Tuesday, October 23, 2012

Supply is Demand

A lesson in Say's Law (or, another reason why it's good for Americans to be able to buy tires at low prices from China);
Even as the presidential candidates try to outdo each other in promising to get tough on Chinese exports to protect U.S. jobs, experts say the more immediate threat to American workers may actually be the slowing of sales to China, which has bid up the price of much of what the United States sent overseas in recent years.
....Five industries — machinery, computers and electronics, chemicals, transportation equipment, and waste and scrap — accounted for 62 percent of exports to China in August, according to Census Bureau data.
But the impact is felt beyond those categories. That’s because Chinese demand pumped up prices globally for commodities like coal, paper and many kinds of metal.
....Exports of steel and iron scrap — among the top products exported to China from the United States — are down 53 percent this year from the comparable period in 2011, according to the Institute of Scrap Recycling Industries, a trade group.
Prices are down roughly 30 percent as a result, said Joel Denbo, chief executive at Tennessee Valley Recycling in Decatur, Ala. Denbo’s family founded the company 105 years ago, and he’s struggling to avoid layoffs among his work force of 175.
“People are asking me, ‘Boss, what do we do?’” he said. “We don’t want to lose a single man or woman.”
Exports of recycled paper from the United States — which comes back from Asia in the form of cardboard boxes — are also off sharply, putting pressure on local recycling and waste pickup companies, as prices for their products slip.
“China is such a large market for paper, particularly in North America, that you can’t hide from that,” said Joe Fusco, vice president of Casella Waste Systems in Rutland, Vt., which serves rural New England, upstate New York and part of Pennsylvania.
If China can't sell tires to the US market they can't earn dollars with which to buy things.  Neither Barack Obama, nor Mitt Romney seemed to be aware of that simple rule in the now concluded debates.

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