Still Free

Yeah, Mr. Smiley. Made it through the entire Trump presidency without being enslaved. Imagine that.

Tuesday, January 25, 2011

Sell me what?

I saw a piece of the news conference that Obama had while Hu Jintao was in the States. During that clip I saw Obama state that America would like to sell the Chinese things. When he attempted to list what Americans would like to sell he paused for a moment and then listed cars and ..uh.. software. The clip ended there but I think it would be instructive to think of what exactly the US has to offer the Chinese.

We could sell the Chinese cars and apparently they do like some American brands such as Buick and GM is reportedly selling more cars in China than in the US. However; slowly but surely they are building up their own auto industry and one of them, Geely bought one of Ford's brands.

But what won't we be selling to the Chinese?
TV's? We don't make those anymore.

Clothes? Check the labels, Not happening.

Cell phones? Ah no. Cause even though Apple's an American company the phone is manufactured in China, so really that's a local product. This either phones, Taiwan, Korea or China. Not selling them that stuff.

Tools? I'm not sure how popular Craftman tools are over there but from the things I see in Home Depot, The Chinese have plenty of their own.

Toys? That is the sound of me laughing.

Computers? Yeah, I'm having another laugh.

Solar Panels? China's making their own.

Windmills? You did catch the controversy surrounding the use of Reinvestment Act funds to buy Chinese made windmills right?

I'm sure if I thought about it hard enough I could come up with a lot of things that we won't be selling the Chinese anytime soon. This brings us to the larger problem. Having exported so many manufacturing jobs and so much industry off shore, millions have been left unemployed and with little prospects. Let me explain.

I supported the auto bailout and not the bank/wall street bailout for the following reasons:

1) Automobile production necessitates manufacturing which employs a great deal of people, particularly those who are what we'd consider "under-educated". These persons make up the majority of the people I the US and a large percentage of the unemployed.

2) manufacturing also employs the tradesmen and those who we'd call semi-skilled.

3) above these are a lesser number of managers who either worked themselves up the ladder or had some college experience to justify such positions.

4) Suppliers who employ people in specific areas. As they are not directly tied to automaker they are another level of employment of semi-skilled and skilled tradesmen.

5) higher up in the automaker are the engineers, accountants and other various white collar employees (ignoring admin assistants). They are relatively few relative to the line workers

6) Outside advertisers. Anyone in the magazine industry can tell you that the auto industry represents a large portion of advertising and thus the auto industry is responsible for A lot of jobs for artists, web site designers, etc.

I'm going to leave out the dealerships, the auto parts supply stores and independent garages, but the point is clear, that manufacturing businesses are the engine of employment in an industrialized country. So called "high finance" cannot begin to compete with the level of job creation that manufacturing does and is why the FIRE (Finance-Insurance-Real Estate) sectors are essentially a vampire class. The entire point of that class is to place themselves between the consumer and the products they wish to obtain. They add no value to the product. they don't even produce a product which should be very clear now after the housing market crash.

You will note that though unemployment is still at it's highest rate in years, the stock market has recovered quite nicely (almost 12000 as of this writing). If you are of the investor class (that is you create nothing) you are making a killing.

The Chinese are making so much stuff that I understand that there are traffic jams that last for days. Delivery truck a actually sit on highways for days waiting to deliver goods. Have you heard of any such thing in the US?

No?


To be sure there are serious environmental consequences to all of this. If the Chinese are bright they will see these challenges as opportunities to develop cleaner manufacturing, patent the he'll out of it and then charge the rest of the world if they try to use those innovations. Kinda like how corporations are going after each other in the mobile phone/computer space.

I'm old enough to remember when Ross Perot was running for president and talked about the "sucking sounds" of jobs being lost to Mexico due to NAFTA. It may not be Mexico but it's still a sucking sound and it has happened.

If manufacturing does not pick up in the US, the. Unemployment is going to stay high. If decent paying jobs that do NOT require a college degree are not created, then unemployment is going to stay high. It is these jobs that enable the US to sell stuff to other countries other than cars and software ( intellectual property).

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