I’m really not a great fan of tax breaks and such to attract or maintain companies, but I’m realistic enough to understand that most states and regions use these as one of the weapons in their arsenal to attract new companies. (Case in point: last year Governor Hogan proposed a ten-year tax break for companies relocating to certain parts of Maryland, but the proposal went nowhere.) So it was with Carrier Corporation, which was supposed to abandon the state of Indiana for Mexico but brought that move to a screeching halt at the behest of President-elect Trump and his running mate, Indiana Governor Mike Pence.
One thing that has been brought out in the general conversation over Carrier’s change of heart was the Trump proposal to punish companies that move overseas. He’s proposing a 35 percent tariff on such firms, so under his idea had Carrier moved its operations to Mexico they would have had a 35% surcharge on their product.
But the incoming President is also advocating for a series of proposals to make America more business-friendly, such as cutting regulations and lowering the corporate income tax from roughly 35 to 40 percent down to about 15 percent. (These are ballpark figures, but that’s okay since Trump only sees these as starting points for negotiation anyway.)
The reason I bring this up is to make the case that all the carrots should be utilized before a stick is ever brought out. It’s patently obvious that America doesn’t make things like it used to, but the factors of why are most important. Just off the top of my head, here are some possible reasons:
- Overseas labor costs are far cheaper.
- There are fewer labor and environmental regulations to deal with.
- China is a larger market overall and is growing in its consumerism.
- The tax structure overseas is more beneficial.
However, even if all these things are true, it boggles my mind that it’s possible to profit by creating a product halfway around the world and shipping it back here on a slow boat when the most affluent consumers are still in the good old U. S. of A.
And then you have certain advantages we can exploit for ourselves: a first-class transportation system, a ready-made skilled workforce, and sufficient, reliable energy that’s inexpensive. Unfortunately, previous administrations were reluctant to allow companies to use these advantages, so they departed for greener pastures. In the case of labor-intensive products such as clothing, it’s not likely they will be coming back.
But at the same time we are looking to make things in America, it’s worth pointing out that these things that we can make use more and more automation to create. I’ll jump across the pond for this example, but a reason cited for the demise of the long-running Land Rover Defender model (a 67-year run) was that:
Five hundred workers build the car by hand – there are fewer than 10 robots on the whole line; step across to the Range Rover line on the other side of the Lode Lane, Solihull factory and you’ll find 328 robots.
If you assume that each robot takes the place of a single employee (which is probably generous to the employees) that means about 1/3 the manpower built the Range Rover compared to the Defender. The same is true in Detroit and Japan. To a manufacturer, there’s a lot of appeal to automation: it doesn’t take smoke breaks or mental health days, won’t come back from its lunch break drunk or stoned, and won’t go on strike for ever-increasing health care benefits or wages. The quality of work is very consistent, too, and once set up there’s no such thing as training a new hire.
For decades, though, workers have used machines to assist them in creating products – even the assembly line itself was a vast machine that automated the process of moving the frame of the car along as its component parts were added. Plastic products aren’t really created by hand, but by machines that extrude the parts for them – an offshoot of the process is 3D printing. When you come right down to it, the Carrier plant is one where premade components such as a motor, fan, cooling unit, outside shell, and electronics are assembled to create a larger product, which is where the value is added in this case. There’s not a huge amount of skill needed to put these things together – the skill comes from the design of these units to keep up with the demands of regulation, consumer preferences, and profitability. (Apparently the luckless Land Rover Defender stopped keeping up with these demands.)
But no amount of physical skill can overcome the capricious nature of government whim, and this is where Trump’s idea becomes somewhat impractical. Let’s say in three years Carrier decides it has to move production to Mexico, so it becomes subject to the 35% tax. A unit that cost $10,000 will now have to run at $13,500.
On the other hand, Carrier’s competitor Fujitsu, which is headquartered in Japan, may have a price for a similar unit of $11,000 because they have to ship it over. (For the sake of argument, I’ll assume their products are made overseas.) Thanks to Trump’s proposal, they can raise their price to $12,500 – making more profit for their foreign owners yet still undercutting their competition. Similarly, if Trump decides to go full-bore protectionist and slap tariffs on imported items, there’s no doubt everyone else will do the same thing and that will kill our export market.
I understand the frustration Americans have when they perceive China and others are beating us economically because they are cheating. Truthfully, they could be absolutely correct – in the case of China, I put nothing past Communist scum. But the solution is to make China less attractive by making ourselves more attractive, not trying to punish people. If Trump wants his 35% penalty, that should be the absolute last resort once all other efforts have been made to make our nation as business-friendly as possible. Unfortunately, I think The Donald is too vindictive for his own good.
Someone will pay for all these Carrier incentives, and I suspect these far smaller businesses will be the ones who suffer for the sins of others around the world.
Commentary by Marita Noon
All of us loved less-than $2 a gallon at the pump. AAA reports: “Americans paid cheapest quarterly gas prices in 12 years” – which resulted in savings of nearly $10 billion compared to the same period last year. However, oil (and, therefore gasoline) has been creeping upward since the February low – topping $45 a barrel, a high for the year. And that could be a good thing.
While low prices at the pump have been a boon to consumers, the plunge in oil prices has been a bust for American producers.
You may not care about “big oil,” but there’s still reason to be positive about the rising prices.
There are several causes for uptick. First is the weaker U.S. dollar. As oil is traded in dollars, a weaker dollar means that it takes more of them to buy the same amount of oil.
Additionally, we are heading into a busy summer driving season and refineries are switching to the more expensive “summer blend.” The switch typically means a brief shut down for maintenance – which reduces the gasoline supply. Summer driving increases demand.
Globally, oil production is down due to a workers’ strike in Kuwait that took about 1.3 million barrels a day of production offline, and disruptions in Iraq, Nigeria, Venezuela, and the North Sea. Former investment advisor and financial writer Tony Daltorio writes: “That brought the total to roughly 3 million barrels a day that were offline.” In the U.S., according to the Wall Street Journal (WSJ), “oil production has fallen below 9 million barrels a day in recent weeks, down from a peak of 9.7 million barrels a day last April.”
These are all supply issues that can easily be eradicated with increased production – such as recently threatened by Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman. Additionally, in the U.S., reports Bloomberg: “Drilled, uncompleted wells could return 500,000 barrels a day back to the market.” The potential for increased production has many, including Daltorio, predicting a fall in price from current levels.
Consumers like lower prices, but they signal economic concerns as the price of oil is directly connected to the global economy.
In February, a Citibank strategist warned that due to the extended oil price collapse, the global economy “appears to be trapped in a death spiral.” Eric Sharpe, Publisher at Energy Ink Magazine, states: “Citi’s assessment is clear, and easy to understand: weak global growth results in continued depressed oil prices as demand weakens under over-supply.”
This is why I posit higher prices are a good thing for everyone, not just the oil industry.
Simple economics are based on a supply vs. demand formula. So far, I’ve mostly addressed the supply side. But a careful read of the forecasts indicates an increase in the demand side. Sharpe points out: “The single most important factor for the stabilization of oil prices is for demand to outpace growth which it has not done for over two years. Though demand growth is slow, it is still climbing.”
On April 23, the Financial Times reported that commodities, led by oil, rallied “on signs of stronger growth” that bolstered demand. It also referenced: “better housing and infrastructure demand after China’s economy rebounded in March.”
On April 27, in a story about the price of oil hitting “another 2016 high,” WSJ addressed the fact that the Federal Reserve officials “left interest rates unchanged.” The last time the same decision was made, the statement included language that indicated the global economic and financial conditions posed risks to their outlook. This time, that was removed – “signaling less concern about risks posed to the U.S. Economy by global financial conditions.” In WSJ, Robert Yawger, director of the futures division at Mizuho Securities USA, is quoted as saying: “The elimination of international elements in the language may mean that the market feels that the international situation is improving, and we’ll get a bit of demand from emerging markets which wasn’t there.”
Additionally, Phil Flynn, Sr. Market Analyst at the PRICE Futures Group, in his daily energy report, on April 22, wrote: “Demand is busting out all over.” He explains: “Low gas prices are causing a buying frenzy at the pump as gasoline demand in the month of March hit an all-time record high.” He continues: “it’s not just gasoline demand, it is oil demand all over. Not just here in the United States but also in China. China reported that crude-oil imports in March were up a whopping 21.6% from last year coming in close to 7.7 million barrels a day. …China’s demand for imported oil is stronger than it has ever been.” He also addressed; “the strongest ever volume increase in Indian demand.”
There is growing demand.
“The market is coming in better balance,” Jason Gammel, an analyst at Jefferies, stated, according to the WSJ. “We maintain the view that the current oversupply will flip into an undersupply in the second half of the year.”
While this is good news for the oil industry, it is also good for everyone – even though it means higher prices at the pump. If this optimistic view is correct, it means the global economy – despite the bad economic news on the American front – may be heading toward a net positive; that it is not “trapped in a death spiral.”
A growing economy needs energy and that is why higher demand – that equals higher prices – is good for everyone.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy - which expands on the content of her weekly column. Follow her @EnergyRabbit.
Over the last few years I have seen the American worker become more and more an endangered species. Sure, there are jobs out there but fewer and fewer of them involve making stuff. Last month the Alliance for American Manufacturing (AAM) glumly noted that manufacturing jobs were off an astounding 29,000 in March. As AAM’s Scott Paul noted:
With 29,000 manufacturing jobs lost last month, it is clear this issue isn’t going away anytime soon. China’s massive industrial overcapacity, currency manipulation, and our growing China trade deficit continue to tip the scales, and it’s laid-off U.S. factory workers who pay the price. That’s not right. American manufacturers can outcompete anyone in the world, but they need a level playing field.
As I have pointed out before, AAM is an outgrowth of the steel industry, particularly the steelworkers’ union. So their perspective leans toward protectionism to a point where they regularly accuse China of cheating us on trade through both currency manipulation and their “dumping” tons of steel on the market. One Illinois steel worker they quoted put the latter charge thusly:
For the past 38 years, I’ve been a steelworker at U.S. Steel Granite City Works in Granite City, Illinois.
I’m proud of the work my 2,000 colleagues and I do at the mill. We produce a high-quality product that’s used in automobiles, construction and energy exploration. In one case, we even made a grade of steel for a major automaker that no other mill had been able to produce!
But right now we need your help.
Because of unfair trade, 1,500 of my coworkers are currently laid off. They don’t know when they’ll be called back – or even if they’ll be called back.
Granite City isn’t the only place coping with layoffs. More than 1,000 people who work at the U.S. Steel Fairfield Tubular Operations in Alabama are laid off. Nearly 350 folks at U.S. Steel Keetac in Minnesota also are out of work, as are hundreds of people at facilities in places like Colorado and Oregon.
All told, more than 13,500 steelworkers are facing layoffs - and the list is growing.
We’re facing an unprecedented onslaught of dumped steel from countries like China, which is producing way more steel than it can use. That steel is heavily subsidized by China’s government, which also doesn’t require its companies to abide by strict labor or environmental laws. China needs to get rid of its steel, so it dumps it into our market at a rock-bottom price.
That’s not fair to American steelmakers and workers, who compete in an open market.
And steelworkers aren’t the only ones who deal with the burden of unfair trade.
I can’t stop anywhere in town without being asked about the layoffs. When so many workers are forced to tighten their belt, it impacts everyone - from restaurants to grocery stores to retail.
Fair trade groups such as the Manufacturers for Trade Enforcement now oppose China’s possible ascension to a “market economy” for trading purposes by our Commerce Department, while AAM also questions China’s effect on our national security as steelworkers lose their jobs:
Plant closures, mass layoffs, and the loss of key technology and manufacturing know-how are sure to follow unless we act.
Moreover, with the loss of U.S. steelmaking capabilities comes a dangerous dependence on these same potentially hostile foreign governments to supply the steel products necessary to equip our military, respond to disasters, and modernize our increasingly fragile infrastructure.
This has actually been a concern for several years. In some respects the concerns about steel parallel our oil crisis, when we lost the ability to supply our own needs and became vulnerable to OPEC’s embargoes in the 1970s. Having lived through that as a child and seeing how it affected our economy, I have issues with the greatest country in the world becoming such a disposable society that we forget how to be self-sufficient. We should have never put ourselves in a position where, for so many of those devices and conveniences that make our lives easier and promote commerce, we depend on a nation that points missiles at us.
That’s not to say everything is bad news, though. As Bryan Riley shows in the Daily Signal, foreign investment in America far outstrips what we invest overseas. And while it’s true Carrier is moving 2,100 jobs from Indiana to Mexico, Riley argues that the net effect will be less as foreign automakers Toyota, Honda, and Subaru are adding a total of 1,600 jobs around the state. Riley adds:
While Carrier has been called “greedy” for moving to Mexico, no one in Indiana is calling Toyota, Honda, or Subaru greedy for choosing to invest in the United States.
In total, over 2 million American manufacturing workers are employed by foreign-owned companies. And while American companies have invested over $700 billion in foreign production facilities since 2000, foreign-owned companies have invested over $1.3 trillion in the U. S. manufacturing operations during the same time frame.
The result: a $614 billion manufacturing investment “surplus” for the United States from 2000 to 2015.
Granted, the year 2000 may have been an artificial and arbitrary deadline considering the exodus of manufacturing jobs from our shores began decades earlier, but there are thousands of Americans who work for foreign-owned companies in all sectors – heck, most people who drink a non-craft beer are supporting American workers toiling for a foreign-owned conglomerate.
Still, we should be doing all we can to promote the old-fashioned art of making things here. There were millions of families around the country (including mine) where there was only one breadwinner (Mom stayed at home) who could still achieve middle-class status because they made good money while creating the products America needed. (In my dad’s case it was concrete block and other cement products. That plant has long been out of business, sadly.) Now that’s all but impossible, as the norm has become two-earner families who can barely keep up with expenses, living paycheck to paycheck. By the time I was in high school, our family was one of those, too.
Perhaps the boom times of the last half of the twentieth century were bound to come to an end sometime, but we should be doing our best to bring them back by allowing workers and companies to create and enhance the value of raw products as much as possible. To use a simplistic example of building a car: we create value for iron ore by extracting it somewhere in the upper Midwest, add value by shipping it by ship down the lake to a steel mill in Indiana, further enhance it by processing it into steel there before shipping it again via truck or rail to a Toledo auto plant, then create even more value by its becoming the fender to a new Jeep, which again is placed on truck or a railcar to deliver to your local dealer. Each step in the process creates a little bit more value from that chunk of rocks once buried underground to the new Wrangler sitting at the dealership, meanwhile helping to create a better standard of living for hundreds of employees in the process.
But somewhere a few decades back we decided it was cheaper to have someone else do it – iron ore from one of a host of countries may or may not be processed there, but it goes to Japan or Korea and they build the cars. Granted, their success led them to put assembly plants here in America but I’d like to keep the process more in-house where we can.
Just because there’s a global economy doesn’t mean we in America have to settle for second best. But it does mean America needs new, fresh leadership that believes in American exceptionalism and wants to create the conditions where we can once again prosper.
Originally I was going to add some of these items to my “odds and ends” post but decided to promote the idea to a post of its own. I have a lot of things which I can neatly tie together.
It’s now been a decade since America’s economy even grew at a 3% rate, as Rick Manning pointed out a few weeks ago. While he lays a lot of the blame for what he later termed an 8.9% ”real” unemployment rate on government regulation and policy, other industry groups like the U.S. Business & Industry Council (USBIC) and Alliance for American Manufacturing (AAM) point the blame squarely at China. First is USBIC President Kevin Kearns:
Can anyone doubt that America’s trading relationship with Beijing is a one-sided, one-way catastrophe for the American economy? Our massive trade deficit with China represents a constant outflow of jobs and productive capacity to a country that refuses to play by the rules of world trade. It’s been 15 years since China joined the World Trade Organization. There can be no doubt that America’s experiment in so-called ‘free trade’ with China is a miserable failure.
AAM’s President Scott Paul:
Now we have even more evidence as to why voters are deeply concerned about China and its impact on the American economy. Our trade deficit with China in 2015 again surged to record levels, and that helps explain the struggles we’ve seen in manufacturing recently – particularly in critical sectors like the steel industry.
The 29,000 factory jobs gained in January is good news, but it’s certainly no indication of an upward trend. Many dangers persist, including a strong dollar, China’s economic weakness, and its massive industrial overcapacity. It strikes me as an inopportune time to be pushing a Trans-Pacific Partnership that is projected to cost America more than 121,000 factory jobs, according to the Peterson Institute of International Economics.
So just how do we compete? There’s no question that 40 years of buildup and advantages accrued by foreign competitors in the areas of lower wages, lack of regulation, and outright cheating more than make up for the millions of dollars in shipping costs required to ship cargo across the Pacific to the American consumer market. The relics and ruins of our Rust Belt convey the depth of the opportunities squandered. If we can’t beat them on price, we have to beat them on quality and be smarter than they are.
One thing I’ve noticed about the Senate race is that several GOP candidates are focusing on the manufacturing sector as a ticket to the state’s prosperity. For example, Rich Douglas had this to say the exodus of jobs to Mexico and about his platform:
Ten thousand jobs lost in Maryland alone. That’s what Texas businessman Ross Perot meant when he predicted a “giant sucking sound” of U.S. factories moving to Mexico after Congress approved the North American Free Trade Agreement (NAFTA). If elected to the U.S. Senate from Maryland in November, I will work to bring them back.
The “sucking sound” was real. In the mid-1980s I lived and worked in Ciudad Juarez, Mexico, across the river from El Paso, Texas. The Juarez of my memory is a vast collection of big-box factories in the desert, bearing well-known U.S. names. Jobs lost from the U.S.
Citizens with a path forward to jobs, homes, and a future remain in school, avoid drugs, do not riot, and keep their unborn children. Maryland needs factories and jobs. A way to attract them is to send the right people to Congress. What sets me apart from the rest of the Senate field? Experience and scars earned in markets where U.S. ethics are mocked. Experience with U.S.-imposed hurdles to U.S. exports. Experience with the human cost of free trade.
But Douglas is not alone. It turns out fellow candidate Chrys Kefalas is a vice-president at the National Association of Manufacturers, which again is urging people to be manufacturing voters:
Notes Kefalas on his social media page:
I’m all about manufacturing more jobs in Maryland and the U.S. And that means fighting so that companies like Under Armour and small businesses can bring more jobs to Maryland. I will.
Adds yet another Senate hopeful, Dave Wallace:
Many will remember when Marylanders proudly made steel, Chevys and many other quality products and enjoyed a prosperous life. Today our infrastructure and job prospect are crumbling, and high taxes and regulations are driving away the jobs and investments we need.
While this is a promising beginning, Wallace remains short on details. But it’s better than nothing, as I’m not finding where the other major candidate, Kathy Szeliga, addresses manufacturing at all.
Actually, I take that back. Nothing is better than this mess that punishes achieving businesses and expands the government’s role at a time when they need to stand down and let the market grow. Remember, doing it this way has led to a “lost decade” of slow-to-no economic growth.
Since this part of the state isn’t dependent on government jobs to survive – but could use an economic shot in the arm to diversify from the poultry and tourism industries – it seems like we would be an ideal location to be the place to make things. The cost of living is fairly decent, the area is nice, and there are a lot of people who are willing to put in a little bit of elbow grease to get things moving. All they need is for the state to let them compete, and even though a Senator doesn’t necessarily guide state policy he or she can lead by example.
In an attempt to tip the scales a little bit, and arguably give itself a little relevance in this current campaign, National Review gathered nearly two dozen prominent conservatives to make their case why nominating (and worse, electing) Donald Trump would be a mistake and a setback for the conservative movement. For the most part their reasons echoed a lot of what I said when I did my “dossier” series a few months back. Simply put, Donald Trump is not a conservative.
Had National Review asked me, my case would be made from the idea that Trump is a populist rather than a conservative, with ideas that sound great in a broad sense but when implemented evoke the old saying “the devil is in the details.” On immigration I share Trump’s concerns, and for the most part I think he has a sound approach to the issue. (This is in contrast to some at NR that would embrace immigration reform.) But in other areas such as taxation Trump works in a more steeply progressive, populist direction. Low-income wage-earners may get to send in a tax form that says “I win” but eventually we will all lose because the precedents will be set in punishing certain businesses. Talking tough with China is one thing, but putting the policies into practice another.
I don’t want to go through a complete rehash of what I said the other day when Trump got the Sarah Palin endorsement, but so far in the 2016 campaign – one which had the promise of a good, conservative candidate who could win on a message of rolling back the excesses of the Obama administration – we have instead seen the candidate whose campaign has most resembled the brashness and bravado of a WWE event reach the top of the polls and stay there despite the best efforts of several candidates to knock him off the perch. The argument that he’s not conservative enough seems to fall on deaf ears because people believe Trump can make America great again for some reason. It makes me wonder if the TEA Party was more of a cry for limited-government solutions or just a reaction to a President who was going too far too fast in a direction they didn’t expect.
To that end, there are now TEA Party people who want to cash in on the Trump name. Case in point: Amy Kremer, formerly of the TEA Party Express. I apologize in advance for the long blockquote, but you have to get a load of this fundraising appeal:
Are you sick and tired of seeing America lose?
Are you fed up with Washington Elites and the liberal media screwing up, weakening our country and running us into the ground?
Do you think we need less mindless political correctness and more old-fashioned common sense?
And, do you think we need a bold, proven leader to win the Presidency and Make America Great Again?
Well I do too! And I am wholeheartedly supporting Donald Trump!
My name is Amy Kremer and I am one of the founders of the modern day tea party movement.
As Chairman of the Tea Party Express, I worked alongside millions of Americans just like you and we helped lead a revolution in American politics. I was just middle class mother who was fed up and spoke out, but together, we made a difference.
Now, America needs us again. We have to come together and elect Donald J. Trump President of the United States!
That is why I have founded TrumPAC, a brand new organization dedicated to supporting Donald Trump. And, I am going to need your help, BIG Time.
The Elites are going crazy! They cannot stand the idea of President Trump, they are running scared, and as they quiver in their Ivory Towers, they plan to throw every thing they can at Mr. Trump to try and stop him, including the kitchen sink! No smear will be left in the bag or underhanded dirty trick will go un-played.
Their desperation is disgusting, but we know it’s coming. And we need to stop them!
That’s why we need you today, right now, to help Donald Trump weather the course. Mr. Trump has strong shoulders, and if we get his back and show the World that there is a movement behind him, ready to propel him all the way the Oval Office, nothing will stop us!
Donate today and we’ll send $5 dollars directly to Mr. Trumps campaign so YOUR name will be on his FEC Report – we’ll handle the paperwork and even cover the credit card processing fees so every penny goes to the Trump campaign.
AND BEST OF ALL – when his January finance report comes out, Your name will be on it, telling the world where you stand. You see, normally only big donations show up on finance reports, but because it came through us, just $5 will get your name counted too.
Mr. Trump will get a shot in the arm to see all of our names going on the record for him. Plus, his campaign will know how to follow up with you and get you involved when it’s time to vote in your state.
I hope I can I count on you to chip in with a contribution and help reach our goal so we can get our winning message out to voters across the country.
Just $20 will help reach about 5,000 people through robocalls, social media, and Internet ads.
$35 will help reach about 13,000 individuals.
$100 will help reach nearly 36,910 folks. $150 reaches nearly 51,000 people.
Just $200 allows us to contact nearly 68,000 folks over social media and the Internet.
Whatever amount you can afford, your contribution will help us reach out and convince more voters that Donald Trump is what America needs!
So I send Amy Kremer $25 (which is the default amount on their fundraising appeal) and Trump gets five bucks? What a bargain! Not only that, the other $20 will “reach about 5,000 people through robocalls, social media, and Internet ads.” (Damn, I’d love to know where they are spending their $20 because I have a website I’d like to promote.) On that point, it looks like we have diminishing returns at some points so I’m wondering where this lady got her numbers. Math may not be her strong suit?
It’s interesting because when Kremer left the TEA Party Express in 2014 her plans were for “engaging in competitive Senate primaries and supporting fiscal conservatives in the coming weeks.” There must not have been enough money in that part of the political world so it was time to glom on to the most populist candidate we’ve seen since Barack Obama to be a moneymaker.
And people wonder why those of us in the heartland are so cynical about politics. It’s why we shouldn’t attach ourselves to a person but a philosophy, and mine is that of limited-government conservatism. Out of all the remaining candidates in the 2016 race, it’s a sad commentary to know that Donald Trump is the farthest from that ideal, yet many who call themselves conservative support him and apparently making money off his name is just peachy.
Update: Still need more evidence Trump isn’t a limited government conservative? Federally-controlled land is just fine with him.
As you surely know, I have taken an interest in rebuilding manufacturing within our nation in general and this region in particular. While much of our local economy takes the form of manufacturing in an agricultural sense, either through grain farming or its primary purpose of assisting in the raising and processing of chickens, the advantages to the local and national economy if America began to make things again is beyond dispute.
So when I was sent a link to a manufacturing report by the union-led Alliance for American Manufacturing (AAM), I wanted to see what the perspective would be. Up front, it was clear that the AAM had their eggs in one basket.
“American factory workers are the solution, not the problem,” said Alliance for American Manufacturing President Scott Paul. “Instead of scapegoats, America needs a manufacturing strategy. That strategy should be built on balancing trade, investing in our infrastructure, enhancing our training programs, and rebuilding our innovation base.”
This report, with the lengthy title “Exchange rate policies, not high wages, are why U.S. lags China and Germany in export performance,” comes from the liberal Economic Policy Institute (EPI). Paul’s interpretation of the report:
“The idea that high wages in the manufacturing industry are causing job losses is common, but incorrect,” (report author Robert E.) Scott said. “Pushing manufacturing jobs into the low-wage, non-union south is a race-to-the-bottom strategy that should be rejected. Instead, we need to fight currency manipulation by countries like China and take a page from Germany and Europe to rebuild American manufacturing.”
His is a truncated summary of the last bullet point solution offered in the EPI report:
The strategy of pushing manufacturing into the low-wage, nonunion southern states is a race-to-the-bottom strategy that should be rejected in favor of high-road strategies: fighting currency manipulation and doing more to rebuild American manufacturing, taking a page from the German and European models (with supply-side policies that benefit and support the manufacturing sector, including increased spending on research and development as a share of gross domestic product; support for “stakeholder capitalism” in which boards of directors include an equal number of representatives of workers and managers; and heavy investment in training and job creation).
Obviously there is a certain appeal to some of getting back to the conditions we had circa 1960, when American manufacturing was the undisputed heavyweight champion of the world, workers brought home a salary that could support a family while Mom stayed home to take care of the kids, and Big Labor had its own corner of the political table. Five decades later, we have ceded that crown to China for a number of reasons. But I don’t think currency manipulation is the primary reason.
The EPI’s worry that manufacturing jobs are flocking to the “low-wage, non-union south” is in and of itself a tacit admission that wages and benefits are an important factor in site selection. China got to be a manufacturing leader because they have a very inexpensive workforce of semi-skilled laborers – the same sort of workforce that illegal aliens bring to the table in this country, although it depresses wages here in a different manner. Given the equality of other factors nationwide such as the federal regulatory regime and abundant cheap energy, those who do site selection tend to choose the places where they can get the biggest bang for their buck.
By the same token, willing local governments which assist these manufacturers with providing new infrastructure and greenfields for development tend to have more success than those urban areas with problematic old systems and brownfields that require remediation. But that’s not the only reason nice plots of available land sit empty in regions of the country outside the South.
Here in Maryland, we are saddled with a state government that refuses to even consider right-to-work legislation and has gone out of its way to punish large non-union employers. A decade ago when I began this site, the largest state issue was the (so-called) Fair Share Health Care Act and whether the Maryland General Assembly would override Governor Bob Ehrlich’s veto, which they did. The bill was narrowly tailored to affect just one employer: Walmart. And while correlation is not causation, the fact a proposed Walmart distribution center in Somerset County was placed on a continuing hold was blamed on the unfriendly climate for non-union businesses in Maryland. (The bill itself was later struck down in court as an ERISA violation, something I thought improper at the time.)
If you assume my overall argument is in favor of this “race to the bottom,” you’re forgetting a simple fact: a little bit of something is better than a whole lot of nothing. There are many paths to prosperity our nation, state, and city have available to us but it seems to me the best one is where we add value to the goods and services everyone needs. This is why our chicken industry succeeds, since we take that which is available to us to raise and process chicken for a world market and have developed an expertise that competitors have a hard time matching. Granted, not everyone in the industry makes a ton of money but that’s a function of the value placed on chicken by the market. Chicken is a very useful food product but people also like and can choose beef, pork, seafood, or vegan as well. On the other hand, there’s a reason oil is called “black gold,” to use another useful commodity for an example. The resource has a very high value thanks to its functionality, relative scarcity, and lack of alternative products.
America as a whole needs to again become the place where the most value is added, and once we get there we will all succeed because of it. (That will be the point where trade takes care of itself as well.) Back in 1960 we were the leaders in adding value, but now we’re not because we let others take our place. Re-establishing our manufacturing base will help us get that crown back, even if some parts of the country do more to help themselves in improving their economic state.
Once again I have a potpourri of items that I think need between a couple sentences and three paragraphs, so here goes.
Over the last few months I have followed the saga of atheists who have tried to have the Bladensburg Peace Cross removed thanks to attorney and second-time U.S. Senate candidate Richard Douglas. Early last week a federal judge dismissed the case in a brief, two-page order, although the plaintiffs promised to appeal. Douglas called the decision ”a good day for liberty,” and I tend to agree. Kudos to the good barrister for lending a hand.
Something Douglas has stressed in his populist campaign is the plight of the working man. So while manufacturing jobs held relatively steady over the last couple months, those who advocate for manufacturing thought the job report was rather bleak. “It’s the latest evidence that manufacturing in America is at or near a state of recession,” said Alliance for American Manufacturing (AAM) head Scott Paul. ”While much of the service sector is growing albeit with low wages, our goods-producing economy is struggling under the yoke of global weakness and China’s massive industrial overcapacity.”
That imbalance with China was also the subject of print ads sponsored by another industry group, the U.S. Business & Industry Council.
Their point is simple: there were no currency manipulation provisions included. While China, which has a long-standing reputation for the practice, is not a part of the TPP, other members have also been accused of similar tricks. The USBIC apparently desires a united front among many of China’s regional trading partners.
Those who can’t find jobs often need government assistance such as food stamps (now known as SNAP.) But the state of Maine recently grabbed the notice of the Daily Signal for a proposal to ban the purchase of junk food and pop with EBT cards. Certainly to some it would border on nanny statism, but the state argues that:
“Our current food stamp policy lets water in one end of the boat while bailing out the other,” said DHHS Commissioner Mary Mayhew. “If we’re going to spend millions on nutrition education for food stamp recipients, we should stop giving them money to buy candy and soda. Maine is facing an obesity epidemic, especially among its low-income population, and we should be solving that problem rather than enabling it.”
In short, if you wish to gorge yourself on Skittles and Mountain Dew, find a job and get off the dole. Maine has cracked down on welfare programs since Governor Paul LePage took office – maybe Larry Hogan should pay attention.
Someone in Hogan’s administration got the hot water turned up on him, as the James O’Keefe video I talked about a few days back had the sequel. Now we know his deputy isn’t particularly into martial fidelity, but then again we sort of factor that into the equation anymore. This guy named Clinton was elected president for doing far worse, so perhaps being on the large end of the Project Veritas telescope will be a resume enhancer for this liberal deputy AG.
Chances are, though, soon Thiruvendran “Thiru” Vignarajah will be ignored by the media, sort of like what we’re advised to do by columnist, fill-in radio host, and would-be Congressman Dan Bongino regarding Barack Obama. Whether it’s gun control, border security, Syrian refugees, or simply his method of leadership, America is better going in the opposite direction our feckless President desires us to go. Simple advice that’s worth the read, as Dan often is.
Yet Obama’s government is still powerful and has the capacity to make peoples’ lives miserable. Take the Internal Revenue Service and a new proposed rule that will ask nonprofits to keep Social Security numbers for donors who give more than $250. Tonya Tiffany of MDCAN got her moment of fame as an advocate against this regulation.
Those who are interested in stating their case have until December 16 to go here and give their opinion. Operations which only have sporadic activities and run on a shoestring would be most affected, and MDCAN falls under that umbrella as their primary activity is the Turning the Tides conference each January.
As they argue:
The IRS wants to make non-profit organizations responsible for storing and reporting the Social Security Numbers for anyone who donates more than $250. This will burden the non-profits financially as well as increase your chances of having your identity stolen. It could also make it easier for the IRS to target organizations based on politics and move on to also targeting the private individuals who support those organizations.
On the latter point, I think back to the emotion surrounding donations to the side supporting Proposition 8 in California some years back (in favor of traditional marriage.) Even years later, those who chose to donate in its favor had to deal with its fallout. Instead of harassment from a group, though, imagine the full weight of the government harassing donors. The system isn’t really broken so there’s no need to fix it.
There’s no need to fix my e-mailbox, either. While it’s not completely empty, the remaining items deserve more of a hearing. Look for these in the next few days.
As I work my way up to the most important aspects of deciding on a Presidential candidate to back, I come to foreign policy which will be worth 12 points.
In doing this part, I’m going to make the assumption that, by and large, these candidates will represent a sharp turn from the disastrous direction our foreign policy has taken under our current President and (for one term) his presumptive Democratic replacement. So since these candidates will represent a sea change, I also want to know how much of a priority they place on it. This will actually make my research easier since I will do it specifically from their campaign websites, including their position papers and news they link to.
For various reasons, I’m ambivalent about certain aspects of foreign policy but I want those who oppose our nation treated as enemies and those who back us to be embraced as friends. I’m no longer convinced we can build nations as we tried to do in the Middle East but regard radical Islam as a threat which will require a Long War to neutralize and contain.
Thus, it’s time to see how they do.
Not only does Jim Gilmore have a comprehensive approach to foreign policy on the website, in all aspects save one it is spot on. My lone quibble would be the wisdom of creating a NATO-like defense pact with Middle East nations against Iraq, one which would include Israel. Aside from that, he has charted an impressive course that tops the field.
Total score for Gilmore – 11.5 of 12.
Lindsey Graham is basing his campaign on being the national security hawk, so you better believe he has a plan. Parts of it may be a difficult sell, but it’s combined with some ideas on the domestic front as well, Overall, a great effort.
Total score for Graham – 11.0 of 12.
In establishing the “Rubio Doctrine,” Marco Rubio has hit on many key points and included others, such as our relationship with Europe. But to me it may be a little too interventionist because we don’t need to be the world’s policeman and that’s how I interpret the statement. Nor do I support making Section 215 of the Patriot Act permanent. It’s why Rubio doesn’t have a higher score.
Total score for Rubio – 9.0 of 12.
Focusing more on national defense and the failures of the Obama administration, it seems that Bobby Jindal is a firm believer in the old Reagan-era “peace through strength” doctrine. Some will certainly call him a neocon, but he presents a compelling case for returning to that brand of thinking. However, he doesn’t consider the civil liberty aspect of his ideas, and that drops him slightly.
As he did on energy, though, he presents a very comprehensive plan.
Total score for Jindal – 8.4 of 12.
Jeb Bush stresses three things when it comes to foreign policy: the war on radical Islam, our friendship with Israel, and the mistake we are making in normalizing our relationship with Cuba without demanding democratic reforms first. He has a very detailed plan to address radical Islam, but it may be a tough sell to the American people because surely the Democrats and the media (but I repeat myself) will be talking down those efforts.
Yet there is an elephant in the room ignored – or perhaps a bear and a dragon. Admittedly, Bush’s website is a little frustrating to navigate but I found no mention of Russia or China and how he would address those nations. Overall, though, his effort is solid.
Total score for Bush – 8.0 of 12.
Eight years ago, the thing that sank his father’s campaign with me was an unrealistic, isolationist view on foreign policy. Rand Paul is a little more flexible in that regard, and is hesitant to return to the Middle East because of it. He believes that we should not go it alone in that theater, and to that extent he is correct. I’m not as certain how he would deal with other enemies in a Cold War-style situation, though, which is why I hesitate to grade him higher.
Total score for Paul – 7.5 of 12.
Scott Walker is set against radical Islam and the Iranian deal, but I’m not as certain how he will react against others who threaten us. He seems to want to follow a Reaganesque path, but it’s worth noting that we withdrew from the Middle East under Reagan. Will Walker buckle under that pressure?
Total score for Walker – 7.0 of 12.
The conventional wisdom was that Ben Carson would be weak on foreign affairs as a political neophyte. So while he is for keeping Gitmo open, noting plainly that we should be a friend to Israel, warning about Russian aggression, and decrying the poorly thought-out Iran nuclear deal, it’s done as a broad statement rather than a detailed approach. It may be fleshed out in coming months, but for now it isn’t as strong as some others.
Total score for Carson – 6.0 of 12.
Similarly to Carson, Carly Fiorina had spoken in broad, big picture terms on her foreign policy. But she vows on day one to reassure Israel about our friendship and tell Iran that their deal is going to change to allow more surprise inspections. She’s also vowed to send a message to Vladimir Putin through various strategic moves like reinstating an Eastern European missile defense system and rebuilding the Sixth Fleet. It’s a promising start.
Total score for Fiorina – 6.0 of 12.
Chris Christie has a relatively comprehensive foreign policy vision which is global as it mentions both friends and foes. However, there are two issues that I have with it. One is the civil libertarian aspect of continuing Patriot Act provisions, which Chris avidly supports, and the other is about not treating China as an adversary. Until they stop pointing missiles at us, threatening the sovereign state of Taiwan, and manipulating currency to benefit their economy at our expense, I consider them a foe. Communism and Constitutional republics are mutually exclusive.
Total score for Christie – 5.5 of 12.
Ted Cruz seems to have his head on straight regarding foreign policy, but the information is so piecemeal I had a hard time digesting it all. A for effort, D for presentation.
Total score for Cruz – 5.0 of 12.
I have much the same problem with Rick Perry. For example, he did a major policy speech last year that was warmly received – but it’s hard to tell how he would react to newer crises. Aside from immigration, he seems more a domestic policy president.
Total score for Perry – 5.0 of 12.
With Mike Huckabee, as I read through his site I get the sense that we will have a reactive foreign policy more so than a proactive one. For example, he decreed that we should hack China back after they hacked into our computer systems. It seems to me that would be an expected move but not necessarily strategic. While he stresses Israel a lot, he seems a little simplistic so I don’t get that great of an impression.
Total score for Huckabee – 4.8 of 12.
John Kasich seems to want to tie the extent of his foreign policy to the extent of the economy, noting we can afford enhanced defense spending as we improve the economy. But I don’t really see what he would do in terms of relationships.
Total score for Kasich – 4.8 of 12.
With a foreign policy primarily focused on the Iranian deal and using Kurdish proxies to subdue ISIS, there’s a lot I’m left wondering about when it comes to George Pataki. So he doesn’t score very well.
Total points for Pataki – 4.0 of 12.
Total score for Santorum – 2.0 of 12.
After doing well on immigration, Donald Trump falls again on foreign policy. There is rhetoric and there is a plan, and Trump has plenty of former and not much on the latter.
Total score for Trump – 0.0 of 12.
My next part is worth 13 points; however, I suspect scoring will be low because my view on entitlements is decidedly more libertarian than the field will likely present.
There are actually a couple things I want to tie together in this piece – they may seem disparate at first, but I think there’s a common thread in something I write about on a frequent basis.
For a guy whose party took a good old-fashioned ass-kicking in the midterms, Barack Obama sure is governing like he didn’t hear any of the voters, whether they showed up or not. We may like these gasoline prices which are the lowest they have been through his time in office, but he’s still determined to decimate our economy in the name of combating global warming. It was a point Peter Ingemi (aka DaTechGuy) made with some hashtag and messaging suggestions today.
In order for our economy to grow, we need to use energy. Like it or not, the vast majority of energy sources for our needs in the near-term future will be fossil fuels – thanks to advances in technology, oil and natural gas prices are reasonably cheap and supplies are plentiful.
And even if you say that cutting our greenhouse gas emissions is a worthy goal, we still are allowing China – you know, that country which seems to send us every product under the sun that’s not made here anymore because manufacturers bailed on America a couple decades back – to continue to increase its emissions. They say they would like their emissions to “peak” around 2030 – of course, that’s no iron-clad guarantee and since when have communists ever told the truth or lived up to an agreement? It’s a ‘get out of jail free’ card for the Chinese and it lasts for 15 years – meanwhile, we cripple what little industry hasn’t abandoned us yet due to shortsighted government policies and the obvious feeling that corporations are cash cows for exploitation to increase spending.
So, just like Obamacare has become the descriptive term for bad health care policy, “Obama China deal” and “Obama EPA regulations” should become part of the political lexicon. Admittedly, it doesn’t roll off the tongue quite as well as Obamacare but all three are detrimental to our economy.
EPA regulations restricting the use of fossil fuels would interrupt what’s been a promising rebirth of an American energy industry many thought was dying just a few short years ago. Instead, they are at a point where the need for workers is great as the industry continues to expand, and writer Marita Noon hit upon a great marriage of supply and demand just in time for Veterans Day. As she notes:
The U.S. oil-and-gas industry has added millions of jobs in the past few years and expects to add more and more—especially with the new energy-friendly Republican-controlled Congress. Just the Keystone pipeline — which is now likely to be built — will employ thousands. Increased access to reserves on federal lands will demand more personnel. But finding potential hires that fit the needs of the energy industry in the general labor pool is difficult, as they lack discipline, the ability to work in a team and, often, can’t pass a drug test.
Obviously our veterans have these qualities in spades thanks to their military experience, (Similarly, veterans have been integrated into a successful local construction firm led by one of their own.)
The question of climate change isn’t one of whether it occurs, as our planet has veered between ice age and warm periods ever since its creation untold eons ago. It’s always been one of responsibility and corrective action – my view is that the sun is the prime driver of the climate and we can’t do a whole lot about that fact. Just the fact that global temperature has held near-steady over the last 18 years and not constantly risen with the amount of carbon emissions punches a hole in a lot of the global warming theory, and is a prime reason they’ve gone to the term “climate disruption.” If we ceased using energy tomorrow it wouldn’t make a dime’s worth of difference to the climate but millions would starve.
Fortunately, what Obama has proposed with China isn’t binding until the Senate says so and a climate deal is probably dead on arrival in a GOP-controlled Senate. But the EPA and other regulators can provide a backhanded way of putting our end of the China deal in effect without lawmakers having a say.
Wouldn’t you know it: I begin a series only to bump it in week 2 because of MDGOP debate coverage. So this will truly be two weeks in review, but I’m sure you really don’t mind.
I begin by asking the question: can America keep making things? I found an interesting perspective on the question and added my own thoughts. But I also found that workers, STEM-based or not, should be flexible and highly-trained. (And while it doesn’t pertain directly to AC, I was pleased that one of our gubernatorial candidates has the same line of thinking.)
In order for our manufacturing economy to succeed, though, we need to have others around the world play fair. Unfortunately, not only China has been caught cheating on trade, with them and other countries threatening up to 500,000 steel jobs, but right here at home one group of American manufacturers is concerned that federal regulators unfairly have them in their crosshairs as well.
Longtime readers know as well that I’m excited about America’s ongoing energy boom, and in this case I look at how manufacturing can benefit, with a little help from regulators. And while the EPA is trying to do away with the coal industry through onerous regulations, Congress on the other hand is trying to rein in that body run amok with accountability and transparency.
I’m sure in the next couple days – since the unemployment rate is always released on a Friday, for weekend analysis – we will get spin on it, but this is another pre-launch piece I wrote last month on May’s unemployment numbers.
On the first Friday of this month, analysts cheered the new low unemployment number of 6.3 percent, a low not seen in nearly six years. Moreover, the economy added 288,000 jobs – although that news was tempered by a labor force participation drop of more than 800,000 workers.
Yet out of those 288,000 jobs, just 12,000 were added in the manufacturing sector. That was “surprisingly weak,” according to Alliance for American Manufacturing (AAM) president Scott Paul. The AAM, an advocacy group backed mainly by the United Steelworkers union, contends that 5.8 million jobs could eventually be created by stopping currency manipulation by China, citing a recent Economic Policy Institute report which called the practice the “primary cause” of our trade deficit.
On a similar front, economist Chad Mowbray, who writes for the Shopfloor blog for the National Association of Manufacturers, detailed a number of “nagging challenges” for American manufacturers, leading off with the weak 0.1% first quarter GDP growth announced last week. (Editor’s note: that number has since been revised to a negative 1 percent growth.) Mowbray added that high marginal tax rates and uncertainty about health care costs could be factoring into the slow market growth.
In all these cases, policymakers in Washington are at loggerheads on how to proceed. A bill to deal with the currency manipulation was introduced last year and has bipartisan support, but mainly from Democrats. Unfortunately, that side seems to be placing more time and effort into trying to increase the minimum wage, which is a political nonstarter and is thought by many, including the nonpartisan CBO, to be a job killer. Republicans seem to be content with introducing bills to tweak around the edges on both tax reform and health care, but know there’s little chance of them advancing through the Senate, particularly six months before the midterm elections.
The situation, then, remains a challenging one. If, as some analysts have cited, the weather played a factor in slow economic growth, that excuse will dissipate in the summer sun. The question of whether the May jobs report was a mirage or portends better things is important, but there’s little doubt that if the manufacturing sector lags behind any recovery it will impede our progress going forward.
It’s been a busy week, but I’ll keep monitoring the manufacturing market.
Yesterday it was announced that the Keystone XL project, an oil pipeline which would have connected the oil sands of Alberta to refineries that could handle the product here in the United States, was shelved again by President Obama. This despite his quest to find “shovel-ready” projects and address the nation’s high unemployment rate.
Reactions? Well, pretty much what I expected. Needless to say, Mark Green at Energy Tomorrow was critical of the decision, stating President Obama wasn’t after jobs but “settled on a different calculus – re-election politics.” The American Petroleum Institute writer also pointed out the Keystone project had been under review for three years, plenty of time to gauge environmental impact. This is particularly true when one considers the Keystone XL pipeline could have run close by the existing Keystone pipeline already in use.