Posted on 01/10/2009 7:32:17 AM PST by AJKauf
I did a lot of Q-and -A interviews on talk radio recently about the bailout. And I got dozens of angry letters about my written opposition to government money going to the Big Three. But one argument struck me. For all those who wish to save the UAW and “high-paying union jobs”, why not just buy American?
I have this unsupported, but I think empirical notion that those on the Left in California both supported the bailout and the idea of unions, but seem to like Hondas and Toyotas better than Focuses and Escapes—and most certainly Mercedes, Volvo, Lexus, and BMW SUVs more so than Tahoes and Yukons.
Is the message, ‘Taxpayer, give your money to the Big Three/UAW to save American industries, but by God, I’ll never buy one myself?”
I never bought a foreign or even a new car until 1991 when I first sinned at 38, and got a cut-rate, entry-level 4-cylinder Mazda MPV van for the five of us ($15,100/five years at 5%, and a $1000 down). (It ran wonderfully for 130,000 miles without a glitch).
That said...
(Excerpt) Read more at pajamasmedia.com ...
But of course, many of the folks who recognize that American companies must go where the labor is the most competitive are the same ones who think that cutting off illegal immigration will not push American companies offshore.
Cutting off illegal immigration is a start, but it’s only pushing the problems off. Too few people (even FReepers) face that fact.
I also can't buy the idea that having illegal aliens taking jobs in this country while the government pays Americans to sit home and collect unemployment is a real bad idea.
That Palin’s lack of experience was a major concern, while Obama’s even more lack of experience for a much more important job was not a concern.
'Nuff said.
There was NO MENTION, ANYWHERE on the list of ironies of illegals. Hijacker!
I didn't say that at all!
Why is it that we must become the shallow, knee-jerk side who can't face the second-order consequences of actions? That used to be the libs!
I also can't buy the idea that having illegal aliens taking jobs in this country while the government pays Americans to sit home and collect unemployment is a real bad idea.
It's absolutely ridiculous. But the whole point is that American wages must be in line with the global market or else we have simply set ourselves up for being uncompetitive. And if we bailout companies that have uncompetitive labor agreements, then all we are doing is throwing taxpayer money in the toilet. These firms need to go bankrupt, to be purchased by other Americans who run them efficiently.
And you can’t see the connection?
Try reading again. The connection is there.
If you can’t see how labor costs tie in with the UAW and automaker competitiveness, then you’re too dense for reason.
I came out of a steel producing region. When I was in high school, the Austrians came up with an efficient method of making steel. Of course, labor rates in the US were higher than in Austria and our productivity was not as high. Consequently, steel produced in the US cost more.
The obvious answer was that if the US increased productivity it didn't matter what their labor rate was. The cost per ton of steel would be lower even with a higher US labor rate. Recall that one wants the working person to be able to partake in the necessities and luxuries which they produce. (Recall again that Henery Ford raised his worker's pay to $1/hour, so they could buy the cars which they produced.) The answer is PRODUCTIVITY.
WHY DIDN'T USS IMPROVE PRODUCTIVITY? Because they would have had to invest a lot of money which would not show up on the bottom line of the quarterly earnings sheet. The view was that if it was good enough is WWII, it is good enough today. Consequently, you had a steel industry which operated with equipment 10/30 years old competing with foreign companies operating entirely new facilities ( because the old ones were smashed flat by bombers in WWII). The irony is/was that US dollars from our aid programs helped them build the new factories.
Now jump to the auto industry (or electronics). Foreign manufactures have adopted the latest manufacturing methods (think robotics). Automatic machines do much of the work. While in the US, for whatever reasons (some good some bad) we as a nation did not embrace the robot revolution. Consequently, their productivity is/was higher. Note also that automatic equipment requires a skilled workforce (trained by our school system) to maintain them. Since many US students think “technical” courses are too hard, we in general have a less educated employees. This really galls me because I know from personal experience that Americans can't be beat when they roll up their sleeves and get to work.
There is another aspect to our industrial decline. That is Federal, State and Local TAXES. What drove United States Steel (USS) out of Allegheny County, PA was taxes. The local politicians killed the goose which laid the golden egg. In short GREED and STUPIDITY cut USS off at the knees.
The politicians also choked industrial development with regulations primarily environmental regulations. The environmental anarchists are in ascendancy. When we are sitting in the dark in the cold (Mr Sun HAS decreased his output.), perhaps we once again will follow a rational industrial development path.
There in a nutshell, you have it. Take this for action.
Don’t waste your breath. These guys are all in favor of a free market, except when it’s not in their perceived benefit.
So they would restrict companies from moving overseas to get more competitive pricing on labor and/or put limitations on imports to force Americans to purchase more costly products made here. Essentially they want to reintroduce Smoot-Halley, the single measure most responsible for turning the 1929 stock market crash into the Great Depression.
All the time they’ll be talking about how they’re opposed to government intervention in the economy without seeing the contradiction.
That comment shows lack of big-picture thinking.
Through the effective use of tariff, based on our social values and "fair" competition, we can have SUBSTANTIALLY HIGHER average wages and standard of living then the rest of the world.
Assign a tariff to every component...an off-shore VAT...which is manufactured overseas. The same would apply to raw commodities.
Hell, we should have a $50/bbl tariff on imported oil NOW while the price is low. Use the revenue to off-set the taxes on companies that produce domestically.
Shoes, shirts, washing machines, TVs, lumber, paper, you name it. All protected by an annually-adjusted tariff based on the values of American society...purely subjective reasoning.
When we didn't like France at the beginning of Gulf War II, tariff everything from France at 150%. Now that they're being nicer, tariff's reduced to 10%.
The US is AFRAID to use their commercial power. We have over 1/2 of the world's REAL capital...and we're afraid to use it because somebody might use open-source vs Microsoft...AirBus vs Boeing.
Let 'em. They'll always know they risk our wrath...and the wrath of 1/2 the world's capital (and consumption)can be very unpleasant.
Are you "series" ?
Lot of tariffs will raise the prices of all goods. So, higher wages and higher prices would at best be a wash, all other things being equal. A second effect would be retaliatory tariffs from countries we trade with, so a new equilibrium would be reached with lower trade and governments skimming more. A third effect would be economic distortions as political clout rather than market efficiency determined which industry got the most protection.
I think these effects would lead to a lower standard of living, not to an improvement for American workers vis a vis the rest of the world.
This is not to say that we shouldn't level the field with countries that levy discriminatory tariffs against our products; I'm just saying that a general high-tariff approach would not be a golden path to a better standard of living.
Sir, I respectfully disagree.
I also believe my point of view will prevail over the next 5-10 years, without regard to who is in power in WA.
The American economy is large enough...and still healthy enough to adjust to 1/10 the amount of trade we are doing now. The result would be millions of US jobs created. Hell, $500bil in annual expenditures for imported oil equates to 500k new jobs...without regard to the trickle down effect...if that same $ value of energy was produced domestically.
Our exports, other than airplanes, tech and agriculture and insubstantial, at best.
Our current-account deficit is 100's of billions of $ annually...and has approached a $trillion.
If you think THAT's sustainable or desirable, you're the enemy.
Great post. Does VDH ever miss?
I think you may be right, but I think it will be a repeat of Smoot-Hawley from the 30's.
Our current-account deficit is 100's of billions of $ annually...and has approached a $trillion. If you think THAT's sustainable or desirable, you're the enemy.
I don't, and I'm not. But here's the way I see it. The economy is like a soap bar in a bath. If you squeeze it, you won't contain it; eventually, it will pop out in one direction or another. I think that the net effect of policies that focus on boosting internal pricing of goods and wages is eventually going to be loss of competitiveness and erosion of purchasing power, and I think the purchasing power erosion will come by currency devaluation, not by the number of dollars workers are paid.
We did well in the past because we worked hard, we saved (i.e., built capital that made us more productive), we educated the populace. I think we've been slacking as a nation over the past 15 to 20 years -- overpriced currency, underperforming education, financial engineering in place of product quality, etc. I don't see that administrative fixes and government intervention cure that. It takes an attitude change. Sometimes that comes out of hard times. We'll see.
I disagree. Simple principles are often the best solution, despite the allure of fiddling with things.
While in the US, for whatever reasons (some good some bad) we as a nation did not embrace the robot revolution. Consequently, their productivity is/was higher.
I'm right with you. Most of those reasons were bad.
When you have big business, you will have big unions.
Not necessarily. This statement is not supported by the evidence. If the government had not voted to prop up the inefficiency of the UAW, we could have had a more efficient entity purchase the plant sites and hire the labor at what would likely be an even higher rate--just without the goofy "paid to not work" rules, etc.
Workers would win; consumers would win; taxpayers would win.
Note also that automatic equipment requires a skilled workforce (trained by our school system) to maintain them. Since many US students think “technical” courses are too hard, we in general have a less educated employees.
And the incentive to get educated is removed if we try to pay people the same regardless.
This really galls me because I know from personal experience that Americans can't be beat when they roll up their sleeves and get to work.
At one time. I wonder if that's still the case. American culture seems to have broken down the values that support that.
There is another aspect to our industrial decline. That is Federal, State and Local TAXES.
Yes, and conservatives have done an abysmal job explaining to workers (i.e., voters) that every dollar of corporate tax is a dollar the company doesn't have available to spend on labor compensation.
The politicians also choked industrial development with regulations primarily environmental regulations.
Yes, and often the environmental regulations don't make sense. But also, though, they are set up in a way that rewards companies that spend more $ on lawyers to evade them; small, compliant companies are hurt, which kills competition.
But note that even things like OSHA regulations are something that a worker must expect to be taken from his paycheck. If a company can get only $100 per widget and a foreign firm can spend 10% of that on wages, while an American firm can spend 10%-1%OSHA=9%, then the American firm has to stop thinking it can spend 10% and try to raise its prices to above market to make up the difference. It just won't work.
I think you and I are on the same page...there's no magic that can make a consumer purchase American or pay more unless there's a reason to do so, so we have to cut costs to businesses to keep them here.
One positive thing. The fact that you recognize the problems for what they are just raised my spirits. :-)
It is astonishing to me, and really quite discouraging to see supposed conservatives talking in such self-contradictions.
Pearls: This is EXACTLY what is happening now as real wealth leaves this country at a pace never before seen in history.
While the dollar got a temporary boost, due mostly to the Chinese "holding" and general fear worldwide, it's long-term trajectory is down, down, down.
This, gentlemen, can be ascribed to cheap money, current account deficits and the export of the manufacturing base...precisely the results of the policies you advocate.
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