LLPOH’s Short Story: How Some Jobs Are Lost

Recently, I have been reading a range of comments on TBP that indicate that companies are doing the wrong thing by failing to protect the jobs of Americans and by exporting jobs overseas. Although I do not believe that a company has a direct responsibility for maintaining jobs as such, I am horrified by the number of jobs that are lost as a result of corporations doing the wrong thing by their shareholders, and to that extent I cannot disagree with those that wish to hold large corporations accountable for the loss of jobs to low cost countries.

It is incumbent on the American people to help keep jobs on shore – buying American made goods and using only American supplied services, and maintaining/creating the world’s highest skilled workforce would help the situation greatly. However, the American people long ago abandoned job creation and maintenance, and instead opted for the cheaper overseas made product, and the result has been a steady loss of work to cheap labor countries. So much work has now been lost that it is nearly impossible to determine the overseas component of many products (for instance “American made” cars contain a large overseas-made component).

I deal with a number of large, multi-national businesses. Each has a system to rank its suppliers based on a range of criteria, such as: on-time delivery, pricing, quality defects, engineering excellence, warranty claims, packaging, accuracy and timing of responding to request for quotations, etc. These large companies publish the results yearly, ranking suppliers against each other so as to drive competition. Some of these companies have annual meetings to reward the winners of the “competitions” (and shame the losers). I was at such a meeting recently.

The winner of the year’s supplier “competition” got up to receive the award, and gave a short speech. The winning company excelled in all of the measured areas. The CEO, during his speech, told the assembled supplier and customer representatives that his company would not win the supplier award next year, as the customer was taking its business elsewhere (where else but China?), as they could source the product cheaper there.

In the end, the customer ignored all of the many benefits of having a superior supplier (in fact its best supplier) with state of the art technology and a committed and skilled workforce, and instead opted to source the parts from a country that could supply the parts for a few cents cheaper. This is indeed a sin and an outrage. It shows no commitment to the long-term success of the customer’s business, and hence destroys shareholder value. In the end it was a decision driven by a lower-level purchasing agent that was paid a bonus based on the savings he generated yearly. There is little or no avenue of appeal for the supplier given the new contract has been let. The supplier has other customers, but a number of jobs will be lost to an overseas company.

As a business owner/manager, I have no specific responsibility to anyone other than the shareholders of the business (there are a great many legal responsibilities, however). If business needs dictate, I would, and do, eliminate jobs as is necessary. But I do so based on a long-term view and for the long-term health of the business. And I do not allow my purchasing representatives to change long-term suppliers without my direct consent. I give my suppliers every opportunity to respond and rectify issues, and I generally pay a modest premium for the relationships we have with our suppliers. The extra costs repay themselves time and again when there are problems that need to be resolved or when an emergency occurs. The cheapest suppliers do not tend to be able to respond in times of crisis.

Large companies have set systems in place that manage and measure every individual aspect of their businesses. Each small portion of the business is set goals to achieve. Individuals within each sub-section tend to be compensated for achieving their short-term goals. There tends to be no master strategy, and the small cogs (low level purchasing managers, for instance) can have very serious effects on long-term outcomes, especially in the aggregate where perhaps 100 purchasing agents each drive a few jobs overseas every year as they search out short-term profits. There of course can be a number of sound reasons for sourcing overseas – lack of skilled employees, extreme high costs, low quality, etc. But to continue to lose jobs because of short-sighted low-level purchasing officers and their ilk is an abomination.

To change this situation would require an entire shift in large corporate cultures. Given that CEOs and board members are compensated for short-term outcomes, I do not believe it is possible that such a shift will occur. The American people can have the most impact via their buying patterns and by refusing to accept overseas services. It is perhaps far too late.

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Petey
Petey

“The American people can have the most impact via their buying patterns and by refusing to accept overseas services. ”

Good luck with that. We boxed ourselves into a corner and we have no one else to blame. The workforce now has to become more competitive, and doing that involves changing entitlements/benefits, more than salary/hourly wages. For example, the greatest contributor to inflation is medicare and social security and of course inflation increases input costs.

Surly1
Surly1

Thanks for posting this. Very insightful in showing how low-level bonus-chasers can have a deleterious effect on a country and a nation.

Good stuff.

Punk in Drublic

It seems like sacrificing the long term health of the entire system for short term benefit is classic boomer thinking. Another decade and the Xers and Millennials will be taking over and hey, they couldn’t do much worse.

I remember your idiot son short story, so…

Sarcasm off.

Punk in Drublic

Where are the boycotts? The protests? People should be mad about these companies sending jobs away. I could not believe back in the day when GM got bailed out and their stock soared. I thought, These people should be PUNISHED, not rewarded. Sell the fucking stock of a company that got bailed out, refuse to buy it. Get it out of your 401k. SHOW them how pissed off you are.

Petey
Petey

Are we to conclude that Atlas really does shrug?

howard in nyc

another great story, with several lessons. thanks, dude.

too bad ‘shareholder value’ has been reduced to a 90 day ‘long term’ horizon. the focus toward the next quarter’s numbers has been a potent force driving such penny pinching. even for privately held companies, following the fashion of this, another of wall street’s malign wealth-stripping schemes.

Punk in Drublic

Punk in Drublic thinking of running GE.

comment image

Punk in Drublic

ummm…

Make a law against it!

It is now illegal to fire someone.

There, I fixed it. No more problems.

Punk in Drublic

Damn I am really loving this CEO thing. I just fixed the whole economy. Gonna retire early with a million dollar pension and a 10 billion dollar severance package. I think I have earned it.

Colma Rising
Colma Rising

LLPOH:

You manage to fit a lot of meat on one plate here…

The short-term profit motive has taken over so much that I’m suprised you can keep your business on shore. We need more business people to make these realizations. The quality of the product will determine future profits through repeat business and word of mouth.

Quality products also come from quality employees… I mean that in the sense you alluded to. An employee who doesn’t give a shit is a major detriment, especially in management. In my experience, employees don’t quite realize where their bread is buttered… the more beuracratic the management structure the more people don’t give a shit.

jmarz
jmarz

llpoh

Thanks for sharing the story and providing some wisdom. I always find value from these stories since I plan to own my own business one day. By the way, you are the type of customer I seek for and do well with. I believe in relationships and customer service. My philosophy is quality over quantity. Unfortunately, most larger corporations establish incentives for their purchasing agents that encourage low cost only. I won’t name some of my customers who I know are a waste of time in building relationships with since their economic incentive is to find the lowest cost. This tends to bite them in the ass since issues normally rise and are not handled efficiently or in a service friendly manner. In the end, the cost is greater. Some of the engineers I provide assistance for in the larger corporations always tell me that they are frustrated with the purchasing policy. They like dealing with me and from time to time can spec me in their prints to overcome the ridiculous cost incentives buyers have but they wish the policy would change. It is foolish for a company to buy from a vendor who has the lowest price and screw the vendor who provides value that exceeds the price. These type of buying policies do nothing in building a relationship or strong supply chain with their vendors. Because I’m in outside sales, these type of companies that I know have these types of incentives that are cost driven are a waste of time for me and my company. We quote these companies still but we don’t rely on them. We look for customers who value the service as well as the product. My customers that I have relationships with are happy to pay a premium. They know that if there is an issue, I will be there in person asap to help solve their problem and to them that is worth alot. They want someone they know they can trust and rely on when they really need to get out of a bind. Most companies that try to get business by offering the lowest price and operating on thin margins can’t offer this type of service. Most buyers that only buy from the cheapest vendor don’t understand the value of having a good relationship with a vendor until they experience an issue with the cheapest vendor.

On the issue of buying American made, I do agree buying American is a good thing. The only problem is that buying American is very expensive. America is addicted to cheap goods. We can’t afford to buy American anymore. Excessive taxes, regulations, and flawed policies/laws have contributed to our lack of competitiveness on a global competitive scale.

Administrator

llpoh

Another great post. I think you’ve hit upon the biggest problem in corporate America, politics, government and our whole culture. Short term rewards always trump long term benefits in this country.

Public companies only care about next quarter. Accounting gimmicks and financial decisions that benefit next quarter are used to meet the EPS guidance, while hurting future earnings.

Politicians only care about the next election. Promise the voters anything, because the bill won’t come due until you are out of office.

Government programs and solutions are rolled out to fix the most recent issue. Stimulus programs to promote car buying and new home sales waste billions and no one cares.

Americans only care about keeping up with the joneses. This is why people lease cars rather than buy. This is why they eat out three times per week, but contribute nothing to their 401k.

A rational way to dole out bonuses would be to base them on a 5 year rolling profit average. That would force companies to think longer term.

Punk in Drublic

Jmarz said, “My customers that I have relationships with are happy to pay a premium.”

The guy who ran the cleaning company I first worked for said something like that in a meeting once… That a complaint about price was really a complaint about quality. That a customer is always willing to pay top dollar for perfection.

After the meeting many other employees were insulted because they thought he had basically claimed that any complaint regarding the price of the clean was a result of them not doing the job to the best of their ability. The nerve of that man to over charge people (in their eyes) and blame them when a customer complained!

I understood and was impressed by the way he put it, as though he was trying to teach us a little of how and why he ran the company the way he did. I never fit in with my coworkers that way, no matter where I was.

Colma Rising
Colma Rising

As an employee I have the curse of putting myself in the Boss man’s shoes…

Do I make him money at my wage? Is it enough money to offset his risk? Many employees don’t understand that a construction worker, with the associated workman’s comp and SS tax, medicare etc. it costs an employer at least 20 cents on the dollar in CA, at least.

Even on my shittiest of days, bleeding and soaked with sweat, when I wonder if I want to just walk out, I know it’s part of the gig… and often when it’s busy the old fart grabs a hammer himself. That builds moral to see the boss mash his fingers.

Conversely, I have pride in what I do. I work in people’s homes, and I don’t steal their shit like many of the day-laborer stories I’ve heard. Customers are happy when we show up speaking English. If I find change on the floor if I’m cleaning up I leave it on their windowsill.

Those are things that I do as an employee to make me valuable. It would seem rudimentary, but you’d be suprised how many snakes in the grass there are.

Always, always always, helping out above and beyond what’s in the contract is what makes long-term relationships work… for the employer, the employees and customers.

Business does not have to be a struggle between the parties to be profitable for all. That is a form of “long term” thinking? We are soooo fucked.

FRED FLINTSTONE
FRED FLINTSTONE

If corporate goals are simply to maximize profit then they are behaving as expected for TODAY. However ethics and simply doing the right thing often come back on businesses in unexpected ways. Sustainability is more important than quarterly results. Look at Honda and Toyota business models. Toyota introduced the concept of “quality circles” where you can have parts at an intersection of price, quality and speed that were excellent. They dominated the market until overexpansion occurred. The world does not have enough resources for everyone to be an overconsuming underproductive user/take. Figure out what is really important in life now while there is still time. Hint: it aint just money.

AKAnon
AKAnon

llpoh-Thanks for another good one.

ASIG
ASIG

“Large companies have set systems in place that manage and measure every individual aspect of their businesses. Each small portion of the business is set goals to achieve. Individuals within each sub-section tend to be compensated for achieving their short-term goals. There tends to be no master strategy, and the small cogs (low level purchasing managers, for instance) can have very serious effects on long-term outcomes.”

LLPOH
I would run into this time and again. Example – One time I quoted a design for a new customer and I saw an opportunity to reduce their manufacturing cost. My design would save them close to a million a year but my design charge was 10K more than my competition. I lost the job. Why? Because the manager biding out the design work was more concerned about the extra 10k out of his budget than the $M savings to some other department managers budget.

bigargon
bigargon

Another good short story LLPOH.

I think our problem is how we uncritically embraced globalization. It really went flying when we signed NAFTA, it been all down hill from then.

America’s greatest growth occurred when we had the American System – No corporate taxes, with a import tariff. we were sold the lie of being “post-industrial” , of a new and better life. American citizens were transformed from producers to consumers. Another problem has been the crazy “green” movement where we have basically exported our pollution (with our jobs) to places like China and India.

Surly1
Surly1

Admin–
“A rational way to dole out bonuses would be to base them on a 5 year rolling profit average. That would force companies to think longer term.”

This is a REALLY good idea, if one were serious about building a company. Why hasn’t it caught on? Because CEOs expect to be up and out in five years drifting with that Golden Chute?

MuckAbout

@llpoh: Another super piece and a great thread trailing along after.

The only problem I see with what you’ve brought up is that the American public simply doesn’t give a shit where something is made if it’s cheaper (just like your purchasing managers).. Serviceability, durability, customer support, whatever – to J6P it-doesn’t-matter. If it’s -$ cheaper, it’ll get the nod every time.

Of course, J6P (or your purchasing agent) may have to buy three of them before a single higher quality one would have worn out but that’s spread out over time, hence affordable, less immediate impact and who cares what happened yesterday. We’re three paycheck away (or another quarter) from the purchase so no one can see it or cares about it.

This is why the study of human action (i.e. Von Mises et al) is so valuable from a business point of view. It teaches the wrong lessons. Man always acts in the way that benefits himself or make him more comfortable, safe, sheltered, fed, etc.. Always….. But business has to accept that most of the users of their products don’t care about extended quality or any issue beyond the end of their nose. Immediate satisfaction at the lowest price (any kind of price) is what will win and that’s how we, as a nation, will go down the tubes.

We are and will do it to ourselves.

MA

MuckAbout

Sorry, one last thought.

We are beyond the pale in so many areas (over and above a suicidal monetary policy and debt) that I actually have been frustrated by no being able to find American made products and being forced, therefore to purchase (first from the Japanese in the 80’s) Chinese, Indonesian and Indian products.

We’re past the point of “being patriotic” by buying American. You can’t be because there are no more “American” products. (OK, damn few..)

MA

llpoh
llpoh

Asig – all too common isn’t it. And to think these “employees” sleep just fine.

Muck – never underestimate the short-sightedness of the American public.

Thanks everyone for the comments. Amazing how so many have similar experiences when the surface is scratched but a little.

jmarz
jmarz

America likes to pride ourselves on our customer service and quality when doing business (not anymore). Unfortunately, I fear that as this crisis continues the quest for cheaper products will get worse as inflation and our economy gets worse. The value placed on relationships should be stronger in tougher times but I fear it will get worse as everyone gets pinched on costs. Certain sectors will get affected worse than others. Wal Mart in particular is a company that is ruthless. They place zero value on relationships and customer service when dealing with vendors. I know businessowners who have done business with Wal Mart but ended up dropping them since they had no say in anything. It was their way or the highway and I’m sure many businesses have been screwed by putting all their eggs in one basket when supplying Wal Mart. They pinch you until you can no longer be pinched and than move to the next sucker and just leave you hanging.

Some companies diversify by sourcing half of their business to China and half to the US. One of our largest customers uses this strategy because they want to hedge themselves from unexpected increases in business or unexpected delays from overseas and by having a US source allows them to save alot of lead time. We have done permanent damage when it comes to our manufacturing base. Businessman will continue to explore for ways to lower costs since management only cares about the bottom line. I come from the school of thought that leadership is a make or break when it comes to a company’s ability to succeed. Of course, I believe leadership isn’t the only factor that determines success but I think it is the most influential. Just look at today’s corporations. There are very few CEOs that I would consider sound. The ones that only care about personal gain is reflected in the business practice of their company. Our country on both a governmental and business level lacks leadership.

Apollo
Apollo

@LLPOH

While your intention is good in this article, let me point out the bigger picture.

The bigger picture is: America is in a major class-based civil war.

The opposing classes have dogmatic, irreconcilable ideologies. This schism started in the recession of 1990, when business and labor broke the implied ‘contract’ of loyalty and productivity. Each went its own way since, and today, what we have is two nations at war.

This explain why America is not able to solve fundamental problems, or restructure society as it has in the past. Why what we have is political and civil polarization so deep it rivals the breakup of Roman Catholic Church and Protestants in Middle Age Europe. (This religious breakup never got reconciled. In fact it sparked the 100 year war between France & Spain against England – highlighted by the famous Spanish Armada invasion of England.)

Witness the latest media event – Trump became a birther and dumps on Obama so hard (aided by non-stop media noise) that Obama released his birth certificate to justify himself being qualified for president. While this is a silly show where the rest of the world find stupidly entertaining, what is the root basis of this event? It is based on a deep class struggle – Trump the elite representing one class who simply cannot accept Obama representing the enemy class – not even after he won the election for presidency. Such is the depth of the civil war.

It is my firm prediction that the current class war will cause America entry into the so-called Fourth Turning civil upheaval. It will happen because, just like the 1860’s Civil War, the force of polarization is titanic and unstoppable. The end of this war may very well be the split of some states out of the union. USA will not only cease to be a superpower, but it economics and finance will be cut in half (adjusted for inflation and destruction).

Seen in this light, your employee and business problems look so ‘small’.

jmarz
jmarz

Apollo

“Seen in this light, your employee and business problems look so ‘small’.”

llpoh’s short stories are short stories. He is focusing on a particular personal experience he has had in the small business world. Your comment deals with a compelete different issue so I think you might be looking way to deep into llpoh’s post. In comparison to your comment, of course llpoh’s short story seems small.

llpoh
llpoh

Apollo – that sort of thinking is beyond my pay grade. I relate what I see. What I see are individuals behaving entirely in their own self interests with no ethical or moral fiber. They do not understand that they have obligations to shareholders/employers, or if they understand they choose to ignore their responsibility.

Perhaps that is group-think or some such – or as you say “class warfare”. I do not know. All I know is that it is happening and that increasingly their are fewer and fewer people of substance out their.

I point out some very simple solutions – such as buy American made product. This is such an easy thing to do, but several people have rightly pointed out it isn’t going to happen. Not because of class issues. But because people cannot extrapolate beyond a cheaper price in the short term to understand they are cutting their own throats in the long term.

I am not smart enough to come to grips with the drivers of cultural revolution or class warfare. But I am smart enough to know that if enough individuals change their behaviour it can make a global impact.

Surly1
Surly1

LLPOH, Apollo, Muck, et al
Just re-read this article and thread and am impressed by the thoughtfulness of the comments in this thread. Some excellent thinking here.

It’s one thing to note despair at the lack of morality and care for the long term business effects of short-term, bonus-driven business decisions; quite another to identify root causes, or solutions.

The zeitgeist is full of Ayn Rand’s objectivism. “Atlas Shrugged” has stumbled into some theatres with a thud. Greenspan was a noted disciple. The justification of selfishness annouced itself loudly in Oliver Stone’s “Wall Street” when Gordon Gekko stating declaratively, “Greed Is Good.” Plenty of Americans who attend church and/or otherwise display a proud bumper-sticker suburban Christianity buy into these notions without understanding how objectivism and Christianity are completely at odds.

Isaiah Poole recently wrote,

“Christians who want to endorse policies that grow out of Any Rand’s worldview will run headlong into Jesus’ response to the question of what is the greatest commandment. It is not, “Love yourself first.” After loving God, Jesus commanded his followers to love their neighbors as they love themselves.

“Then there is the nature of Jesus’ ministry. Jesus worked to bring people together into a community in which individuals shared their abilities and their resources so that each person finds strength and fulfillment through their interdependence. The apostle Paul likened the result to how the organs of the human body support each other, benefiting mutually from health, suffering together from disease. How that community took shape in the earliest days of the Christian church, with the wealth of believers redistributed to “anyone who had need,” would no doubt appall Ryan and his acolytes.

“Over all of this is the significance of the cross that made Rand so “indignant.” Yes, I believe, to use Rand’s words, that a man of perfect virtue died for all of us who are imperfect. That was the climax of a life that featured healing people without questioning whether they had deserved to be healed, redistributing the contents of a young person’s picnic basket to feed thousands, and preaching that the kingdom of heaven was a place that belonged to the poor that the wealthy would have to struggle to enter.

“We have spent the past three decades as a nation scorning mutuality and interdependence and orienting our economy toward Rand’s objectivism . . . Cleaning up the resulting wreckage of our idolization of individualism and greed and building a new economy and a better nation is the great challenge of our time. The conservatives who are now doubling down on “Atlas Shrugged” ideology would have us go back down that road to disaster, only more unabashedly. And the lure to go there is as strong as the serpent’s offer to Eve to forsake obedience to God for the promise of being like God.”

But perhaps since we now worship Mammon, none of this matters.

llpoh
llpoh

Thanks Surly. I have not given up but I do despair.

Apollo
Apollo

“What I see are individuals behaving entirely in their own self interests with no ethical or moral fiber. They do not understand that they have obligations to shareholders/employers, or if they understand they choose to ignore their responsibility. ”

Although now retired, I was at the top of my career in the 90’s. I was running large organizations in the tech world. But the quoted statement above was already a strongly experienced force during that time, almost 2 decades ago. Already, the ‘social contract’ was irretrievably broken – workers and employers work strictly for self-interest. Loyalty and ethics in business was heading for zilch. Two classes of America society went their own way. The biz class maximizes profit and their own prosperity and hell with the rest. The worker class works ethic is to work the minimal for the biggest paycheck he/she can get away with, and jump ship without a tiny thought of loyalty to its employer. It is no wonder things developed into unfettered outsourcing after 2000 – profit and bonus come before everybody else, including country, for the biz class. While the worker class descents deeper into cattle-like behavior, and transformed into debt slaves.

Now ask yourself – why does such societal polarization that began almost 2 decades ago not only did not get resolved, but deepened? And deepened to such degree that it triggered a financial and economic crisis in 2008. And even after that event, today, it only further deepen today? This force is unstoppable until society reconfigures itself – like Egypt of late.

Blaming China is popular but either wrong or no use. China did not cause America problem. China since joining WTO trades with many countries of the world according to WTO rules, enforced by treaty laws. It has a comparative advantage – massive amount of low-cost labor – and smartly exploited it. It exploited it for all trading countries, not only US. This strategy was exactly how America of 1900, still devastated by the Civil War with millions of low-cost labor, exploited European advanced economies. Europe went into a schism of imperial contests and wars soon after. But don’t blame America for causing WW1 in Europe. Similarly, it is useless to blame China for causing America’s class warfare.

Surly1
Surly1

Apollo, excellent thoughts.

We wouldn’t even be in the position to blame China had we not bought into the free-trade gospel. Am sure you remember, as do I, during the 1992 Presidential debates, how that impossible little jug-eared Ross Perot, with his charts and “that giant sucking sound” meaning the loss of American jobs should free trade come to town, had it exactly right.

Maybe in a Thomas Friedman “the earth is flat” world, globalism is inevitable due to the instantaneous transfer of capital and all that that entails. But there can be little doubt that we have hastened the process deliberately through policy decisions– then doubled down on crazy by providing tax incentives for corporations outsourcing US jobs.

I think of that article on ZH (and re-posted here, I think) about McDonald’s hiring 60,000 out of 900,000 applications, for part time, minimum wage labor. And the other about how Wal Mart is struggling because peoplem are runnign out of money mid month.

The frog is slowly cooking. And he is us.

Surly1
Surly1

Post in haste, correct spelling at leisure…

eugend66
eugend66

LLPOH, +1, Surly1, +1.

TeresaE
TeresaE

Nicely done LLPOH, and I have many a story to echo it.

One of my customers had a customer that made plastic kids’ toys mainly for Walmart. By the mid ’90s, the company had grown to three locations – the original in Mich and two new ones in the non-unionized and less government south. Then the reality of, “cut 8% from your cost EVERY year” hit him. As Walmart began importing more and more, and the additional reality of “competing” with vendors that have ZERO American tax, pay $1 an hour (or less), no OSHA, no EPA, no health care hit, he closed two plants and retrenched.

Over the next few years he found a few new customers, still sold one item to WallyWorld, and was doing ok.

Then the lead bullshit hit the kids’ toy market and Walmart freaked OUT. They faxed him an order for two times the largest order he had ever filled for them at his peak.

He told my customer that for one second, he gloated, then he picked up the phone to tell the mighty Walmart that they were shit outta luck. Walmart offered an open checkbook, he laughed again.

“Thanks to your cost cutting, I had to sell my equipment, I sold it to your Chinese suppliers, my buildings sit empty, and not one of my current customers is going to wait for my products. I can sell you more, but not at this cost and not this many. Sorry, but just like when you fired me, there is simply not a fucking thing I can do to help you.”

These short-sighted, the next-election or next-bonus geniuses, have killed us. Now we just get to watch the bleed.

Surly1
Surly1

Wow.

Just think if we wanted to go back to making our own steel.

I just came back from a family reunion. It was held in a place within in a giant shopping district that had been built on the site of one of Pittsburgh’s largest steel plants. They razed the hulk, and built an attractive outdoor “destination shopping” mecca. The irony of all this was not lost on me.

Now there’s a metaphor that works, as well.

Persnickety
Persnickety

Given the way mankind’s future looks at this moment, there won’t be much long-term need to make steel. All steel that is needed or can be used will be recycled from existing steel. That’s actually been a major source of steel in the US and rest of the west since the 1970’s, and with the incredible Chinese production of steel in the last 15 years or so, there will be plenty to recycle. Think small electric arc furnaces.

Surly1
Surly1

P-

didn’t know that. Good point.

Apollo
Apollo

@Surly1
Let me respond point by point.

Ross Perot – Yes I remember Ross well. He was a rare businessman who know *exactly* how biz is done in America and said it out loud. He knew the only objective of CEO is profitability, and shipping to lower cost of production trade zones is the simplest and easiest way to make a great deal of money. He knew most of America won’t buy his talk because America will benefit greatly initially. And Americans did. U.S. did enjoy the most wonderful time since Ross run and his ‘nonsense’ was totally forgotten. Did we not shop like mad dogs without earning the hard cash? Did not millions own houses far in excess of their net worth, and cash in the good time by the trillion dollar? Life WAS good for the 2 decades after Ross. And he was sent packing into political exile.

Free trade – What Americans bought was not free trade per se, but trickle down economics. It is a basic tenant of international trade agreement that terms are reciprocal. Both parties of a trade agreement can do the same thing to each other, or else there will be specified punishment. This is what is meat by ‘free trade’ – a bunch of transactions are defined and agreed upon, under treaty laws. US signed up NAFTA with Canada & Mexico. That means Canada & Mexico can do to the US exactly what the US can do to them. US shipped millions of jobs to Mexico. Did Mexico or Canada shipped jobs to the US as they are fully allowed under NAFTA? No! Let’s take China. Does US-China has a free trade agreement? No. US-China trade is governed by WTO rules, the same rules that govern a hundred other countries. Do you see China ship millions of jobs the the US? No. So US outsourcing is purely a domestic policy decision. Who made those decisions? Biz CEOs for sure – they are paid only for their company profitability. But also the millions who bought imports from China – the millions who enjoy fantastic low prices for so many stuff and load them up like no tomorrow. They also voted for China trade. Now if Americans buying China imports get prosperous and move the economy forward, great. (Chinese do, you know.) But if not, as we now see, they that’s a purely domestic policy problem. It’s not a free trade problem. Hell, there is not even a free trade agreement with China.

Globalization – I read Flat Earth when it came out. I say half of the book is bullshit and that’s being kind. It’s written by a guy who bought into the ‘America is Great’ hubris and therefore can’t imagine anything else. The book is nothing more than a chronicle and projection of how US financial and technological power drive and control the world through ‘globalization’. Some kind of 21th century imperialism. Be careful reading big talks from authors who have not done big things. Do you see Bill Gates talks imperial?

Transfer of capital – There is no such thing as ‘instantaneous transfer of capital’. Well, if a bank officer hit the Transfer key of the computer, yes the money (actually the information) will get moved instantaneously to the destination computer. But that’s about it. Every country has laws governing how foreign money (from foreign banks and individuals) can be deposited into its banks. The laws are complex, strict, and reporting to regulators essential. Once foreign money is allowed to be deposited, the central bank controls if and how much of it can be converted into local currency. Without such conversion, the money is useless. These players control the transfer of ‘capital’, actually just currency and credit. (Only when a currency is linked to an investment project, backed by financial institution, can it be called capital.) So movement of money across borders is tightly controlled – but yes billions do get moved around every day – legally. For fun, let me give you $1 billion dollar. Now show me how you can transfer this $1 billion of US dollar into your friend in Russia ‘instantaneously”. 🙂

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