonable value, their cars have to be decontented.

To truly understand the machinations at work here, you need more than a minute understanding of international business and international economics. So read up on it, if you want more details. I have a masters degree in international business.

So how would buying American products help schools?
It doesn't.
 

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To truly understand the machinations at work here, you need more than a minute understanding of international business and international economics. So read up on it, if you want more details. I have a masters degree in international business.

So how would buying American products help schools?
It doesn't.
Well aren't you fancy.

International business is fascinating, but most people can't grasp it beyond "THEY TOOK OUR JEOOOOOUURRRBS! (JOBS)!"

If you want to build stuff here, you MUST decrease the associated fixed costs. The answer is NOT tariffs, unless you want to cause the Second Great Depression (Smoot-Hawley... look it up). Either workers must accept that their function is a commodity, or the government must lower taxes.
 

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And your prices would be 2-3x higher than what you're paying for now.
Furthermore, the economy would not be as robust as it has been, and we most likely would have been still been mired in the recession that hit in the early 1990's.

Blanket statements like "If Americans just bought American products, we'd be fine," are inherently flawed
Really? Then perhaps you could shine some light on why our economy is in the shape it's in today! Hundreds of thousands of people are out of work. I'm not exactly an economics professor, but when people aren't working their not paying taxes, right. So, who flips the bill for that?
 

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I'm with Mgescuro on this one.
 

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Well aren't you fancy.

International business is fascinating, but most people can't grasp it beyond "THEY TOOK OUR JEOOOOOUURRRBS! (JOBS)!"

If you want to build stuff here, you MUST decrease the associated fixed costs. The answer is NOT tariffs, unless you want to cause the Second Great Depression (Smoot-Hawley... look it up). Either workers must accept that their function is a commodity, or the government must lower taxes.
Well, they did take our jobs, didn't they?
America's cost of living is too high. So work went to countries with lower cost of living; therefore, lower wages.

The time will come when India and China will have higher wages than some other countries, and work will shift from India and China to the other lower wage countries. That's the way it goes.

Well, there are 2 solutions to making stuff in the US.
1) What you said: Lower fixed costs. This is what GM has done.
2) Create a niche product, but price it high because it's a niche product. This is what Levis has done with their premium jeans. Pay $180 for "Made in the USA."

But back to the original essay. The essay makes interesting points, but nothing was tied together to make a coherent argument. It's a poor critical essay in that respect. A high school teacher told me once, "You can say whatever you want, so long as you have the proper backing in your work and make coherent arguments." I can see where the author is trying to go, but it still needs more work.
 

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Really? Then perhaps you could shine some light on why our economy is in the shape it's in today! Hundreds of thousands of people are out of work. I'm not exactly an economics professor, but when people aren't working their not paying taxes, right. So, who flips the bill for that?
I believe the economy is in the shape it is in partially because of a distrust in the credit and lending systems of this country, and partially because Americans have an attitude that they can have everything for nothing, so long as they make the minimum payment.

A culture of irresponsibility has been fostered in the United States (and to an extent worldwide) that we can make purchases and grow in debt, and so long as we make our payments, we're kosher.

And for at least the past year or year and a half, a number of GMI-ers, myself included, have been talking about this downfall because all the signs were there. The market was due for a big correction.

It started with the mortgages. Joe blow wants a house. He make $60,000 a year. Typically, he would go in for some kind of loan, that would make his payments manageable assuming that income and the amount in savings and other accounts. And he's buy a house that was say $200-300,000. With the ARM's, you'd find Joe Blow going in for the loan, getting very attractive numbers, and then going off buying a $600,000 house. And for a time, his payments were manageable. And then the rates adjusted. Suddenly, he's paying 3x and unable to make the payments. So the company that provided the loan or bought the loan from the issuing company is in trouble because they're not getting paid. And now hundreds of thousands of people start defaulting. Now what? You see a collapse of the industry. And this is the core of the US and now global recession.

Now, because for years this was occurring, there was housing boom. Lots of new housing starts. This affected the employment numbers because in order to support the boom in the industry, people would be hired to build the houses and support the value web and operations chains of all adjacent industries that supported the housing industry. This gave a false sense of security over the last decade or so, when you'd see unemployment numbers drop and see housing starts rise. It looked like the economy was doing "Fine." And for all intents and purposes, it was "fine." But it just shielded the core problem as noted above.

So. Now. Mortgages have failed. Housing starts have stopped. Which means supporting industries have been idled as well. And now you see the rise in unemployment.

Now, because people had all these new houses, they needed stuff to go in it. Furniture, TV's, rugs, accessories, cars, etc. How do they get money for that? Well, credit and/or equity loans. So they do all the stuff to the house and have a fun time. But what happens now when they can't pay the mortgage AND their credit cards or the equity loans? Then that starts affecting banks who issued the credit and loans. That's a double whammy. Mortgage + credit down the tubes. Now you see banks reeling and needing financial aid from the government in the US and worldwide. Only the biggest banks or the most conservative banks survive. But now they're extra careful, so they shut off all or most credit lending.

Remember, the world runs on credit. Now what? If you aren't in superb standing, you ain't gonna get squat!! No cars. No house. No clothes. No restaurants. No to small businesses so they can't get inventory to sell. No to big businesses that need lines of credit (ie - GM). The entire economy grinds to a halt, putting at risk not only small companies, but the titans of commerce -- healthy (GE) and faltering (GM) alike.

That's where we sit today.

What the government is trying to do now is jumpstart credit lending by giving money to the banks. In doing so, they begin lending again. Getting small businesses and people to go out and spend again, which in turn jump starts the economy's engine.
The issue now is that the government is giving money to banks that don't need it and have gone on record as saying "We don't need your $20 billion." But they're being forced to accept it anyways. If the company says "we don't need it, then the government should find another place for the $20 billion.

So where is the US getting money for this? Countries buy Treasury Bills. That's where we get our funding. And countries like it because the USA is a very solid investment. The worry is that if the US economy collapses or is surpassed by another country, how will the US fund its debtor economy? The answer is.... We Can't. And this country is in deep ****.

Hopefully that was somewhat understandable?
 
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