Thursday, October 18, 2012

Economic Rainbows and Manufacturing

Stumbled onto to this the other day and I thought I would share it.  Slate magazine apparently decided to list their 5 favorite plans to help reinvigorate American manufacturing. I thought this was interesting enough to click the link and read the articles and then share them with you.  For those of you who don't know Slate is an online magazine that is often featured on mnsbc online, naturally there is a center left biased to most of their editorials. I decided to read the articles posted because I wanted to see how far far away from good economic sense their readership suggestions were. Naturally ,there were some that were very bad, while others were well intentioned but operating off of what I would considered based on flawed or incomplete premises.  Here is one such article with my comments bolded.

'American Manufacturing could be reinvigorated by good wages for factory workers and high consumer product regulation - as strange as that may seem at first glance.' 

It is but I will let you make your case.

'Good Wages for Factory Workers: First of all, American manufacturing companies, and American consumers, need to realize that there is simply no way that factories in American can compete with factories in the developing world on labor price.'

True to an extent. If we ignored the continuing atomization and computerization of many tasks then yes; however, as shown in this article by msnmoney many robots can do the same tasks for humans for pennies on the dollar.

'No matter how many unions are dissolved, how low minimum wage is, or how small benefits packages are, a company simply can't pay an American worker low enough to compete with a worker in a country who can be paid 50 cents an hour. American manufacturing just can't compete on labor costs, it has to compete on something else. That something else has to be consumer confidence and quality.'

America does have an advantage over developing nations in this regard, but it won't necessarily last forever. Japan was once known as the manufacturer of cheap and ill-made trinkets.  Forty to Fifty years later we have seen this reputation completely reverse. Still the author makes a valid point, if we ignore robotizing of many services.

'Competing on labor price is just not possible. High Consumer Product Regulation: Consumers need to know that if they purchase an American made product, that no product in the world is safer or of higher quality. Consumers need to know that if they give their child a Made in America toy, that it would never contain any harmful chemicals, that it is completely safe, and that it was built in a factory by adults who were paid decently. A teenager who buys an MP3 player made in the US should be proud that he purchased a product that wasn't made by children who are forced to work in a factory instead of going to school.'

This would be the unicorns and bunnies portion of this treatise. It is hard for me to fathom how individuals still think that these ideas somehow carry weight.  There has been a buy American movement for at least a decade, if no much longer, and these arguments were constantly made as being the major impetus for why we should buy American.  Yet more people buy foreign goods today.  The fact is that outside of individual who work, or know people who make those products, and those who simply want to feel good, those arguments carry no weight whatsoever.  Now to be fair to the author he did acknowledge this fact in the comments section, but there is still another point that needs to be made.

Americans, particularly those on the left, focus n child labor, or slave labor conditions, all the while being almost completely ignorant of the economic realities that cause people to go into those trades. Believe me, I used to refuse to eat Chiquita bananas after what I saw in Guatemala, and it wasn't until my college economic professor, a Keynesian no less, set me straight.  The fact is this, no matter how terrible those jobs seem to us, they are better than what are available to those individuals in those impoverished countries; they only alternative is back breaking labor in some rice paddy.

 'Selling the concepts of well paid factory workers and high regulation to consumers: American companies need to be proud of the fact that they only employ well compensated adults who use safe machines, work in good environments, and are proud of the products they produce. Consumers need to be reassured by various advertising campaigns and perhaps a "A Safe Product Made in a Safe American Factory" sticker or something similar placed on consumer products.'

A pretty decent idea. I don't think it would have a major effect, at least for now. But it could grab traction.

'Consumers need to be reassured that American manufacturing regulations are there to protect them from dangerous chemicals, and that they cannot be assured that products created in non-democratic countries will be as safe. Documentaries should be made about appalling labor conditions in some offshore factories that create products American consumers buy daily.'

I'm skeptical when it comes to documentaries. It seems its more about egos of the director than the actual display or finding of truth.  But it doesn't really on using governmental force so I have no real qualms against this idea.

'The farmer at my local farmer's market is happy to show me a picture of happy the chickens who laid the eggs he sells. He is proud that they aren't caged chickens. Why don't we pay as much attention to the human beings who build our cell phones as to the chickens who lay our eggs? Companies should be equally proud (and proudly advertise) that they only use adult laborers who are well compensated, live in the United States, and that they do not resort to hiring factory workers in areas of the world where workers' rights and freedoms come second to what the local strong man gang thinks should be done.Additionally, American regulatory agencies need to have the teeth to be able to take way an American company's seal of approval if that company doesn't meet strict health and safety guidelines.'

America doesn't need any more regulation from its regulatory agencies.  The fact is that all these agencies would accomplish is causing the companies to move their plants to other countries that don't attract the ire of regulators.  Yes it will make activist feel good, but it doesn't too much for the poor individuals who just lost their jobs just because their country ran afoul of America. And let us be utterly candid, nations that were on Americas good side would get a pass, while nations that ended up with antagonistic relationships, would be punished. It is very easy to see how this sort of thing would be abuse and fail to solve the problem.

 An American Manufacturing commercial could feature an American mother trying to decide between two dolls to buy her daughter for her 7th birthday. One doll is cheaper and was made in offshore in a country with dubious labor standards and a political leader who was not elected democratically. The other, slightly more expensive, doll was made in The United States. After considering that the American doll is guaranteed to be free of dangerous chemicals and not built by a little girl factory worker who looks just like her daughter - the mother decides to purchase the American doll.'

I don't really have much to say about the ending.  The article was about what I expected, full of good intentions but fails to see how things would turn out with regulations, or even consider why individuals work those kinds of jobs in the first place.

Lastly, a lot of Americans, justifiably, complain about the decline of America's manufacturing.  When it comes to the number of Americans employed by manufacturing this is true; however, wait people fail to realize is that America is still the largest manufacturer in the world.  There is some dispute as some claim that China recently surpassed America.  But the point is that America still manufacture a great deal of items, its just not the items you see every day.  We manufacture high tech high value goods.  But that is beside the point. In the end, even if goose America's portion of gdp that is manufacturing it just won't change the fact that many manufacturing jobs are gone; robotification is the future. And that raises some potential major issues in the future. (Such as what will happen to individuals that literally can do nothing more than menial labor, but have seen their job taken over by robots?)

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Seattle resident whose real name is Kevin Daniels. This blog covers the following topics, libertarian philosophy, realpolitik, western culture, history and the pursuit of truth from the perspective of a libertarian traditionalist.