Sunday, April 3, 2016

Trade talk


It is said that the primary Tuesday in Wisconsin will depend in part on how the voters think about trade. Now, I don’t for one moment believe that Trump voters really care about trade; and if they did, no one is stupid enough to believe that Trump can make good on this claim to be able to bring jobs back. But it is possible that the Democratic voting will in some sense be about trade.

Let’s consider how trade across borders works in the real world, in 6 anecdotes:

1.   A friend of mine used to be in the strategic team at TRW, the big auto parts manufacturer. Once (I don’t know the exact year, but it was the ‘80s, which is important to this discussion), TRW decided to test a potential supplier in China. So it sent a sample part (not engineering drawings) to China to be copied.

The original part had an inconsequential bump on it that had not been ground down. The sample came back with the bump reproduced exactly.

That is one marker of the end of the American auto parts sector.

2.   In1985, Firestone Tire closed a plant in Iowa. I asked why, since the rapid growth of countries like Japan, South Korea etc. was elevating tens and hundreds of millions of customers from shank’s mare to motorbikes and autos.

I was told (by the head of North American operations) that there was no growth potential in tires because automakers were phasing out spare tires on their new cars.
3.   Sometime in the mid-1990s, Maui Pineapple Company requested bids to supply tinplate can tops with “100% Maui pineapple” printed on them.

The potential was for billions of lids.

At this time, the American steel sector was shrinking and complaining mightily about unfair competition from imports.

The president of Maui Pine told me he would have preferred an American supplier, but not one made a proposal.

4.   In 1958, American automakers had their best year. Their cars were outmoded junk: you could not get a four-speed transmission or independent suspension. It would be 20 years before you could get radial tires. Drum brakes were barely capable of slowing down two-ton cars. Reliability was so poor that when my family bought a 1959 Chevrolet, the transmission failed as it drove off the dealer lot.
By 1987, General Motors cars were unsalable at any price to customers; only GM’s captive rental companies, Hertz and Avis, would buy them.

5.   In 1985, I was writing editorials in the Des Moines Business Record about the collapse of the farm-implement manufacturing business in Iowa.
Production was moving to right-to-work states. Reaganomics fans were cheering. I wrote that the jobs were not going to stop in South Carolina; they were going to go to South Korea.

I was wrong, because I did not foresee in that China would open up as fast as it did. The jobs went to east Asia, as I expected, but more to China than to South Korea or Taiwan.

I could go on, but you get my drift. NAFTA didn’t go into effect until 1994.

Despite what Trump, Clinton or Sanders like to say, it was not the international trade treaty that caused the collapse/migration of US industrial jobs. It was the unbelievable stupidity and incompetence of American industrial management.

It wasn’t unions, either. It was the unbelievable stupidity and incompetence of American industrial management.

6.   American industrial jobs would have migrated overseas anyway but it is true that Republican policies in the ‘80s hurried them along. It is possible that with smarter management the process could have been slowed, and with smarter investment, the total of lost jobs could have been lessened.

However, Reaganomics was in large part about impoverishing American workers. The idea was to break unions by exporting jobs.

It worked, although not exactly as planned. In the id-‘80s, an international business consultant told me this story:

He was discussing the offshoring not only of jobs but also of industrial machinery. As an example he took a large lathe that was moved to Taiwan. A Reaganite assured him that once American workers came to their senses about pay, the lathe would be brought back and the jobs reopened.

The consultant told me, “He did not understand that once the Taiwanese manager saw that he could generate a million dollars a month, he would get his own lathe.”

And so it happened. The discontent being mined by the Republicans was created by them.











15 comments:

  1. Despite what Trump, Clinton or Sanders like to say, it was not the international trade treaty that caused the collapse/migration of US industrial jobs. It was the unbelievable stupidity and incompetence of American industrial management.

    It wasn’t unions, either. It was the unbelievable stupidity and incompetence of American industrial management.


    Then you know absolutely nothing about pattern bargaining.

    Do me a favor, although I know you won't. Listen to this.

    Then get back to me about unions.

    BTW, do you know where BMW's most productive plant is?

    American industrial jobs would have migrated overseas anyway but it is true that Republican policies in the ‘80s hurried them along.

    Which policies, exactly?

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  2. Pattern bargaining had what, exactly, to do with, for example, the migration of TV manufacturing to South Korea?

    I have more anecdotes from those days.

    What policies, exactly? Oh, breaking the traffic controllers, for starters. Literally, that was starters. The move to right-to-work-for-peanuts-and-without-protections laws. All like that there.

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  3. Pattern bargaining had what, exactly, to do with, for example, the migration of TV manufacturing to South Korea?

    Pattern bargaining had what to do with automobile manufacturing.

    What policies, exactly? Oh, breaking the traffic controllers, for starters.

    Oh, you mean a policy of enforcing the law?

    (And if you want a good example of what we avoided, it is France with its endless, no-notice wild cat air traffic control strikes.)

    The move to right-to-work-for-peanuts-and-without-protections laws.

    Apparently you are alright with union tyranny then. And also can't be bothered with Economics 101.

    Where is BMW's most productive plant? How much is the company investing in it? What are the workers there getting paid? How are their conditions?

    How many other examples are there besides BMW in the same region?

    Why there?

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  4. I have 2 words for you: Don Blankenship

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  5. Harry, stop moving the goal posts.

    [Harry:] What policies, exactly? Oh, breaking the traffic controllers, for starters.

    [Hey Skipper:] Oh, you mean a policy of enforcing the law?

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  6. Funny. You condemn unions but never management. Management is more tyrannical and murderous.

    You have been flogging pattern bargaining for years without ever explaining why it would matter. By the late '80s, Americans were waiting in line to pay a premium of thousands of dollars to buy a Toyota while Detroit could not sell its cars no matter how far it discounted them.

    What did pattern bargaining have to do with that? It was purely the incompetence of Big Three management.

    A friend of mine, who owned one of the GM all-makes distributorships, made $100 million laundering Oldsmobiles through Avis/Hertz in those days.

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  7. Funny. You condemn unions but never management.

    No, what is funny is this: It wasn’t unions, either.

    I'm not defending management, I'm attacking a statement that is either rampaging ignorance, or ideological hackery.

    You clearly know nothing of pattern bargaining's effects, nor any of its odious offspring, such as the jobs bank.

    (And I can't help but notice you haven't acknowledged confusing whatever the heck Reaganism is with enforcing long standing law.)

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  8. It was purely the incompetence of Big Three management.

    Oh, and you clearly didn't listen to the This American Life episode I recommended.

    Every time I hear you accuse someone of being ignorant, I shall remember this.

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  9. I know about the jobs bank. A good idea, actually. How did the jobs bank keep the managers of the Big Three from approving designs for cars people would buy?

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  10. I know about the jobs bank. A good idea, actually.

    No, it is a bloody stupid and expensive idea, just the kind of thing that have made Venezuela and Cuba the brilliant successes they are today.

    How did the jobs bank keep the managers of the Big Three from approving designs for cars people would buy?

    If I recall correctly, at one time you styled yourself a business reporter. So it shouldn't, or your newspaper wasn't getting value for your salary dollar, that there are other reasons than design for buying, or not buying a car.

    I suggested above you listen to an episode from that not at all right leaning radio show, This American Life.

    Since you asked that question, clearly you didn't; no surprise there, your immunity to unwelcome fact is impermeable.

    But if you had listened to it, you would have gotten an hour long description of exactly how UAW thuggery and stupidity damaged the US car industry.

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  11. However, it remains true that no one would buy Detroit Iron, at any price. Unions had nothing to do with that.

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  12. However, it remains true that no one would buy Detroit Iron ...

    Obviously, that means if I was to look at sales figures from the period, they would be zero.

    Oh, wait, that's not at all right.

    Unions had nothing to do with that.

    Just as obviously, you did not listen to that show.

    Otherwise, you would not keep parading your ignorance for all to see.

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  13. In 1964, Datsun began exporting light, cheap, handy pickups to America. Since then tens of millions of little Japanese pickups have been sold here. Any day now, US manufacturers will offer a competitive design.

    Just as soon as the unions let them.

    I am familiar with the argument that unions prevented managers from managing, but history tells a different story.

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  14. OP: Despite what Trump, Clinton or Sanders like to say, it was not the international trade treaty that caused the collapse/migration of US industrial jobs. It was the unbelievable stupidity and incompetence of American industrial management.

    It wasn’t unions, either.


    Goal post shifting Harry:

    Any day now, US manufacturers will offer a competitive design.

    Just as soon as the unions let them.


    No, make that typically ignorant Harry:

    Ford repurposed the name "Ranger" in 1982 for the 1983 model year for a compact pickup truck sold in North America and later parts of South America. Since 1998, Ford has offered a separate model of Ranger sold internationally.

    So you shifted the goal posts, asserted a brand new argument that unnamed others have made somewhere, and insisted upon its contradiction.

    Clearly, you have not listened to the This American Life* episode I linked to above, or you wouldn't continue parading your impenetrable ignorance.

    *TAL is clearly has a left wing orientation, in that whenever the chance arises, it almost always fails to question its own progressive shibboleths. Despite that, IMHO, TAL is by far and away the best radio I have ever heard.

    Which is why I was so surprised by the contents of that episode.

    But given your utter lack of curiosity, and complete unwillingness to learn inconvenient facts, I'm not the least surprised that you haven't taken this opportunity to learn something.

    Next time you accuse someone of being ignorant, I will be sure to link this glaring example of willful obtuseness.

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