« Will the War Clouds Pass Us By, Or Will the Storm Break? by Alastair Crooke | Main | White Helmet Films, Inc. ? »

03 March 2018

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Amir

To summarize Walrus, invest in yourself instead of blaming others.

As an example, the way Belgian Government competes, is by providing a $2000 worth of “subsidies” to the different car manufacturers in Belgium.
This is provided through ensuring universal healthcare, thus decreasing the cost of health insurance for all manufacturers or other investors who will plan to hire local workers.

This is another example of investing locally and fighting domestic problems instead of fighting “furriners”.

Walrus’s observation about public education is underwritten by me. I am the very product of an affordable education, allowing an ILLEGAL alien / undocumented (thus not qualifying for any state subsidies) refugee attend the equivalent of a college and a university ( https://www.ugent.be/en ).
And no I didn’t fleece the system as I was charged the highest tuition. That costed, despite sounding expensive, a mere $3000 per year for medical school as opposed to 20-40k in USA.
Later, when push came to shove, the debt in gratitude was partially repaid.

walrus

My experience is as a customer of Boeing in the airline industry, as a management consultant with an international firm, as a general manager of a manufacturing company then in various senior management roles in aerospace/IT/defence before working in industry development for Government then culminating as CEO of an intellectual property company.

I have seen a lot of "protectionist behaviour" first hand including in the U.S. and have had to listen to countless businessmen complaining about unfair competition. In every case when I ran my tape over their business I discovered rotten management, poor work practices, lack of investment and R & D, etc., etc. I was often the go-to guy for the state government when some manufacturer got on talk back radio and complained about taxes and regulations and how the community owed him plenty for creating jobs, yadda, yadda.... In every case the guy had an old broken down plant and no idea how to modernize things.

Of course when GM, Ford, GE, etc. close a plant they blame costs and regulations, that is self serving crap. Were the plants state of the art with leading edge technology and work practices? Didn't think so, more likely an old plant whose machinery and workers have been run into the ground, that is now far from target markets and requiring major investment.

In addition, there is global over capacity in the car industry because every Asian nation uses that industry to bootstrap its other industries and economy. As for Bethlehem steel, were its plants state of the art or hangovers from 1890?


As for the clothing industry, it has always moved to where labor is cheapest. It moved from China to Vietnam and Bangladesh. It will move again when those countries get expensive. Do you really want the clothing industry back? Sweatshop conditions and lousy wages?

As for Boeing (and GE) you miss the point. The partnership models used require the partners to come up with a percentage of the development capital for the aircraft and fund and develop the manufacturing tooling and equipment themselves. They then get exclusive rights to build that part. They are 'partners' not cheap subcontractors.

As for intellectual property theft, don't get me started. The two biggest thieves I've seen are Israel and the U.S. although everybody else does it too.

outthere

Amir
Agree with you entirely. Universal medicare care in USA would be a huge boost to productivity/efficiency. Far more productive than tariff wars or currency wars.

Walrus
Thanks for your perspective.
It is true that government of Japan helped its big industries, especially steel and automobiles. But it is also true that these Japanese manufacturers were more inventive and hardworking than any manufacturers in USA. I had the honor of working with Ed Demming in 1965 at a time when no automobile manufacturer could comprehend anything he said. But the Japanese heard him, hired him and worked with him to make Japanese cars the world leader. And only then did Ford and GM try to hire him, yet they were largely still deaf to his wisdom. Their fix for the Pinto, K Car and Vega was more advertising. I remember well when my local junkyard owner told me in disbelief "This transmission has bearings made of plastic!"
The last round of federal regulation of cars and trucks guaranteed that trucks and engines will be bigger. How is that? A sliding scale was created, allowing bigger engines for bigger trucks. So the manufacturers make the truck footprint bigger and then they can put a bigger engine in it, which is what sells.
There are signs of change in USA, but small. A friend just bought an aluminum Ford pickup, full size, 2.7 liter turbo, gets amazing fuel mileage. But for every sale of such a model, there are 20 full size pickups and SUV's with v8's, and very few of them will ever tow a horse trailer or carry a full load.
Drive the big truck to the gym for a workout, come home and have a beer and watch tv, it's the American way.

Alves

Total production numbers are meaningless for this case. The affected nations are:

https://www.marketwatch.com/story/trump-steel-tariffs-to-hit-these-8-countries-the-hardest-china-is-not-one-of-them-2018-03-01

jdledell

I think Trump's aim was bad on his new announced tariffs. It is not going to produce a lot of jobs, in fact will probably produce a net decrease in U.S. employment. First off, the primary production of steel in the U.S has only 87,000 workers and th primary production of aluminum has only 28,000 workers.

Raising capacity in these two industries is an expensive long term process. Since tariffs can be eliminated as quickly as they are introduced, I do not see a long term future for these tariffs since both Republicans and Democrats are not fond of tariffs. They might be eliminated in as few as 3 years. It will take longer than that to build the extra capacity and I suspect the steel and aluminum industries will be VERY reluctant to make this kind of investment in the face of American political resistence to tariffs.

Even if steel and aluminum capacity increases, those increases will probably be highly automated. I suspect at most the tariffs will increase steel and aluminum employment by 10%, or 10,000 to 15,000 jobs at most, a drop in the bucket for the U.S. Now with the increase in costs of steel and aluminum, how many jobs in autos, appliances etc etc will be lost - probably a lot more than 10,000. Then there is the added disadvantage of higher costs to consumers which will decrease their buying power for other American goods.

kgw

Could you lay out the principles of your morality here? Kill or be killed is not even in the picture...

rexl

Laura, who of our past Presidents was a business man?

Harlan Easley

Globalization has been a disaster for our manufacturing base. A country is only as wealthy as its manufacturing base that will never change. Massive inequality is not wealth. The current political tensions in the US can largely be contributed to a smaller per capita pie and a massive slice going to the globalist. Count the massive increase in our prison population along with massive increase in disability claims and the massive increase in food stamp usage in the last 20 to 30 years and you see the effects of outsourcing with has nothing to do with this fool ideology of free trade which has failed throughout history. China is on a glide path of superseding us in all categories and it was all due to the fools who have govern us since Bush I. Either adjust or the US will become a third world country in 50 years. Flint, MI times everywhere.

Stueeeeeeeee

America's economic strength was not built by eggheads, Poindexters, or pencil pushers. The excellence of America was the pioneering spirit of its people. This spirit germinated a culture that balanced the theoretical with the practical, and the early stewards protected it through protectionist policies. Read your American history.

Trump's tariffs will not hasten or improve anything. They are soundbites that fill the news cycle and give the leeches at Wall Street a reason to siphon off some money from American's 401k and pension plans. The reason for the outrage is not that it helps American management (no need to add lazy and incompetent as those adjectives are redundant), but that it questions the dogmas of the free market religion.

This insidious religion has been a major reason why we have lost our competitive advantage. It has rationalized and justified the abject greed of our elites. Through the observance of the free market religion we have gifted China technologies and systems that took us almost a century of blood and sweat to develop. Worse, it has given the manager class the impression that the American people are commodities. But what these MBA asses do not realize is that commodities do not develop culture, people do. As a CEO, can you tell me what is the hardest to develop and maintain in a successful company?

different clue

pacifica advocate,

(Reply to comment 25),

Actually, your reply ( build more things in America that people outside America will want) is just one of two equally logical replies.

The other equally logical reply is . . . build more of what Americans want to buy in America. The less we imported, the less we would have to export. Or try exporting. If we have lost the ability to make complex things . . . like computers and servers and routers . . . we are still smart enough to make the simple things that we use, simple things the production of which has been offshored strictly so that upper class investors and comopanies can arbitrage the differential wage rackets and the differential social standards expenses rackets and the differential pollution cost controls rackets, etc.

I think that decades ago most tableware was made in America. A few decades ago I developed the habit of looking at my tableware in restaurants to see what country it was from. A lot of it started becoming from Japan. Then an lot of it started becoming from Taiwan, Brazil, etc., wherever. Now a lot of it is from China. Are we Americans too dumm stupid ignorant to make our own tableware? No. We are smart enough to make our own tableware. But the only way we can afford to make our own tableware is if we ban the import of tableware from all the trade-aggression slaveryholes and cancerholes and pollutionholes of the world.

But unless and until an overwhelming majority of American voters can somehow reconquer the government and force it to act upon that basic understanding, the only people who will buy the simple things from America are those who believe in the practice of private virtue, and even then only in those cases where the "made in America" version even exists at all anymore.

And if a certain thing meets a certain need that I have, and that thing is only made overseas, then I will have to buy it from overseas or do without it. Some needs are relative and I do without it. Some needs are imperative . . . like a garden border fork with the head AND the handle both angled up from the shaft in a very ergonomically advanced way. I needed it so I bought it from China. I would have paid twice price to buy it from America, but I was not given that choice.

Fred

outthere,

"full size, 2.7 liter turbo, gets amazing fuel mileage. But for every sale of such a model, there are 20 full size pickups and SUV's with v8's" Do you just make up your data?

"56% of Ford F150 sales are turbocharged (ecoboost to use the marketing term)." "upgrading to the 5.0-liter V8 (from the basic 3.3-liter V6) costs $1,995." "578,000 F-150 sales in the 2017 calendar year .....144,500 F-150 5.0-liter V8 sales."

http://www.thetruthaboutcars.com/2017/08/v8-market-share-just-quarter-ford-f150-lineup/

GM has been moving in the same direction with thier trucks due to fuel mileage standards set by Obama.

divadab

@Publius - the solution to being cheated by one neighbor is not to turn around and cheat all your neighbors.

And one instance of cheating at NAFTA by one company in Mexico is not justification for scrapping the whole deal. And that's what Trump is doing with this poorly conceived pure protectionism based on abusing the rules of trade. It's really bad for business and the main beneficiaries will be the top management at US steel and aluminum companies.

You ok with cheating your friends and trade partners? I'm not.

outthere

thanks, i am glad if I am wrong
But you have not convinced me.
You may be correct about new Ford 150's sold in 2016
But what I said was that for every 2.7 liter Ford truck
there are 20 pickups and suvs (all models not just F150, all years, not just 2016, all makes not just Ford) that are v8's.
So how many v8's are on the road compared to 2.7 liter?
Your article does not say.

confusedponderer

Richardstevenhack,
re: "So it seems our "business oriented" President is not only ignorant on foreign policy, immigration, and gun control ("take the guns, then do due process"), but he's also ignorant on economics."

The say has it that Trump doesn't read at all or doesn't read any reports longer than 4 pages, and that his attention span is limited so that he doesn't listen to a report to him after 15 minutes.

That such a man would come up with a gut idea like punitive taxes against somebody, anybody doesn't surprise or scare me. Rather it is what I expect.

That written, I think these taxes will harm America, which is bad and that's why the penalty tax is a bad idea.

I read an explanation for the taxes on steel and alumunium, which scared and entertained me. It was justified with the assertion that dependence of import for such things does make it more expensive for America to ... build tanks.

Well, now that's a reason for penalty taxes. If there is one thing the most heavily armed military in the world lacks is is the number of arms.

So US corporations didn't invest in US steel plants and moved things like their steel making to cheaper countries and they so limited US capabilities "to build arms cheaply" - for that the rest of the world is to be 'punitive taxed'?

If a person gets alcoholic, would that justify penal taxing Jim Beam (or french wine makers or vodka distilleries etc pp) - for making tasting alcohole and make it cheap? Who needs the penal cure - the consumer or the producer?

I recall Trump lamenting about nasty, bad and evil banks, especially from Germany. Iirc he even mentioned by name the Deutsche Bank.

The Deutsche Bank folks are SOOOOO BAAAAAD that they accidentally lend him about 2.5 billion, and do bank service to him, Melania and Kushner. How very wicked. Now, in light of that the lamentation is of course idiotic - but then, it's not a brain that's speaking or tweeting things like that, but a gut.

That means to me that, on a day with bad golfing, too much FOX News and some mistweeting, there is a chance for penal taxes on the Deutsche Bank for their ... crime.

Reggie

Oh, how the European hypocrisy is in overdrive on the tariff issue. According to BBC U.K. Prime Minister Theresa May and President Trump had a phone call where the British leader expressed “deep concern” over the Trump administration’s pending tariff’s on Steel and Aluminum.

Mrs. May must think Americans are unambiguously stupid because it was less than two years ago when the U.K. urgently applied tariffs against Chinese steel in an effort to stave off the losses within their own steel industry:

So Yeah, lets talk about economics, trade, UK and EU tariffs shall we...

1. 2016

Steel crisis: UK government plays down China tariff fears

http://www.bbc.com/news/uk-35951108


2. 2017

EU Imposes Anti-Dumping Duties on Chinese Steel

https://www.usnews.com/news/business/articles/2017-04-06/eu-imposes-anti-dumping-duties-on-chinese-steel

3. 2018

Theresa May tells Donald Trump of 'deep concern' over US trade tariffs

https://news.sky.com/story/theresa-may-tells-donald-trump-of-deep-concern-over-us-trade-tariffs-11276237

Hypocrisy much?

The $20 trillion U.S. economy is the market, the customer, that all European countries want/need access to. We are the customers in the equation. We can crush them in any trade conflict. Apply a 20% tariff to imported Audi’s, or simply apply a reciprocal trade tariff toward their auto’s identical to those they apply on ours…. wait and see just how long Germany chooses to play stupid.

Pro-tip, they wouldn’t last a day without our business.

What is good for the goose is good for the gander

Balint Somkuti, PhD

And at the end all empires crumble not upon the pressure of their adversaries, but the incompetence of their contraselected elite.

my saying.

Feel free to quote.

ISL

outthere,

My argument is that the fact that a Republican administration is creating tariffs could put a chill into the entire globalization movement for fear of suddenly being shut out after making a huge investment overseas.

My reading of the article is that California Steel makers will lose versus east coast steel makers. Hmmm, why would a Trump administration introduce such tariffs that hurt democratic california? And in any case, why is it cheaper to ship steel from China by ship to the US that from the East Coast by ship through the Panama Canal? One might suspect dumping of excess Chinese capacity. But that would clearly be silly. and in any case, dumping is good, or so the shills of the free trade religion sing.

As a California user of steel and aluminum, I get the best steel prices from California suppliers, but the best aluminum prices from the midwest. I am a real fan of structural aluminum. Maybe its time for the US to shift towards aluminum, particularly if the energy could come from solar power.

In the short term, there are 8 million users of steel who will be impacted. SO I grant Trump picked a stupid place to start.

I would have suggested he look at the solar panel industry that Chinese dumping has destroyed in the US and Germany. reading about the German failure is interesting. Management made a bad decision - they thought they could challenge directly Chinese dumping by their own production efficiency. I mean they thought their politicians wouldn't sell them down the stream. but apparently that is the price for deflating southern Europe.

Adrestia

The polls indicate results as expected. The establishment is surprised, I'm not really. It only shows that the Borg have completely lost touch with the electorate. This will continue until the electorate gets a majority by itself. Delaying actions such as the small-majority governments Macron, Berlosconi, Rutte, Merkel will not last.

Victory for Eurosceptic, populist parties shocks the establishment in Italy election https://www.telegraph.co.uk/news/2018/03/04/italian-election-country-goes-polls-latest-news-results-forecast/

5 March 2018 • 6:14am

Italian voters have flocked to anti-establishment, Eurosceptic parties and rejected mainstream, traditional political parties, the latest predictions from the country’s election indicated on Monday.

The populist Five Star Movement, founded by stand-up comedian Beppe Grillo as a bombastic challenge to the established order, emerged as the big winner of the general election, in a result that will be viewed with trepidation in Brussels.

With around half the ballot counted, it looked as though the Five Star Movement had won around a third of all votes, up from 25 per cent in Italy’s last general election in 2013.

The Eurosceptic, anti-immigration League also performed well, according to preliminary calculations.

The numbers suggested that The League and Five Star together attracted 50 per cent of all votes.

Next steps:
* interim government for some time when the M5S will try to get a majority coalition (which the traditional parties will not do).
* a small majority government (like The Netherlands, UK etc) from centre left/centre right, who will continue the pro-Euro(pe) neoliberal policy => this will probably be led by Berlusconi, so Italy will get its own Trump back
* that centre government will fall (as governments tend to do in Italy) and in new elections populist/far right and left will get more votes

English Outsider

Walrus - Thanks for your article. That and subsequent comments point out that Trump 2016 is going to be difficult to implement in a globalist/neoliberal economy. In fact what you're saying, as a practical businessman, is that it's going to be impossible. Maybe it's time for people like me - you could call us the Trump 2016 true believers - to accept that you could be right. It may be that the President's piecemeal and tentative attempts to implement Trump 2016 aren't going to work.

What exactly IS Trump 2016? In the comments to Alastair Crooke's article "likbez" sets out some of the shopping list:-

"I would like to remind that Trumpism (or "economic nationalism" as it sometimes it is called) initially was pretty attractive proposition which included the following elements (most of which are anathema to classic neoliberalism):

"Rejection of neoliberal globalization;

"Rejection of unrestricted immigration;

"Fight against suppression of wages by multinationals via cheap imported labor;

"Fight against the elimination of meaningful, well-paying jobs via outsourcing and
offshoring of manufacturing;

"Rejection of wars for enlargement and sustaining of neoliberal empire, especially
NATO role as global policemen and wars for Washington client Israel in the Middle East;

"Détente with Russia;

"More pragmatic relations with Israel and suppression of Israeli agents of
influence;

"Revision of offshoring of manufacturing and relations with China and India, as well as addressing the problem of trade
deficit;

"Rejection of total surveillance on all citizens;

"The cut of military expenses to one third or less of the current level and
concentrating on revival on national infrastructure, education, and science.
Abandonment of maintenance of the "sole superpower" status and global neoliberal
empire for more practical and less costly "semi-isolationist" foreign policy;

"Closing of unnecessary foreign military bases and cutting aid to the current clients."


That's one hell of a shopping list to come up with in the crony economic environment that is America and the West today. You don't need any conspiracy theories to account for the unexampled resistance the new Administration encountered. One look at that list and the status quo merchants from Merkel to Cruz are going to lay down all the fire they can muster. And since they own just about all the firepower there is that's a lot.

The trouble is with "likbez'" list it that it all hangs together. You can't sneak in a bit of Trump 2016 here and a bit there and hope it's going to work. It's all or nothing. I'm pretty sure that that's in effect what you're pointing out.


Fred

outhere,

"twenty times" is a big multipliciation factor. F150 is 35 perceont of the truck market. 544,000 F150s, 65% with turbo charged engines. Round numbers that 350,000. Twenty times that is 7,000,000. The total new vehicle sales in the US for 2017 was 17.25-Million. There were a lot more cars sold than trucks, Camry being the biggest seller. The SUV market has a great deal of variety in it too, with a lot of options for engines that aren't V8s. The later are popular for towing capacity and lifetime durability. Turbo chargers have come a long way but if you tow something you put a great deal more stress on them than if you just commute to work.

Ulenspiegel

"reading about the German failure is interesting. Management made a bad decision - they thought they could challenge directly Chinese dumping by their own production efficiency."

Look, there were some mistakes, but most people agree that the support of PV in Germany in 2010/11 was too generous and let to uncompetitive structures, here most blame goes to german decisions, even by PV installers.

BTW: Even with imported Chinese modules the added value is 60% in Germany.

Or as contrast: Why is German wind power in very good shape? Why can Chinese producers not compete on the international market?

Ulenspiegel

"We are the customers in the equation. We can crush them in any trade conflict. Apply a 20% tariff to imported Audi’s, or simply apply a reciprocal trade tariff toward their auto’s identical to those they apply on ours…. wait and see just how long Germany chooses to play stupid."

Why did the USA agree to different tariffs? What was the other side of the bargain? Don't tell me the USA did not get something in return.

And BTW even good bullying requires intelligence when your opponent is as large as you. :-)

Balint Somkuti, PhD

a small majority government (like The Netherlands, UK etc) from centre left/centre right, who will continue the pro-Euro(pe) neoliberal policy => this will probably be led by Berlusconi, so Italy will get its own Trump back

Liga Nord wont support more migration as neither will the Fratellis(sp?). Currently EU = more migrants. I see a FI/lN/FR coalition with the Beppistas.

Undisturbed with the new italian govt Merkel/Macron will go on their path to completely destroy EU's internal cohesion with their forced migration policies.

LeaNder

Ulenspiegel, glad you are still around. Strictly this is not in any way a field I can add anything to. You realized in our earliest encounters?

Although, I realized that the easiest way to respond would be a google translate version of Wikimannia. I cannot see on first sight that the articles are otherwise easily communicable to other native speakers:
https://wikimannia.org/index.htm

outthere

you ask
why is it cheaper to ship steel from China by ship to the US that from the East Coast by ship through the Panama Canal?
answer
the Jones Act
another protectionist law that prevents realistic economic decision making in USA and causes higher consumer prices, especially in Hawaii, Alaska, and Puerto Rico

The comments to this entry are closed.

My Photo

February 2021

Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28            
Blog powered by Typepad