U.S. market off limits

[PapaDisco]

2 hours ago, Morgan said:

While Cuba's central planning may not be ideal central planning can work just look at China, they beat us on every trade agreement and when their economy only grows at 7% its considered disastrous Oh wouldn't we love those disastrous 7% growth

I disagree with you on that.  While it would appear that Chinese style 'market' economy is a success, I would argue that this is appearance is completely due to their ability to trade with the U.S. on favorable terms.  All measures of efficiency are so much lower for Chinese manufacturing that, if it weren't for lower labor costs, they would be unable to compete anywhere in the world.  Essentially, the Chinese competitive 'advantage' is made up solely of it's lower standard of living which translates into lower wages.  

It is possible for stringently managed production to produce high quality output in China, but this is the exception rather than the rule, and the cost advantage of practically anything out of China (including Apple products) is entirely due to lower labor costs.  If China was prohibited from trading with the U.S., it's economy would immediately crumble.  Yes, I realize that the U.S. would quickly run out of plastic junk to buy at Walmart;  this is not a statement about competitiveness, it's an assertion to illustrate the fragility of China's 'market' economy.  A country of 1.3 billion, with a true market economy is big enough to have healthy economic growth without trading with any other nation.  And for China that is impossible.  Their 7% GDP growth is actually more like 3.5% (I've personally tested their numbers in my line of work and this is a better guesstimate than the 'official' stats), and that 3.5% is entirely dependent on the poorest members of their society working 12 hour days, 6 days a week.  Bring them up to a reasonable wage and there's no competitive advantage in any area of manufacturing whatsoever.

My opinion, humble or not  , is that centrally planned economies have never succeeded and never will (even counting on 'Big Data' and future computing power), it's just not possible to manage an economy of any size from one point of view.  A 'democratic' economy, which is essentially what a free market is, is the only solution (as imperfect as it may be).

[NSXCIGAR]

2 hours ago, Morgan said:

As far as the Cohiba brand trademark for USA pitting Cubatobaco vs General Cigar Co. The final ruling has been handed down in favor of Cubatobaco who will now have General Cigar Co Cohiba trademark vacated and that will be the end of General Cigar Co Cohiba trademark in USA and Cubatobaco will be allowed to have their Cohiba trademark registered in USA

As far as Montecristo trademark its clear that Altadis owns this trademark in USA and since Altadis is also a partner in Cubatobaco I don't think anyone can lay any opposition to Altadis Montecristo trademark

I don't believe this is accurate. It appears that the US District Court ruled simply that Cubatabco can be allowed to petition the Trademark Trial and Appeal Board for the cancellation of General Cigar's registrations on “Cohiba", and that the US Supreme Court declined General Cigar's appeal, meaning the petition can proceed. The Trademark Trial and Appeal Board can still reject the claim.

In addition, General still has Partagas, Punch, Hoyo and Bolivar. As far as I can tell, Cuba hasn't challenged those trademarks as they have Cohiba.

http://www.reuters.com/article/usa-court-cuba-idUSL1N0VX12H20150223

[NSXCIGAR]

3 hours ago, Jimmy_jack said:

I read the article to say Cuba has lost potential profits due to the embargo. Not actual loss of money on hand/investments. Something I find interesting but don't see brought up often is the ability to ship bulk raw Cuban tobacco off the island to other manufacturers. I'm not sure the Cuban Govt would allow it. 

Imagine other great brands such as Fuente, Padron, Davidoff, Tatuaje and the like blending with Cuban tobaccos. I think there would be some great flavors. 

Some discussion about that topic here:

 

[Morgan]

2 minutes ago, PapaDisco said:

I disagree with you on that.  While it would appear that Chinese style 'market' economy is a success, I would argue that this is appearance is completely due to their ability to trade with the U.S. on favorable terms.  All measures of efficiency are so much lower for Chinese manufacturing that, if it weren't for lower labor costs, they would be unable to compete anywhere in the world.  Essentially, the Chinese competitive 'advantage' is made up solely of it's lower standard of living which translates into lower wages.  

It is possible for stringently managed production to produce high quality output in China, but this is the exception rather than the rule, and the cost advantage of practically anything out of China (including Apple products) is entirely due to lower labor costs.  If China was prohibited from trading with the U.S., it's economy would immediately crumble.  Yes, I realize that the U.S. would quickly run out of plastic junk to buy at Walmart;  this is not a statement about competitiveness, it's an assertion to illustrate the fragility of China's 'market' economy.  A country of 1.3 billion, with a true market economy is big enough to have healthy economic growth without trading with any other nation.  And for China that is impossible.  Their 7% GDP growth is actually more like 3.5% (I've personally tested their numbers in my line of work and this is a better guesstimate than the 'official' stats), and that 3.5% is entirely dependent on the poorest members of their society working 12 hour days, 6 days a week.  Bring them up to a reasonable wage and there's no competitive advantage in any area of manufacturing whatsoever.

My opinion, humble or not  , is that centrally planned economies have never succeeded and never will (even counting on 'Big Data' and future computing power), it's just not possible to manage an economy of any size from one point of view.  A 'democratic' economy, which is essentially what a free market is, is the only solution (as imperfect as it may be).

PapaDisco obviously you've never been to China and probably never did business with China. Your statement " If China was prohibited from trading with the U.S., it's economy would immediately crumble." is REDICULOUS Here's the facts: China has the largest percentage of total global exports in the world representing 13.8% of the world market. The United States represents 18% of China exports, EEC 16% Hong Kong 15% ASEAN 12% and China exports only represent 23% of their GDP.

Your other comment about low cost of labor being its only reason for sales is also erroneous as labor intensive industries only represent 16% of Chinas exports.

China Gov't has the largest surplus of money of any country while we're 20trillion in debt and who may I ask owns more of our treasury bills than any other country. I wonder whom that is my sardonic humor of course China.

China essentially starts in 1978 Deng Xiaoping and there economic rise from 1976 to today is staggering your statement that centrally planned economies have never succeeded well China's current 38 year (1978-2016) going from one of the least developed economies to the largest in the world dispels your humble or non humble opinion that no central economy has ever succeeded!

 

[NSXCIGAR]

45 minutes ago, PapaDisco said:

I disagree with you on that.  While it would appear that Chinese style 'market' economy is a success, I would argue that this is appearance is completely due to their ability to trade with the U.S. on favorable terms.  All measures of efficiency are so much lower for Chinese manufacturing that, if it weren't for lower labor costs, they would be unable to compete anywhere in the world.  Essentially, the Chinese competitive 'advantage' is made up solely of it's lower standard of living which translates into lower wages.  

I agree that this is occurring, but it's always going to be the case that labor in emerging markets is going to be less expensive. Once capital and production resources begin flowing into these areas, however, wages should begin to equalize. At least, that's what should happen in a free market/free trade/free capital movement situation. Wages are always and everywhere determined by the workers' marginal productivity, which increases with more capital invested per worker. Not saying that's what's happening in China, but that's what would happen without government intervention, and it is what's happening to some degree in China--to the extent they let the market work. Clearly, the average Chinese is far better off today after the 40-year experiment in pseudo-capitalism then they were before. The well-connected benefiting at the expense of the average worker is entirely due to the socialist economic interventions China still employs.

Of course, the Chinese aren't inherently better at manufacturing in general than the west. As you stated, in, fact, they may be less efficient and it's only due to suppressed wages that they can out-compete. I suppose the government can continually suppress wages and siphon off the worker's increasing productivity, but I'm not sure how long that can last. Even if the state kept wages the same, the goods produced would continually become cheaper as more capital is invested, still effectively giving them a rising standard of living. The state would have to actually reduce wages continually which is not easy to do. It's an interesting economic scenario.

 

[NSXCIGAR]

19 minutes ago, Morgan said:

China essentially starts in 1978 Deng Xiaoping and there economic rise from 1976 to today is staggering your statement that centrally planned economies have never succeeded well China's current 38 year (1978-2016) going from one of the least developed economies to the largest in the world dispels your humble or non humble opinion that no central economy has ever succeeded!

This is a bit of a fallacy. The Chinese economy has been successful to the extent that it employs free market principles--as is the case everywhere. For example, Sweden is far more free market than is thought by most people, and is only successful to the extent that it is. As Sweden became more and more centrally planned from 1960-1990 it declined into economic disaster. The comprehensive free-market reforms they implemented in the 90s revived them.

Also, the standard of living for the average Chinese is far lower than it should be which is deceptive based on China's huge economic metrics. The state has allowed the workers to keep quite a bit if their newly increased productivity but not all. PapaDisco is correct in saying that the Chinese elite benefit directly at the expense of the average Chinese. If you judge an economy by the average person's standard of living (the true and best measure, in my opinion), China's should be much higher based on their metrics. China plays all sorts of games with trade agreements, currency and capital. I've heard many stories about China's massive, impressive and totally useless public works projects, buildings, etc. These things boost GDP and employ people, but represent a massive mis-allocation of capital.

The bottom line is that the free market is the most effective means known of increasing the standard of living for the most people. Central planning can produce some illusory effects and some apparent short-term miracles, but it's everywhere and always unsustainable. 

And yes, I have been to China.

[Morgan]

21 minutes ago, NSXCIGAR said:

This is a bit of a fallacy. The Chinese economy has been successful to the extent that it employs free market principles--as is the case everywhere. For example, Sweden is far more free market than is thought by most people, and is only successful to the extent that it is. As Sweden became more and more centrally planned from 1960-1990 it declined into economic disaster. The comprehensive free-market reforms they implemented in the 90s revived them.

Also, the standard of living for the average Chinese is far lower than it should be which is deceptive based on China's huge economic metrics. The state has allowed the workers to keep quite a bit if their newly increased productivity but not all. PapaDisco is correct in saying that the Chinese elite benefit directly at the expense of the average Chinese. If you judge an economy by the average person's standard of living (the true and best measure, in my opinion), China's should be much higher based on their metrics. China plays all sorts of games with trade agreements, currency and capital. I've heard many stories about China's massive, impressive and totally useless public works projects, buildings, etc. These things boost GDP and employ people, but represent a massive mis-allocation of capital.

The bottom line is that the free market is the most effective means known of increasing the standard of living for the most people. Central planning can produce some illusory effects and some apparent short-term miracles, but it's everywhere and always unsustainable. 

And yes, I have been to China.

I'd like to explain China having lived and owned a business there. China Gov't is a dictatorship China economy is Free Market. That means the government does not set the wages for the workers the market sets the wages. Further China Gov't does not own the vast majority of companies in China they are private and publicly traded companies just like here in America.

China Government gets involved in 5 year plans to have energy plan or road power plant infrastructure and so on like governments do.

China has a burgeoning middle class of 500 million people, they are not starving by any means

The two biggest problems in China is A) Pollution air and water B. there is a big disparity in income between the costal cities on the east coast and the rural areas in the west of China

 

[NSXCIGAR]

2 hours ago, Morgan said:

I'd like to explain China having lived and owned a business there. China Gov't is a dictatorship China economy is Free Market. That means the government does not set the wages for the workers the market sets the wages. Further China Gov't does not own the vast majority of companies in China they are private and publicly traded companies just like here in America.

China Government gets involved in 5 year plans to have energy plan or road power plant infrastructure and so on like governments do.

China has a burgeoning middle class of 500 million people, they are not starving by any means

The two biggest problems in China is A) Pollution air and water B. there is a big disparity in income between the costal cities on the east coast and the rural areas in the west of China

 

You're correct, and I never said China sets wages directly. Governments don't need to set wages directly; it can influence wages with regulations, taxes and price controls.

China allows certain economic freedoms, to be sure, but nearly every area of the economy is highly regulated and ultimately controlled from Beijing. Also, governments do not need to own outright the means of production in the socialist paradigm. Fascism--nominal private ownership of the means of production but controlled directly and/or indirectly by the state via regulation or outright edict--is an example.

I agree the middle class in China has emerged and is growing--thank the nascent but limited economic freedoms of the last 40 years for that. 

The public works projects in China are famous for being complete make-work boondoggles. They are tremendous mis-allocations of resources that boost GDP and that's about it. North Korea does the same thing. So did Nazi Germany. Enormous buildings that sit empty. Big, gorgeous roads with no cars in sight. Here's one: malls with hardly any stores: https://nextcity.org/daily/entry/surprise-china-built-the-worlds-biggest-building-and-its-a-boondoggle

Pollution is a problem because private property rights are not enforced. This would not be the case in a private property-based free market where a court system would enforce damages from polluters. The wealth disparity in China is exacerbated by the state pilfering the fruits of the productive masses and steering that capital towards special-interest crony projects that enrich the insiders and party elite who tend to live on the more desirable east coast.

The only plan that's worked for China has been the 40-year plan of less government intervention in the economy and people's lives, not these Stalinist 5-year plans that steer scarce resources from potentially productive uses into the pockets of the well-connected party elites. Unfortunately, the plan that I fear that is being implemented in China is one similar to Lenin's New Economic Policy. One step backwards to later take two steps forward.

[JohnInCleveland]

12 hours ago, Jimmy_jack said:

I read the article to say Cuba has lost potential profits due to the embargo. Not actual loss of money on hand/investments. Something I find interesting but don't see brought up often is the ability to ship bulk raw Cuban tobacco off the island to other manufacturers. I'm not sure the Cuban Govt would allow it. 

Imagine other great brands such as Fuente, Padron, Davidoff, Tatuaje and the like blending with Cuban tobaccos. I think there would be some great flavors. 

From what I've read, Cuba has no interest in exporting their tobacco for those purposes, as it undermines their position in the market.  Perhaps the lower grade stuff, but I wouldn't hold my breath for those brands getting their hands on premium cigar leaves from cuba any time soon.

[Corylax18]

Imagine how much they would lose if the embargo was enforced!

[perkinke]

Imagine how much they would lose if the embargo was enforced!

Or if it was ACTUALLY a blockade as stated in the article!