Road Trip, Part 2: The Empties
Driving east on I-40 to Oklahoma City. Also headed east:
A freight train, a long one, chugging its slow way along.
As some of you know, I'm a container ship enthusiast. I've written a lot about them, crossed the Pacific on the Hanjin Miami with Mike Murphy, and so now, every time I pass a train like that one, I check the containers for the Hanjin logo.
The basic rule of container shipping, at least these days is: full ones head from the coast inland. Empty ones head from inland to the coasts.
Meaning: we buy stuff from overseas (China, mostly) and then send empty containers back to China, to get filled up with more stuff for us to buy. So the containers I traveled with from Seattle to Shanghai were mostly empty:
It's not supposed to work that way. We're supposed to fill up the containers with our stuff for them to buy before we send them back, but, well, we don't make as much stuff as we used to, which is not an optimal situation. Or a sustainable one.
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May '10
Re: Road Trip, Part 2: The Empties
The U.S., of course, exports goods as well, even if the market value of U.S. imports exceeds that of U.S. exports. The chief cause is the high costs of production; why produce goods with American labour if Mexican labour or Chinese labour is cheaper to employ. Ergo, if the government was really concerned with job creation, it would incentivize production within the U.S. by abolishing policies/laws that increase production costs and reduce net revenue: minimum wage laws, corporate income taxes, regulatory measures like Sarbanes-Oxley, legal obstructions to firing employees, etc.
May '10
Re: Road Trip, Part 2: The Empties
Michael Labeit: Ergo, if the government was really concerned with job creation, it would incentivize production within the U.S. by abolishing policies/laws that increase production costs and reduce net revenue: minimum wage laws, corporate income taxes, regulatory measures like Sarbanes-Oxley, legal obstructions to firing employees, etc.
Ah, but you see, Michael, jobs created under those conditions aren't good jobs.
Re: Road Trip, Part 2: The Empties
Michael Labeit: Ergo, if the government was really concerned with job creation, it would incentivize production within the U.S. by abolishing policies/laws that increase production costs and reduce net revenue: minimum wage laws, corporate income taxes, regulatory measures like Sarbanes-Oxley, legal obstructions to firing employees, etc. · May 31 at 11:41pm
Sadly, I still don't think we would be able to compete with less developed nations unless we abolished child labor laws and basic standards for working conditions.
My funniest Libby moment about our imbalance of trade came from a writer quoting "An Inconvenient Truth" that American automobiles were not allowed imported into China because they didn't meet their stringent environmental regulations. Are you kidding me!? I said. The reason the Chinese restrict import of our cars is because they aren't made by Chinese. Meanwhile I've read that the Buick is the luxury car of choice over there.
Re: Road Trip, Part 2: The Empties
China is indeed full of Buicks. Their Buicks. They build cars and dams and steel things and iPods and shipping containers and cheap electronics and we invented the Cinnabon.
But I agree with Michael when he writes:
You know what I love about this Ricochet business? You can take a picture of a train, post it, and the next day a bunch of people have something smart to say about it.
An aside: this is what Peter and I were daydreaming about when we started thinking about what Ricochet might be.
Re: Road Trip, Part 2: The Empties
Sadly, I still don't think we would be able to compete with less developed nations unless we abolished child labor laws and basic standards for working conditions. · Jun 1 at 8:49am
The United States could do just fine in global competition with our children in school and today's safe workplaces. In most industries, direct labor costs simply are not the overwhelming factor in locating manufacturing plants.
The world's highest corporate tax rate, unlimited liability, over-the-top environmental regulations, and uncertainty about what's next -- cap and trade anyone? -- are the bankrupt-the-company risks being avoided by outsourcing manufacturing overseas.
May '10
Re: Road Trip, Part 2: The Empties
Denise Moss: Sadly, I still don't think we would be able to compete with less developed nations unless we abolished child labor laws and basic standards for working conditions.
Labor productivity is more important than direct labor costs. Higher paid workforces can be more competitive than low-paid ones when they can work smarter and take advantage of automation. As George points out, there are many factors preventing real growth in labor productivity. Union work rules and disincentives to capital investment are two that come to mind for me.
The other factor is what one might call labor dumping. Businesses still inclined to brave the regulatory and tax headwinds here, are then tempted with Chinese labor underpriced through currency manipulation. Also a factor is the availability of cheap and often illegal immigrant labor. The low wages on offer from these sources break the business cases that managers need in order to convince their management and boards to invest in labor saving automation.
Inevitably there are going to be fewer manufacturing jobs here, either because the jobs move offshore or because automation reduces labor needs. But wouldn't we rather have the jobs that remain?
May '10
Re: Road Trip, Part 2: The Empties
Outsourcing is becoming more popular with Chinese firms as well. Many have begun to outsource jobs to Cambodia, apparently because Cambodian wages are even lower!
May '10
Re: Road Trip, Part 2: The Empties
Michael Labeit: Outsourcing is becoming more popular with Chinese firms as well. Many have begun to outsource jobs to Cambodia, apparently because Cambodian wages are even lower! · Jun 1 at 11:36am
As far as wages go, it's a race to the bottom. This is why we see virtually zero growth over the past 30 years in weekly wages (not hourly wages, to which the Heritage Foundation disingenuously points.)
May '10
Re: Road Trip, Part 2: The Empties
I agree 100% that the situation is not optimal or sustainable. The only minor quibble I have is that we do make stuff that the Chinese buy - we print more and more T-Bills which, alas, don't require a container ship to cross the Pacific. In exchange for our providing a voracious market for Chinese manufactured goods, the Chinese finance a whopping portion of our out-of-control government spending spree. Now that is suboptimal and unsustainable.
Re: Road Trip, Part 2: The Empties
I believe we should be proud of our "cinna" industry. Are you aware of the "cinnapretzel"? If this isn't innovation, I don't know what is:
http://farm3.static.flickr.com/2061/2276566898_6679e1e86f.jpg
Re: Road Trip, Part 2: The Empties
The cinnapretzel looks like a stroke of genius. Salty, and sweet at the same time. What could be better?
May '10
Re: Road Trip, Part 2: The Empties
Rob Long: China is indeed full of Buicks. Their Buicks. They build cars and dams and steel things and iPods and shipping containers and cheap electronics and we invented the Cinnabon.
Well, Rob, strictly speaking we invented the iPod. We just don't build `em.