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The view from the rust belt

Lafayette

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This thread's title comes from the "Lexington" report in The Economist this week, which I excerpt:

Even workers protected by trade tariffs feel angry and neglected ...

AMERICA feels sick at heart this year. Can conventional politics cure that malaise, or will voters turn to those peddling radical remedies, from trade wars to high border walls? That question weighs heavily in midwestern states, where factories propelled millions of post-war workers into middle-class prosperity. Though rustbelt states like Ohio, Michigan and Illinois helped Barack Obama win the White House, this year many midwestern voters seem drawn to fiery candidates who offer the sharpest contrast with the president’s cool, headmasterly style: from Donald Trump on the right to Senator Bernie Sanders on the left.

A day before the Ohio primary Lexington traveled to Findlay, a frayed-at-the-edges town of 41,000 people which is home to one of Ohio’s larger tyre plants. The smell of cooking rubber hangs over its streets. Twice under Mr Obama, anti-dumping tariffs of up to 88% have been slapped on imported Chinese tyres at the prodding of the United Steelworkers union (USW), to protect jobs at plants including the Cooper Tire & Rubber factory in Findlay.

Mr Obama cited the tariffs in his state-of-the-union message in 2012, declaring: “Over a thousand Americans are working today because we stopped a surge in Chinese tyres.”

Several workers accused Democrats of scorning traditional values. Jerry Eatherton said that tariffs on Chinese tyres have “helped a ton”, and voted for Mr Obama’s re-election in 2012. But this year he will support “anybody except Hillary”. Mr Eatherton is a hunter who feeds his family with venison and other game. Mrs Clinton, he avers, would like to take away the gun with which he puts “food on my table”. Several workers were for Mr Sanders (who on primary night won Hancock County, of which Findlay is the seat). A number declared Mr Trump “scary” and backed Governor John Kasich of Ohio, a Republican who won his home-state primary (Mr Kasich’s line on trade is Clintonesque in its nuances).

Rod Nelson, president of the Cooper plant’s union branch, Local 207L of the United Steelworkers, and that was in the “realist” belief that she will be the Democratic nominee. At Lexington’s request, Mr Nelson gathered ten Cooper workers for a group interview. Asked to sum up Mr Obama, the men replied variously that he was a good man, a disappointment, a “great speech-giver”, a victim of Republican obstruction in Congress and a man who had failed to rein in the super-rich and their influence over politics. The president was praised for bailing out the car sector and other industries soon after taking office. He was thanked for tariffs on China, but his support for the TPP caused baffled dismay. Mr Nelson ventured that perhaps the president is using trade as “a diplomatic tool” to win allies.

Above all, tariffs on Chinese imports were described as too late to save thousands of jobs in American tyre factories. The men in the union hall want a new approach to capitalism, in which foreign trade partners must pay living wages and heed global environmental norms.

For the Rust Belt or the Dust Belt (farming), these are dreary days for both.

The US slapped tarriffs on tire-imports, but for a good reason. This country rolls on rubber tires, and to allow a foreign country (especially China) to control in any way the supply is simply out of the question.

But what about the rest of manufacturing? That's the 64 billion dollar question!

Should Uncle Sam start slapping tariffs on each and every industry that is threatened from cheaper imports? Where would that tactic lead us ... ?
 
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This thread's title comes from the "Lexington" report in The Economist this week, which I excerpt:



For the Rust Belt or the Dust Belt (farming), these are dreary days for both.

The US slapped tarriffs on tire-imports, but for a good reason. This country rolls on rubber tires, and to allow a foreign country (especially China) to control in any way the supply is simply out of the question.

But what about the rest of manufacturing? That's the 64 billion dollar question!

Should Uncle Sam start slapping tariffs on each and every industry that is threatened from cheaper imports? Where would that tactic lead us ... ?

Yes, it would lead us to american consumers making living wage incomes keeping their neighbors enployed and would cut top executive pay

/thread
 
Tariffs start trade wars.

One thing I'd like to see done, is to force China to pay licensing at the dock for technology purloined, patents violated, processes stolen. IWO, if you are shipping in paint with titanium dioxide derived from the stolen process a few years ago, you are slapped with a licensing fee before it can leave the dock. Nearly everything China produces is based on a stolen patent or stolen technology.

Secondly, currency manipulation needs to be addressed by a "leveling tariff". You do that by converting the Yuan into world price gold equivalents, then reconverting from there into dollar equivalents, using a rolling average gold price.

Profit manipulation. Yes, Toyota builds cars in the USA, but they ship the engine and transmission unit in from Japan. Lets say true cost in Japan is $1000, the invoice it for $5000 to the USA plant, effectively moving $4000 profit back to Japan without paying a nickel in tax. In the mean time, they make buying a US car nearly impossible using "non tariff barriers". And they are supposedly our friends. You can imagine with China will do to us as an enemy.
 
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Yes, it would lead us to american consumers making living wage incomes keeping their neighbors enployed and would cut top executive pay

If we put-up tariff barriers against imports, our trading countries will reciprocate, and that outcome hurts American workers of exporting industries. (Which is an opinion corroborated here.) All international trade will diminish, which will put American workers on unemployment compensation. (That is the our historical experience from the 1930s. So, "been there, done that, didn't work as planned".)

But I agree with you about ultra-extravagant Executive Pay & Bonuses. To correct that "problem", we can obtain lower executive pay-scales by reversing the tax-policy that started frenzy for higher and higher pay. About 30-years ago the Reagan Administration brought down from 70% to below 30% upper-income taxation. (If you like, that fact is corobborated in this info-graphic.)

That was the starting-point at which companies were prompted to wildly increase executive compensation, often for no justifiable reason whatsoever. It was America's 20th century "Gold Rush".

Also, it was the beginning of our 1%-class of Americans - who own now own enormous wealth. Today, 88% of all Net Worth - which is Wealth minus Debt - is held by only 20% of American households. (Which is a research finding by Prof. Domhof at the U of Cal - see that info-graphic here.)

Btw, I don't think that Net Worth accumulation is either fair or right. Both the stock-options and the bonuses could have been shared (not equally but equitably) also by all those who worked for a company's success - and not just top-management.

Besides, what happens to such enormous amounts of Wealth? They create inherited dynasties - which is a step backwards in time. We reverse to the ancient monarchies of Europe against which we fought a revolutionary war to free ourselves ...
 
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If we put-up tariff barriers against imports, .

Except it's not all countries, it's China, and it's not going to be all imports either. You're buying into lies that the media is feeding you re:tariffs against all countries. Has Trump talked about putting in Tariffs to England? Or Zimbabwe? No, he has not.
 
Except it's not all countries, it's China, and it's not going to be all imports either.

It is evident that haven't the foggiest notion of how tariffs work.

In fact, we did raise an import tariff on tyres, as the original story relates. The Chinese accepted that, but do you think they will accept any and all import tariffs? They wont.

International Trade represents a significant amount of our GDP, and if we start using such impediments, then other countries will adopt them as well.

It's the perfect way to start a Trade War, and at a time when America needs one the least.

You're buying into lies that the media is feeding you re:tariffs against all countries. Has Trump talked about putting in Tariffs to England? Or Zimbabwe? No, he has not.

If you Trust Trump to not run us into the dump, then you are just as crazy as he.

In fact, he is exactly the sort of guy who would act reflexively and start a trade-war at the drop of a hat. That is precisely how he screwed up his own businesses ...
 
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Everything has cons, what are the possible cons?

Reciprocation tit-for-tat and the overall reduction of world trade has led to war in the past. It had a hand in the rise of Hitler in the interim period between the two World Wars, as countries were led to believe that they should serve themselves before they serve others. As well, post-WW2 was a heavily expansive period in which World Trade recovered and, as a result, the US prospered with higher and higher standards-of-living.

If we want to take the path of blocking trade by substantial amounts (and not just rubber tires), then the US risks an all-out Trade-War that could send the country into its second downward spiral in just the past ten years.

Since the 1980s, the US percentage of Trade in our GDP has doubled to 14% of GDP in 2015. Who, in their right mind, would want to jeopardize that growth (meaning American jobs) with a Trade-War?

Who ... ?

(Dense as he is, The Donald would ...)
 
One thing I'd like to see done, is to force China to pay licensing at the dock for technology purloined, patents violated, processes stolen.

The purpose of TPP (Trans Pacific Partnership) was to assure that China would observe the rules of global-trade and stop making/selling knockoffs of patented products. China was purposefully NOT a member of the group that negotiated TPP, but has signalled that it is prepared sign the TPP-agreement.

That fact will not prevent China from continuing to make iPhones on behalf of Apple. But it could mean that were it to build, for example, jet aircraft, it would continue to buy its engines from GE or P&W. Which is goodness, but not as much goodness as Uncle Sam was accustomed in the past.

If TPP passes, and there is some doubt, because most Americans think it is an anti-jobs bill, it could boost trade. If it protects American products, then it will also protect the production of said products and therefore jobs stateside.

That is, if America can produce the products at a price that makes them affordable on world-trade markets. The times when Made-In-America resulted in an automatic genuflexion towards the Statue-of-Liberty is over and gone.

We must become very, very attentive to production costs - they could easily price us out of World Markets ...
 
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It is evident that haven't the foggiest notion of how tariffs work.

In fact, we did raise an import tariff on tyres, as the original story relates. The Chinese accepted that, but do you think they will accept any and all import tariffs? They wont.

International Trade represents a significant amount of our GDP, and if we start using such impediments, then other countries will adopt them as well.

It's the perfect way to start a Trade War, and at a time when America needs one the least.



If you Trust Trump to not run us into the dump, then you are just as crazy as he.

In fact, he is exactly the sort of guy who would act reflexively and start a trade-war at the drop of a hat. That is precisely how he screwed up his own businesses ...

If we have "institutional amnesia" so bad that we can't find a way to retool, rehire, train people to do the jobs necessary to replace imported goods, then that should be a giant flashing red flag.

That in and of itself is a good reason to remember how to "make stuff" again!
 
This thread's title comes from the "Lexington" report in The Economist this week, which I excerpt:



For the Rust Belt or the Dust Belt (farming), these are dreary days for both.

The US slapped tarriffs on tire-imports, but for a good reason. This country rolls on rubber tires, and to allow a foreign country (especially China) to control in any way the supply is simply out of the question.

But what about the rest of manufacturing? That's the 64 billion dollar question!

Should Uncle Sam start slapping tariffs on each and every industry that is threatened from cheaper imports? Where would that tactic lead us ... ?

We depend on clothing as well yet the vast majority of that is made in other countries. The reality is that even after NAFTA, even after one of the worst recessions in history we currently have an unemployment rate of 4.9% which is actually pretty good. Granted there are other barometers of the economy that are still coming back, but they are in fact coming back. If we actually attempted to bring back every single solitary job that has been shipped over seas we wouldn't have enough workers here in America to do them all.

I think that realistically we need to focus on making sure American's have the education and skill set necessary to do jobs that cannot be shipped over seas or done by robots. That is the only realistic solution to the problem. By artificially propping up America's manufacturing sector you're preventing a transition that needs to be made, and increasing the cost of goods for consumers who don't have manufacturing jobs.
 
I think that realistically we need to focus on making sure American's have the education and skill set necessary to do jobs that cannot be shipped over seas or done by robots.

I could not agree more.

It is senseless to relive past glories. The post-WW2 are long gone, and the world has changed fundamentally. The US must make room for the EU (twice the population of the US) and China (almost 5 times bigger). And as regards China, given its long history, it looks at the US as a comparative "up-start".

The question facing us is how does the US, and we Americans, find our place in this world? Old truths have been upset and new-ones are in place. We are a country, one of the very few countries, that remains fixedly orientated on the future. We have little time for history, except on the fourth of July.

And yet, the answers we are looking for are in the past and not the future. (George Santayana: Those who refuse to understand the mistakes of history are condemned to repeat them.) Our country has, to find easy words, got sidetracked.

Since LBJ (of all people) began the ramp-down in upper-income taxation for 90 to 70%, and Reagan completed dropped it from 70 to 30%, the US has been on a mindless bent for riches. We are not the first historically, it's happened before in other countries.

However, rarely has the desire to be rich been so palpably desired/emulated as in the US. It has become our center of values.

Whilst at the other end of the spectrum, the EU was saved from a Communist domination that ended in the demise of that erroneous philosophy. Whereas the US, elated at the demise of communism, went in one direction, Europe went in another. To Social Democracy, the central belief of which is that:
*Since the dawn of time, humans have always lived in collectives.
*That said collectives provide a communal means of existence.
*Said existence is in the form of a capitalized market-economy, in which we are all both workers and consumers of the products/services that we consume.

And finally, that the market-economy at the very heart of our existence should be one that generates the Income necessary to Consume in a fashion that is Fair & Equitable.

From which derive other imperatives of achievement within the collective economy, which are - more or less - very well conveyed in Maslow's Hierarchy of Needs:
Maslow.jpg

For a more detailed view of the above "needs", see here.
 
The US slapped tarriffs on tire-imports, but for a good reason. This country rolls on rubber tires, and to allow a foreign country (especially China) to control in any way the supply is simply out of the question.
Yes, it's not like we get our oil, or food, electronics or *cough* rubber from other nations ;)


Should Uncle Sam start slapping tariffs on each and every industry that is threatened from cheaper imports? Where would that tactic lead us ... ?
Looks like you know the answer. Pushed far enough, eventually it will result in retaliatory tariffs and trade wars.

In addition to not understanding this, most people do not realize that:

• Manufacturing output is huge in the US, it's just heavily automated, meaning they need very few employees to do the same amount of work.

Along those lines, many companies are bringing manufacturing back to the US. It's heavily automated, though, meaning there is little employment gained.


• While we have a trade deficit, we still export huge amounts -- $2.3 trillion in 2014. That's equivalent to 13% of GDP.

And if protectionism if it's good for us, why isn't it also good for our trading partners? Why shouldn't France or Germany stop buying US goods? Why shouldn't England ignore Hollywood movies, and bulk up its own entertainment industry?


• We're now in a service economy, and no amount of gnashing of teeth will change that. Manufacturing is 10% of employment, and service is 80%.

Enacting protectionist policies will not magically reverse that trend.
 
If we have "institutional amnesia" so bad that we can't find a way to retool, rehire, train people to do the jobs necessary to replace imported goods, then that should be a giant flashing red flag.

It's not that we "can't do it". It's simply not worthwhile. We cannot do it at a "world-price", so we are obliged to shut out that world-price. In which case the world will retaliate by shutting-out the "USA price".

When a nation starts that sort of price-war with the world, it becomes usually uncontrollable and ultimately debilitating to all concerned.

Export trade is worth 14% of our GDP. Should we fool-around with that value by shutting out imports? I don't think that is at all wise.

What I think is smart is to find out why we don't try to robotize the production, which is only one step in a long process. Yes, in automated production lines there are fewer workers - but at least the production remains stateside. Which means what?

It means that perhaps all the components that go into the production of sophisticated products can also be automated, and that remains in America as well. Which means companies need not close, and thus go the jobs in Finance, sales & Marketing, Distribution, etc., etc., etc.

Whatever we do in the direction of sophisticated automation means fewer workers across a great many manufacturing industries. So, let's all have a good cry ... and then get on with retraining our people in automation-technology, and inciting large-scale investment in automated production. (Accelerated tax write-offs, etc., etc., etc.)

We lose a bit, but we also keep a lot ...
 
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If we have "institutional amnesia" so bad that we can't find a way to retool, rehire, train people to do the jobs necessary to replace imported goods, then that should be a giant flashing red flag.

That in and of itself is a good reason to remember how to "make stuff" again!
We never forgot how to make stuff. Manufacturing output is near record highs, and much of what we make is high-end goods.

http://www.acting-man.com/blog/media/2014/08/Manufacturing_Data.jpg[img]

We are able to retrain people to manufacture. The problem is that automation is so prevalent and efficient that companies need fewer employees to produce their goods. Hence, protectionism will not save a lot of jobs, no matter what.

[url]https://www.washingtonpost.com/business/capitalbusiness/factory-jobs-trickle-back-to-the-us-giving-hope-to-a-once-booming-mill-town/2016/03/16/5647cd7a-e4a3-11e5-b0fd-073d5930a7b7_story.html?wprss=rss_social-postbusinessonly[/url]

[url=http://www.theatlantic.com/business/archive/2015/10/onshoring-jobs/412201/]Onshoring Isn't Bringing Back Good Jobs - The Atlantic[/url]
 
We'd better find a solution because you can't have an idle population. It's too expensive and unstable.
 
No we shouldn't slap tariffs on anything at all. It's contrary to free trade and capitalism which we have advocated for so many decades.

Why should we regress to the old times like the 1890's when protective tariffs were in place to keep the wealthy corporations artificially wealthier as they didn't have to deal with competition?
 
It's about fees and honest trade. As it is now we are being played as the worlds biggest suckers.
 
Manufacturing output is huge in the US, it's just heavily automated, meaning they need very few employees to do the same amount of work.

It's percentage of total GDP is around 15%, which is considerable but not huge. It's percentage of national employment is 9.9%, which is not "huge". As well, the Bureau of Labor Statistics predicts a further decline to 7.1% by 2024. (See here.)

As I proposed in a previous comment, we can save parts of Manufacturing only if we put the resources into more automation. But that will only accelerate the decline in the number of workers needed to produce the same value of products. However, it will retain production in the US, which is worth the effort - since manufacturing is only one (costly) part of the entire process of bringing products to market.

There is not a developed nation on earth that is not suffering the same phenomenon; including China, which is hiving off production to southeast Asia where costs are even cheaper...

We are able to retrain people to manufacture. The problem is that automation is so prevalent and efficient that companies need fewer employees to produce their goods. Hence, protectionism will not save a lot of jobs, no matter what.

Yes, well put.
 
If we put-up tariff barriers against imports, our trading countries will reciprocate, and that outcome hurts American workers of exporting industries. (Which is an opinion corroborated here.) All international trade will diminish, which will put American workers on unemployment compensation. (That is the our historical experience from the 1930s. So, "been there, done that, didn't work as planned".)

But I agree with you about ultra-extravagant Executive Pay & Bonuses. To correct that "problem", we can obtain lower executive pay-scales by reversing the tax-policy that started frenzy for higher and higher pay. About 30-years ago the Reagan Administration brought down from 70% to below 30% upper-income taxation. (If you like, that fact is corobborated in this info-graphic.)

That was the starting-point at which companies were prompted to wildly increase executive compensation, often for no justifiable reason whatsoever. It was America's 20th century "Gold Rush".

Also, it was the beginning of our 1%-class of Americans - who own now own enormous wealth. Today, 88% of all Net Worth - which is Wealth minus Debt - is held by only 20% of American households. (Which is a research finding by Prof. Domhof at the U of Cal - see that info-graphic here.)

Btw, I don't think that Net Worth accumulation is either fair or right. Both the stock-options and the bonuses could have been shared (not equally but equitably) also by all those who worked for a company's success - and not just top-management.

Besides, what happens to such enormous amounts of Wealth? They create inherited dynasties - which is a step backwards in time. We reverse to the ancient monarchies of Europe against which we fought a revolutionary war to free ourselves ...

The Tariffs need not be permanent though, they can set to repeal upon enforcement of environmental and labor standards in the countries being blocked. they will fall in line to access profitable markets. no is saying to eliminate trade.
 
ABOUT ESTEEM (IN MASLOW'S "HIERARCHY OF NEEDS"

And it is in the fourth level that we find both "esteem" (meaning self-esteem) and both "respect of others" and "respect by others".

Esteem means "value", which can quite easily be corrupted by "riches". My "value" is that of my "Net Worth". Maslow, rather, was likely thinking of esteem in terms of "value to society as a whole". Towards answering the question, "Do I contribute to society as much as I take from it, or more, or less?"

ABOUT THE RESPECT FOR OTHERS

Respect for others is the societal component of "Do I value the quality of the lives of others as much as mine?" After all, we live and work in the same Market-Economy, we are therefore all interdependent upon one another ...
 
Yes, it's not like we get our oil, or food, electronics or *cough* rubber from other nations ;)



Looks like you know the answer. Pushed far enough, eventually it will result in retaliatory tariffs and trade wars.

In addition to not understanding this, most people do not realize that:

• Manufacturing output is huge in the US, it's just heavily automated, meaning they need very few employees to do the same amount of work.

Along those lines, many companies are bringing manufacturing back to the US. It's heavily automated, though, meaning there is little employment gained.


• While we have a trade deficit, we still export huge amounts -- $2.3 trillion in 2014. That's equivalent to 13% of GDP.

And if protectionism if it's good for us, why isn't it also good for our trading partners? Why shouldn't France or Germany stop buying US goods? Why shouldn't England ignore Hollywood movies, and bulk up its own entertainment industry?


• We're now in a service economy, and no amount of gnashing of teeth will change that. Manufacturing is 10% of employment, and service is 80%.

Enacting protectionist policies will not magically reverse that trend.

The other problem , time to start regulating automation.
 
PROTECTIONISM?

The Tariffs need not be permanent though, they can set to repeal upon enforcement of environmental and labor standards in the countries being blocked. they will fall in line to access profitable markets. no is saying to eliminate trade.

International trade-tariffs fall under the jurisdiction of the WTO, which is responsible for said tariffs. Excerpt:
Trade negotiations

The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They include individual countries’ commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets. They set procedures for settling disputes. These agreements are not static; they are renegotiated from time to time and new agreements can be added to the package. Many are now being negotiated under the Doha Development Agenda, launched by WTO trade ministers in Doha, Qatar, in November 2001.

So, before unilaterally imposing trade-tariffs they are "discussed" and "negotiated". Let's understand something: Uncle Sam is no longer the "biggest guy on the block". There are international trading rules and either we observe those rules, or World Trade comes down like a House of Cards.

The US put up a trade-tariff against Chinese rubber-tires, and they did so (most likely, I wasn't there) by arguing at the WTO that depending upon a foreign-country for such a crucial product was inacceptable. The US needed to maintain a production capacity internally, and that argument passed muster.

How many industries can we "protect" with import-tariff barriers in that manner, which was quite a unique case?

Not a helluva lot ...

PS1: It will amaze you to learn that I can't buy a Thanksgiving Butter-ball Turkey here in France! Why? Because all poultry from the US is banned in the EU due to the manner in which it is cleansed with a product that leaves a consumable residue on poultry skin, which is banned in the EU. The US has been trying to "negotiate" away that ban for the past two decades, and getting nowhere.
PS2: TPP has raised one helluva hullabaloo, especially from unions. Why? The usual excuse: "It's gonna cost us jobs!" In fact, the key element of TPP was to protect intellectual property rights that will prevent China from producing knock-off products that are protected by an international patent. If the US wants to produce a product in China - like, say, the iPhone - China will have to respect the intellectual content within that product by not copying it and employing it in a homegrown variety. Which does not prevent China from building the product.
PS3: China was not even asked to join the negotiations for TPP. Thus, they will either accept the conditions negotiated or be enjoined from trading with the US said patent-protected products.
PS4: Moreover, the reason TPP was concocted outside the WTO is because Obama felt it would be easier to implement; since the WTO has many ways of protracting such negotiations.
 
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We're now in a service economy, and no amount of gnashing of teeth will change that. Manufacturing is 10% of employment, and service is 80%.

Point very well made!

And what are the characteristics of Services Products? Intellectual ability. That is, in general, service industries require higher-level talent.

And if that is the case, why in heaven's name is it sooooo damn expensive to get a Tertiary Level diploma in the US?

Because "education" is now being treated like a "market" that should make a "profit". Which is the summum of Patent Ignorance, one more step in the Dumbing-down of America.

Education is like air we breath and the water we dring, it is for the wholesome well-being of all individuals.
 
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