Posted on 03/19/2006 5:42:04 AM PST by B4Ranch
Are foreign countries and companies using the "Wal-Mart model" to undermine American industry?
US economic incentives and trade policies encourage foreign producers to invest in this country. While the nation may be experiencing short-term benefits from foreign investment, the long-term harm may far exceed expectations, as is the case when Wal-Mart has invested in some local communities.
Undermining American Industry
The result of these US economic incentive and trade policies seems to be dramatic erosion of American industry through predatory competition and utilization of cheap overseas suppliers, analogous to the displacement of many local merchants that sometimes follows the introduction of Wal-Mart into a local economy.
Predatorily Undercutting Domestic Industry
A year ago, the entire state of Vermont was added to the National Trust for Historic Preservation's list of America's 11 most endangered historic places. The reason for the add was an expansion plan for 7 new Wal-Mart 150,000 square foot retail stores into a state which itself has only 600,000 residents. The National Trust cited the following concerns:
Their findings suggest Wal-Mart is predatorily pricing out local businesses by providing cheaper prices to local consumers but ultimately eliminating local competition and taking profits and local skilled producers out of the local community. "Communities often welcome these large stores in the hope that they will bring economic benefits," but "too often, however, the stores bring hidden costs and cause significant economic and social harm," said the National Trust.
Foreign Investment That Destroys American Industry
In Ohio, Governor Taft led a trade mission to Japan and Taiwan in 2004 to bring foreign investment to that state. According to the Business Journal of Youngstown, Taft expects this to yield $154 Million in new foreign investment on top of $473 Million through previous trips and efforts. To date, Taft projected 1,395 new jobs have been added through these efforts.
What is the result? In Central Ohio, according the Greater Columbus Chamber of Commerce there are over 100 foreign industrial companies feeding the nearby Honda manufacturing facility and competing with other American-owned industry. The industrial job base in Central Ohio is nearly completely dependent on continued goodwill of these foreign employers. The majority of American-owned "industry" in Central Ohio is distribution and warehouse facilities to store and forward goods made by foreign companies or their US subsidiaries.
Central Ohio has no assurance from these foreign controlled industrial facilities that profits, knowledge gained, or taxes will stay in the area.
For example, Honda ships in volumes of components and parts from overseas and then exports soybeans back to Japan in those same containers in record amounts according to Forbes. A definition of "banana republic" includes a country importing a majority of finished goods and exporting mostly raw resources.
Where is the long-term value to America from having other countries supply and control our industry?
Foreign industry has effectively colonized Central Ohio and the Governor has led 6 "trade missions" to try and encourage this.
Today, General Motors has a market capitalization of almost $14 Billion. Toyota Motor Company has a market cap almost 10 times of that and has almost $20 Billion in cash and 1/4 of the debt of General Motors. Toyota could gain control of over 50% of General Motors for approximately 1/3 of the cash Toyota has in its bank account today. If we were in a military war, this would be considered an extremely vulnerable position.
Recognizing Our Losses
How much do we have to lose before we recognize that other countries, like Wal-Mart, have a plan to gain market share at the expense of our own industry; and all the while, we are not backfilling with new offsetting industry, new services, or any other means through which we will secure our future?
Source: http://www.economyincrisis.org
Most likely. But she would also have a problem with big business using the mechanism of the State to 'grease the wheels'--think 'Orren Boyle','Hank Reardon',OPIC, and tax incentives for investing overseas.
I do not think that banana republics export financial services electronically. Nor, do I think that they have negotiated lucrative deals like the Bush admin has to sell power plants and water treatment plants in exchange for toys and call center jobs. Bush is shifting some things such as soybeans home for alternative energy. Also, I just read that he has proposed massive fish farms in the seas to shift the biggest item (after oil) in current accounts back stateside. Funny, imbalance isn't really about manufacturing, at all.
"It is more than we presently have and can only be accomplished, sadly, in decades."
Correct. Undoing the deterioration will take considerable time. But a couple things you forgot:
5. The withdrawal from GATT/NAFTA/CAFTA/WTO that will give us maximum flexibility.
6. The implementation of tariffs on a gradually increasing scale that'll start companies that have moved overseas to use the considerable profits they're earning now to reinvest back in the United States before they become too high. They'd rather earn some profits than no profits and they'd prepare for it. That in turn will increase the demands for steel etc...so the massive steel mills that "are a thing of the past" might return out of sheer demand. Especially if imported steel is made more expensive.
PING!
"As far as massive steel mills of the past, I believe are in the past. The micro-mills are more efficient at that same production. We must use technology to our advantage and stop being a passenger on the trip."
Micro-mills are not used, and will never be (they lack the capacity another reason they're called micro-mills), for large ship-building components such as keels, heavy armor plate, and other very large and thick steel items. One thing we need is the rejuevenation of ship-building through setting a mandatory retirement age on warships and auxillary vessels (and possibly even civilian vessels). Part of our independence from oil goal should be the phase out of conventionally-powered Navy ships for nuclear-powered ones.
2. When I opened the copy of Road to Serfdom last week.
3. Whenever I buy cheese, detergent, cereal, and even fish.
4. The "Korean" car I drive has half of its components sourced from GE and GM.
It goes on and on...
What is so important about physical goods that the brain dead can manufacture. We still have the number one consumer economy in the world, low unemployment, highest standard of living for a nation over 5 Million, etc.
We are doing quite well. I really don't give a sh-t if the GI Joe with Kung Fu grip is not made in the USA. Neither do most consumers.
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