Saturday, March 11, 2017

U.S. manufacturing revival? Dream on

In Herr Trump's piñata of hollow slogans, hyperboles and plain lies, the one about "buying American and hiring American"—with its implicit promise to resuscitate a manufacturing sector that withered away decades ago—stands out as one of his most appealing and appalling promises.

Exhibit A sits on the shelf next to the TV in our living room and it's a very cool, lighted 1950s style (maybe Art Deco) clock, which we probably found at a flea market years ago and is one of the few artifacts to survive our move to Mexico. It usually keeps perfect time except on cloudy days when our solar electric systems lags and the clock may lose two or three minutes.

Model 146, as advertised on the internet. This one was sold,
and ours is not on the market. Sorry.
Its most interesting feature is a sticker on the back that lists its place of manufacture, none other than Chicago, by the Mastercrafters Clock and Radio Company, 1750 W. Fullerton Ave. It's the same Chicago where mostly unionized workers used to make steel, electric drills, televisions and radios (Zenith) and a myriad other geegaws and doodads, large and small.

That employment stratum first skedaddled to cheaper and warmer climes in the southern U.S., then to Mexico and on the Far East. Chicago now has either high-paying jobs in banks, financial exchanges, law firms and so on, or low-skill, marginal gigs of the "Good morning, welcome to Walmart!" variety. It's called the "service economy."

If I understand the Trump pitch correctly, he wants to strong-arm American manufacturing firms to stay put in the U.S., or perhaps even come back, through the use of tax penalties, threats, abandonment or renegotiation of free-market treaties and other forms of billy club-type persuasion. He's had hard words for some foreign manufactures too. Believe me.

And if he pulls this trick, and those rusting industrial mastodons along the Kennedy Expressway in Chicago come back to life, hey, I'll be the first one to cheer.

I don't expect I'll have to. Global markets and free trade—assuming the absence of currency manipulations, dumping and other hanky-panky—are the most logical path to continued economic growth and for American consumers the most beneficial system. [Geezus, what's wrong with me? I'm starting to sound downright Republican!)

Those markets have to be free, though: Trumpian claims that he can nudge, deal, tickle, shove or otherwise bully American manufacturing and trade, as if he were punching buttons of a TV remote, are a fraud, one of many of his.

Aside from our clock, Stew and I last week came face-to-face with the reality of globalization when we ventured out to find a new car, a quest temporarily or perhaps permanently suspended after our accident with the 2013 Ford Escape, which has soured me on internal combustion.

We looked at Mitsubishi pickups (made in Thailand); Ford Rangers (Argentina with engines from South Africa); VW Amaroks (Argentina); Nissan Frontiers (Tennessee for the gasoline engines, Aguascalientes, Mexico for the diesel models) and so on. The states of Guanajuato and Querétaro are flooded with factories making everything from Chevrolet trucks, GE kitchen stoves, components of Canadian Bombardier jets and EU Airbus helicopters.

VW Amarok, made in Argentina: Bratwurst with a dash of chimichurri. 
On the brain-deadening drive to Texas from San Miguel we invariably see hundreds, probably thousands, of semis going in both directions, bringing pieces of something one way and the finished somethings the other way.

(We of course also have the illegal narcotics trade with producers and customers on both sides of the border, but that's another story.)

It's an intricate web of trade presumably developed not by cunning Mexican politicians or villainous American corporate moguls but by rooms full of weenies with MBAs (some no doubt from the University of Chicago Business School where I worked for awhile) their eyes glued on monitors displaying spreadsheets with hundred of variables, and trying to answer the perennial question, Where is the best place to make such-and-such?

The crucial factor is the "competitive advantage". Mexicans bring cheap labor to the table, along with loosey-goosey environmental regulations, with Americans providing the design and engineering technology, plus a consumer market with an insatiable appetite for every conceivable kind of crap ever invented or yet to be conceived, at the lowest possible price.

The ones left out of this global trade system are the American workers once employed in high-paying, unionized marketing jobs that have largely vanished. If we are to believe the post-mortems of the election, most of these folks voted for Trump, vainly hoping he can bring back their jobs and livelihoods.

It ain't going to happen and the shattered hopes of those voters will go down as the cruelest hoax played on the American electorate.

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