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How To Stop The US Hemorrhage Of Manufacturing  
User currently offlineMD-90 From United States of America, joined Jan 2000, 8508 posts, RR: 12
Posted (10 years 4 months 4 weeks 1 day 2 hours ago) and read 2024 times:

National Association of Manufacturers (NAM) has recently released a report titled, “How Structural Costs Imposed on U.S. Manufacturers Harm Workers and Threaten Competitiveness”

This is the central finding: “While manufacturers have many challenges in the current global environment, it is the finding of this report that domestically imposed costs—by omission or commission of federal, state, and local governments—are damaging manufacturing more than any foreign competitor and adding at least 22.4 percent to the cost of doing business from the United States.”

The five areas covered in the report that increased costs are
1. Corporate taxation
2. Health and pension benefits
3. Actual or threatened tort litigation
4. Regulatory mandates (esp workplace safety and pollution)
5. Energy (esp natural gas)


The most important of the findings -

1) “The U.S. corporate tax burden reduces cost competitiveness by 5.6 percentage points”;

2) “U.S. employee benefit costs are higher than most of its major competitors”;

3) “The regulatory compliance burden on U.S. manufacturers is the equivalent of a 12 percent excise tax”;

4) “Pollution abatement alone reduces U.S. cost competitiveness by at least 3.5 percentage points.”

How can we possibly compete against places like China and India that don't have these unncessary, added costs? No wonder Boeing likes to outsource.

We need less government regulation and interference in business. Then you'll see more manufacturing in the US. And the economy will grow faster and become more healthy.

Unfortunately, politicians don't like any economics (especially not from the Austrian school of thought) that Keynes didn't come up with. Because Keynes advocated government spending, and boy, politicians love to spend more than anything else (even so-called conservatives, like Bush and Arlen Specter).

20 replies: All unread, jump to last
 
User currently offlineL-188 From United States of America, joined Jul 1999, 29802 posts, RR: 58
Reply 1, posted (10 years 4 months 4 weeks 1 day 2 hours ago) and read 2012 times:

That is what made Thatcher and Reagan so great, they believed in the Austrian and later Chicago schools of thought.

I suspect the gap on number 2 and 4 will close once the population of those countries begins to gain affluence.



OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
User currently offlineCba From United States of America, joined Jul 2000, 4531 posts, RR: 3
Reply 2, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 2007 times:

So we should just eliminate all pensions and employee benefeits and cut all pollution controls? Who's going to drink the water in 30 years?

User currently offlineMD-90 From United States of America, joined Jan 2000, 8508 posts, RR: 12
Reply 3, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 2007 times:

Chicago's not so bad, even if it's not quite Austrian.

User currently offlineJAL777 From , joined Dec 1969, posts, RR:
Reply 4, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 2002 times:

So we should just eliminate all pensions and employee benefeits and cut all pollution controls? Who's going to drink the water in 30 years


Isn't that what they do in China? They have no pensions, employee benefits, nor pollution controls. You don't seem to mind.


User currently offlineL-188 From United States of America, joined Jul 1999, 29802 posts, RR: 58
Reply 5, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 2000 times:

JAL777, some economist, I can't remember his name came up with a curve that showed how countries when they are poor and first industrialized don't worry too much about polution, but as they become more affluent pollution begins to decrease because it is more of a concern amoung the weathier, not driven only for survival populace.

Needless to say, I think we can say that China and India, not to pick on those two, are not so far down that curve as say western europe or the US.




OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 6, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 2003 times:

Take whatever these guys or any other group of lobbyists put out with about 10 tablespoons of salt or just drink a glass of seawater. It is as likely to be self-serving distortion as it valid argument. And think real hard before labelling things as " unnecessary, added" costs.

Despite all of the headlines, India and China are not very good places to live or to do business actually outside of very narrow parameters that make headlines. A closer look at either country will show you quickly the value of having effective regulatory compliance regimes and pollution control laws. Further I do not think Boeing is going neither to China nor India to do any significant manufacturing. They are going to Japan which is a first-world country though.

This is about doing business in China: http://www.economist.com/books/displayStory.cfm?story_id=2610179

Although these lobbyists are whining about employee benefit costs, I am sure they would squeal like hogs if their expense accounts at ritzy Washington restaurants and bars were ever threatened let alone their employee benefits.

I also suggest reading up on "externalities" both positive and negative.

Implicit in MD-90s post is that saving manufacturing is somehow crucial to the well-being of the US economy in and of itself. Not true. The US has been moving steadily away from manufacturing for years and has become even more propserous in the process. Rather than trying to resist changes in the world economy, it is much smarter to rapidly adapt and stay ahead of the innovation curve.

I agree with L-188 that Reagan and Thatcher did great things by incorporating the thinking of people like Schumpeter, Hayek, Coase, Laffer and so on into their governance. But they were astute enough to realize the limitations and danger of rolling back regulation too far. (Incidentally Jimmy Carter actually got the ball rolling on deregulating the US economy-- have to give credit when it is due)

If you want contemporary evidence of the dangers of insufficient government oversight, look at all the crappy things done by a wide variety of companies while the SEC took a laid-back approach towards regulation during the 1990s.


User currently offlineMD-90 From United States of America, joined Jan 2000, 8508 posts, RR: 12
Reply 7, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 1998 times:

Pensions and employment benefits are offered by employers to their employees to entice them to work there. That has nothing to do with the report.

Pollution has to be consumer driven, or it's just a mess. The problem with the EPA is that it can dictate whatever it wants, regardless of how much it'll hobble industry and increase their costs. But consumers can choose to pay a little more and buy green power from their electric company. Consumers can choose to drive smaller cars. Consumers can choose to boycot products that come in excessive packaging (Consumer Report always has a field day with that). Consumers should and DO care about the quality of their drinking water. Which is why they'll properly dispose of hazardous wastes, instead of just dumping them down the drain.

Example 1 - It's required that CFC's not be put into the environment, so old air conditioners must be recycled, not just dumped. This can easily cost $20. So you have a lot of people just dumping their a/c units anywhere and everywhere. Because they don't want to pay $20 to junk something, even if it's good for the environment. BUt some people will, voluntarily.

Example 2 - I've been reading that the US is suffereing from inadequate refining capacity. Our oil can only be converted into gasoline to be sold in the US at certain refineries and cracking stations, because it has to meet certain standards. But the EPA has made it nigh near impossible to construct new refineries. Thus, prices are going up now. China doesn't have the same restrictions on their gasoline, and they're starting to demand more oil (there's also the government problem in Venezuela right now, contributing to this). Face it folks, we ARE going to drill in the ANWR eventually.

Otherwise you have a few Greens making everyone else pay more money, and the vast majority has no say in the matter.


User currently offlineL-188 From United States of America, joined Jul 1999, 29802 posts, RR: 58
Reply 8, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 1993 times:

I have to give more credit to Paul Volker then Carter.

Carter nominated Volker to the fed but wasn't thrilled with Volkers moves to tighten the money supply. To cut the money supply you raise interest rates, There was an election comming up, which Carter was afraid that those high interest rates would sink the economy and his campaign farther.

Reagan really is the one that gave Volker the support to really cut the money supply and set about the recovery of the early 1980's.



OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 9, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 1990 times:

Because of the lack of manufacturing regulation, the Chinese have us beat....:

May 5, 2004
Infants in Chinese City Starve on Protein-Short Formula
By JIM YARDLEY

FUYANG, China, April 29 - Summary: Chinese babies starve to death as they are fed fake food because their government has failed to regulate mfrs.

L-188, I am not sure what the concept of 'local' has to do with anything. I posted this information to refute the idea that regulation is somehow a valueless burden that is oppressing manufacturers. People (in China or anywhere else) will do as much as they can get away with.

Unfortunately we cannot always count on people to do the right thing all the time and that is why some level of regulation is essential. Don't forget the Ford Pinto from the 1970s. Or Mitsubishi trucks in the 2000s in Japan. (The former VP of Mitsubishi Motors was just arrested for criminal negligence as he knew of and concealed of deadly defects for 12 years. People died in that time)

http://www.nytimes.com/2004/05/05/international/asia/05milk.html

[Edited 2004-05-08 07:59:01]

User currently offlineL-188 From United States of America, joined Jul 1999, 29802 posts, RR: 58
Reply 10, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 1989 times:

N77969.

Sad.

But I don't see how that is anything but a local issue.

There is a reason why the US has alphabet agencies to regulate such matters.



OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
User currently offlineMD-90 From United States of America, joined Jan 2000, 8508 posts, RR: 12
Reply 11, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 1983 times:

N77969, that also, unfortunately, violates the new forum policy on not posting any copyrighted material. You're supposed to "summarize" it.

User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 12, posted (10 years 4 months 4 weeks 1 day 1 hour ago) and read 1986 times:

L-188,

I was not talking about monetary policy and the economic boom of the 1980s...that was clearly Reagan's work. I was referring more to effort eliminate the thicket of regulations choking American business.

MD-90,

You are hugely mistaken about the power of the EPA. There are several statutes which require the EPA to give the public notice of a proposed regulation, require it to conduct rigorous economic analysis of the regulation, respond to public comment, and several other steps before it can set a standard. More often than not, the EPA gets rolled. Particularly under this Bush Administration.

If you take the real long view of energy, we need to get away from imported petroleum. No way around it. Rather than elbowing China, Japan, India, and the rest over diminishing oil supplies, we are much better off trying to wean ourselves off it. I do not believe that the US has insufficient refining capacity per se (my own conspiracy theory). Rather I believe that the oil companies are engaging in (perfectly legal) conscious parallelism and are collectively keeping refineries shut down for mx to drive up prices. It makes economic sense for them.

If consumer behavior is creating large negative externalities such as pollution, that is evidence of market failure. According to the standard playbook, that is when the government is supposed to step in so that consumer behavior is rational in light of actual costs, both private and social.


User currently offlineMD-90 From United States of America, joined Jan 2000, 8508 posts, RR: 12
Reply 13, posted (10 years 4 months 4 weeks 1 day ago) and read 1976 times:

Rather I believe that the oil companies are engaging in (perfectly legal) conscious parallelism and are collectively keeping refineries shut down for mx to drive up prices. It makes economic sense for them.

Reeaaalllly

BP, for example, is a big player in the PV technology. But there's just not economic demand for it (yet). Oil'll run out, eventually. But until it becomes dire, we're going to be an oil-based economy.

So the only difference between the US and Europe are the governments? The people don't have different attitudes? Americans would riot over $5/gal gas prices. But Euros willingly accept it.


User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 14, posted (10 years 4 months 4 weeks 1 day ago) and read 1974 times:

MD-90,

Go read up about "conscious parallelism." Then pick up an intermediate microeconomics text start with perfect competition and go through monopoly. Pay particular attention about three-quarters way through to the section about oligopoly and cartels. The economic incentives are all there.

The FTC actually investigated but could not find any wrongdoing....an illegal agreement is often unnecessary to achieve the desired effect in oligopolistic markets.

BP has an alternative fuel division. Big deal. What large firms do not hedge their bets?

Of course Europeans and Americans have different attitudes. That should be no surprise. But do you actually believe that consumers form their views independent of their governments' influence?

Do you really think the fact that Americans hardly smoke compared to Europeans has nothing to do with some deliberate government policy? Something or somebody shaped our views towards tobacco...it was not the Marlboro Man either.


User currently offlineMD-90 From United States of America, joined Jan 2000, 8508 posts, RR: 12
Reply 15, posted (10 years 4 months 4 weeks 14 hours ago) and read 1948 times:

Do you really think the fact that Americans hardly smoke compared to Europeans has nothing to do with some deliberate government policy?

Well, smoking of late has been under incredible attack by Hollywood and righteous do-gooders who don't mind infringing upon other people to get the regulations they want. Sin taxes have the biggest effect, because it hits people in their wallet, right where it hurts. But those have only been effected because the majority of the public didn't mind them.

I'll agree that no government regulation at all would be a bad thing.

More often than not, the EPA gets rolled.

Such as in the infamous snail darter case?

And just how much oil is estimated to exist underneath the ANWR? Isn't it supposed to be half as much as has ever existed in the Middle East? And yet it is closed...


User currently offlineB2707SST From United States of America, joined Apr 2003, 1369 posts, RR: 59
Reply 16, posted (10 years 4 months 4 weeks 10 hours ago) and read 1936 times:

JAL777, some economist, I can't remember his name came up with a curve that showed how countries when they are poor and first industrialized don't worry too much about polution, but as they become more affluent pollution begins to decrease because it is more of a concern amoung the weathier, not driven only for survival populace.

This is called the Kuznets Curve, and for many pollutants, it's shaped like an inverted U: low pollution at very low income levels, rising pollution as a country industrializes, and then falling pollution as high income levels allow the public to "buy" a cleaner environment.

It's really a shame that the Austrian School was buried by the Keynesian revolution, even though Keynes could never rebut the Austrian business cycle model - he just ignored it (ask a Keynesian where savings goes in his/her model and this becomes very clear). Ludwig von Mises' Economic Freedom and Interventionism is a penetrating explanation of how government policies, even well-intended ones, almost always make a situation worse, thus requiring further interventions to "correct" the very problems the government has created. Coase, Friedman, and others have argued among similar lines.

Many cases of "market failure" have been created or supported by the government. It's almost beyond dispute that highway system is overused because it is a free good. The average user of a highway shoulders no more responsibility for building and maintaining the roadways than a mass-transit commuter. The public has no incentive to conserve its driving or use alternative transportation because the costs have been externalized. Meanwhile, the highways are deteriorating and choked with traffic for lack of funding.

RE the debate above, even the Chicago and Austrian Schools (except maybe the anarcho-capitalists) would agree that intentionally selling fake baby food, defrauding investors, or continuing to make a defective product is criminal behavior - fraud, reckless endangerment, whatever - and should be dealt with by the courts. Given that the court system exists to prevent and punish these behaviors, I tend to doubt whether the alphabet soup of regulatory agencies is a net benefit to the country.

--B2707SST



Keynes is dead and we are living in his long run.
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 17, posted (10 years 4 months 4 weeks 6 hours ago) and read 1921 times:

MD-90,

Would you not agree that sin taxes, along with numerous anti-smoking commercials and publicly funded education progams are part of a government initiative to curb smoking in our country? I don't how much effect Hollywood has on people. Besides many of those people still smoke.

I'm not sure why you are raising ANWR. I have not argued the point. Drill away.


B2707SST,

I think there is some real value in having some of the alphabet soup agencies. Take for instance the FAA. What ordinary consumer is able to evaluate whether an airline keeps it airplanes airworthy, does not overwork pilots and crew, and so on? Not too many. While I agree that multimillion dollar legal liability is usually a stronger deterrent than government action, I would not understimate the deterrent value of having a license suspended or revoked. That ends careers and grounds airlines.

Consumers simply have a very hard time judging whether industries such as the airlines, nuclear power, auto and so on are operating safely or not. In these particular industries, a lawsuit after an accident may be of little or no value to people in the public.

With respect to the baby food issue, I think everyone would agree that producing and selling such a fake product is a criminal act. However I would also argue that if government regulatory oversight provides a first line of defense, then it should be used to prevent things from reaching the deliberate criminal act stage. Apparently those jerks in China felt that they could get away with anything.

I wonder if that would have been the case had the Chinese government sent inspectors with the authority to shut them down into the factories every now and again. Assuming that inspectors are honest, then I think not.

The bottom line is that I think that for some industries, a bare-bones set of regulation is essential to protect the public. I definitely agree subscribe to the ideas of the Chicago school, but I think even some of those economists would be a little wary of getting on airplane if the government got completely out of the business of regulating aviation and they had to rely on their personal assessment of publicly available information to judge the safety of airlines.

I would certainly agree that government has in the past, gone well beyond bare-bones to the detriment of the firms and consumers. NAM's point has some validity. However their statement was too broad.



User currently offlineDc10guy From United States of America, joined Feb 2000, 2685 posts, RR: 6
Reply 18, posted (10 years 4 months 4 weeks 5 hours ago) and read 1908 times:

MD-90 when will you bible thumping Bubba's realize that slavery is over in the US .... Sorry dude.


Next time try the old "dirty Sanchez" She'll love it !!!
User currently offlineMD-90 From United States of America, joined Jan 2000, 8508 posts, RR: 12
Reply 19, posted (10 years 4 months 4 weeks 5 hours ago) and read 1906 times:

I tend to doubt whether the alphabet soup of regulatory agencies is a net benefit to the country.

Me too.


N79969, sure, I'm all for sin taxes. Because I don't smoke! I resent government intrusion in private lives, though, such as NYC having the audacity to sweepingly ban smoking in ALL restaurants. Such flagrant abuse of government power angers and frightens me. Because if it can happen to smokers, it can happen to another minority (for example, say, pilots).

http://www.lewrockwell.com/grichar/grichar-arch.html

Look at Grichar's recent articles. They were a continuing series on how the federal budget could be cut, and yet horrors, terrors, and calamities would not come to pass (libertarians can be pretty radical, sometimes).

I favor regulating on the state level, personally.


User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 20, posted (10 years 4 months 3 weeks 6 days 11 hours ago) and read 1893 times:

MD-90,

Actually the smoking bans, indoor ones anyway, are decent public policy. When enjoying their cigarrettes, smokers impose the health costs of smoking onto everyone else around them. The ban forces them to absorb both enjoyment and the costs of smoking onto themselves. It's not stopping them from smoking at home. As far as intrusions into personal life, smoking bans are not too bad in my view.

"I favor regulating on the state level, personally."

Well so do I but this has limits. Some activities, such as aviation, must be regulated federally. Otherwise airlines would have to comply with 50 separate sets of regulation. There are many economic activies in which federal regulation makes more sense than state level regulation. Of course, the opposite is true as well as you point out.


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