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.




8 comments:

  1. I enjoy reading your posts from time to time. Will the deplorables even realize that their false prophet has betrayed them from the get go?? I think not. There will be multiple spins by alternative fact news sources that will place the blame on various perceived "enemies" of the "New Order".. "Bratwurst with a dash of chimichurri" love it!! Ron

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    1. Glad you enjoy my blogs. Many of the deplorables who depend on Obamacare for health coverage are coming around to realizing they've been screwed by the Republicans who now are trying to eliminate that very life-saving insurance. Maybe they'll remember at the next election.

      BTW, I'm blessed by at least four friends named "Ron". Would you care to reveal which one is you??

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  2. I guess I'm a pseudo-deplorable. I didn't vote for him but do lean that direction in several areas (smaller gov, good defense, etc.) However, I am an example of how the ACA has screwed me over.

    The things you hear/read about I have experienced. High annual increases in premiums (this last one 40%) and deductible increases along the lines of $1000/year. In 4 years costs have doubled. There is only one provider (BCBS) with a limited number of doctors. I chose HMO over PPO because the PPO would be at least $250 more/month with the same level of deductibles.

    Basically I get nothing for $770/month until my near $7000 deductible is paid. The next year it starts all over ago at higher rates. Anything would be a welcome change.

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    1. Dear Anonymous: I don't know much about Obamacare and can only sympathize with you rather than comment of the specifics of your situation. I can see why you're angry, though.

      My question is: What would you have absent Obamacare? Are the Republicans offering something better?

      If the yesterday's report from the Office of Management and Budget is correct, some 28 million people would be left without ANY insurance under the Republican plan.

      For a second or two I thought the Republicans were serious about improving or correcting some of the problems with Obamacare including yours.

      Instead the Reps seem to be more interested in cutting taxes on the very wealthy and leaving the self-employed or poor people with an unworkable plan—essentially no insurance.

      I hope someone intervenes to create something that addresses the needs of
      the uninsured. Thank you for your comment.

      al

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    2. I can always stick with the current provider. Prior to the ACA I had coverage from a state run pool that was very reasonable. It shut down when the ACA came to pass. State run pools might make a comeback and hopefully there will be more competition bringing other big providers back to the area.

      On thing I've heard might be happening is finally allowing Direct Primary Care along with a Catastrophic plan. IRS rules would have to be changed for that. For self-employed, companies and others this could be a big idea.

      The CBO predicts under the GOP plan that rates for older Americans will go up 10-20% for 2018 and similar for 2019 then rates & deductibles will start declining. That's better than 25-45% that will happen again next year and the year after that.

      As for the "massive tax cuts" many talk about, it is simply reversing the massive tax increases that the ACA put in place 4 years ago. No one mentions that part.

      Thanks for replying.

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    3. Hello Anonymous: I hope you work something out with your health insurance that is both affordable and covers you. What I keep thinking about is the fact that no American should be walking around with no health insurance or receiving substandard or nonexistent health care simply because they can't afford it. How you get there I don't know. One place to start would be to do something about health care costs, particularly prescription drugs, and the paperwork overhead created mostly by private insurance companies. I remember my doctor in Chicago saying he had to hire one full-time person just to deal with the paper shuffling and the back and forth created by having to deal with insurance coverage and plans for every patient.

      Good luck again.

      al

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  3. While the weight of evidence is mostly on your side, remember that every single pundit who underestimated Trump has been 100% wrong.

    So when American manufacturing comes roaring back, I expect you to eat some humble pie.

    If not, continue with your diet of tamales, tacos, and caldo de pollo.

    Saludos,

    Kim G
    Redding, CA
    Which could desperately use a 1950's style manufacturing plant.

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    1. Now, Kim, it's shocking for see a numbers hombre like you putting his hopes on, well, hopes, even though the data and experience so far strongly point in the opposite direction.

      I think the ones who are more likely to eat bouillabaisse of crow (?) are the poor folks who have Obamacare insurance and voted for Trump, and who may be left with effectively no insurance thanks to a GOP plan composed of equal parts tax credits, free-market wishful thinking and Republican hoo-hah. Four-thousand bucks in tax credits if not going to buy you any insurance.

      BTW if you and dear Mercedes come this way you're welcome to visit our place. The invitation is good even if you leave Mercedes back in the States.

      Alfredo
      Guanajuato, MX
      Where U.S. manufacturing plants are moving to, including those in Redding, CA

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