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Originally Posted by francois60
Sure there is. Prices fluctuate, you have to build the infrastrucure, and there are risks like oil fires, accidents, etc. Those things can cost money. Now granted, resource exploitation isn't risky like a tech or pharma company is risky, but energy companies can and do screw up and fail. Bush was on the board of one such company, Harken Energy.
For the entity that owns the oil but can't exploit it, there is no risk. They get royalties no matter what.
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The price of oil does fluctuate......between profitable and EXTREMELY profitable. No risk.
Can you show me anyone who ever lost money pumping oil from a known deposit of oil?
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Originally Posted by francois60
There is no economic benefit in the longterm to shielding uncompetitive businesses from competition. Not much in the short term either. All you really do is preserve jobs. At the cost of future innovation and current consumer prices.
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Shielding uncompetitive businesses, where one has no comparative advantage, shields the entire economy from collapsing. Once the domestic industries are wiped out by competition, not only are the jobs gone, and the economy destroyed, but the future is wrecked as well. How can there be any progress after all those businesses are gone?
I grant you that protectionism keeps prices up, but if you don't have a job (under free trade between China and Africa) to pay for goods, I guess it doesn't matter too much what the prices is. WRT innovation, with a countries businesses wiped out (under free trade) how would they innovate?
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Originally Posted by francois60
Yes, in the short term, Chinese companies will wipe out most African competition. But good African companies will prosper. And many Chinese-owned companies will want to build infrastructure in Africa, which will provide jobs and educate the next generation of African businessmen.
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Some good African companies may prosper, but many will also go under as well. The upside you present is infrastructure. Chinan is only building as much infraastructure as it will take to get the resources out of the bowels of the earth and into a ship bound for China. This will be insufficient to provide the jobs that are destroyed from free trade. Whatever education is gained can't replace the education provided by the indigenous jobs that will be lost to free trade.
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Originally Posted by francois60
Without this trade, Africa is doomed to be where it is now for a very, very, long time.
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Africa has a better shot at modernization without free trade with China than with it. China and Africa are not countries with different comparative advantage, so their economies don't complement each other as a developed and underdeveloped country do. Both countries are labor abundant, but China has superior infrastructure and organization so they are a competitor (not a partner) with Africa in anything but natural resources.
Africa has problems, but they are not solved by trading with China. Africa needs to get its government together, which will allow them to provide their own infrastructure. They can engage in some trade, but they should not allow their economies to be flooded with Chinese goods that they have no chance of competing with.
Quote:
Originally Posted by francois60
They can compete in areas where they have comparative advantage. Such as agriculture and livestock. IF China opens their markets to African goods.
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I'm listening. Haven't heard anything about Africa being strong in food production, but I'm listening if you have something to say about that.
Quote:
Originally Posted by francois60
Therein lies the problem. China is taking advantage of the world in the same way Japan did. But in the end, you pay the piper. Restrictive import policies will only harm China in the long run, because Chinese businesses will grow fat and complacent in the absence of real competition. China is an emerging economy so everyone is hungry now, but eventually they'll end up like Japan in the absence of real competition.
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I don't agree. China is large enough that they will be more like the US than Japan. China is large enough that they have a sizeable internal market that they can concern themselves with supplying. Japan always had to worry about getting into other markets, which lead them to make bad loans to exporters and subsequently crashed their economy, since many loans turned out to be no good.
Not an expert on Japanese economics, but that's how I understood it.
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Originally Posted by francois60
China has Most Favored Nation trading status. It's not free trade like we have with Mexico and Canada, but it is better than the terms we give the countries you mentioned. Although one or two of them might have MFN status and I just don't know it.
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MFN status is required for all countries that the US trades with under the WTO, I believed. I'm not sure, but I believe that any country the US trades with under the WTO are all under MFN status.