Fareed Zakaria weekly take - Trump betting on US manufacturing.
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Two of the big football manufacturers went under during Covid. The helmet mahomes wears. Raised 90 mil got picked up by a bc group for under 3. Opened a manufacturing plant for them and schutt under the same umbrella outside of Indy
The Medicaid scandal in Indiana is putting older citizens on Medicaid and housing them in understaffed poorly managed nursing homes with the income to the nursing homes coming from selling the senior citizen's residences.
Deprives heirs to the Seniors of inheriting the family home as the nursing home owners rake in the cash.
Who are the companies that have come out and announced massive capital investment recently?
Apple
TSMC
SoftBank
Oracle/ Open AI
Johnson & Johnson
Nvidia
This isn’t shitty companies turning out cheap widgets paying slave wages. We SHOULD onshore these industries as much as possible and bring production geographically closer where it’s being designed.
Apple
TSMC
SoftBank
Oracle/ Open AI
Johnson & Johnson
Nvidia
This isn’t shitty companies turning out cheap widgets paying slave wages. We SHOULD onshore these industries as much as possible and bring production geographically closer where it’s being designed.
All other things being equal (which they aren’t, of course) it would be better to manufacture things closer to where they’re designed.
However, I don’t think this ranks terribly high on the list of factors of where something is most sensibly made.
A talking point this administration has been using is that nations that don’t produce will eventually begin to lag in innovation for that same product.
It seems like a sound theory, but I’m not sure how you test its veracity.
Maybe that’s part of the argument that we shouldn’t be so focused on manufacturing jobs if they’re becoming robotic. Focus on the service industry that Fareed outlined is much more profitable for both companies and employees.
It's important to mine as well. It's the only thing keeping us afloat right now.
It was important to me to manufacture here. I tried for years and couldn’t make it work. Even with some longstanding outfits. Demoulin in Ill and others. As we speak I’m dropping my daughter and her friends in the ozarks then checking out a factory outside of rolla. Lost a fortune trying.
Well, my general view is that an economy is best served by government staying out of the way. What I want governments to focus on are those necessary functions where they do play a vital role -- infrastructure, defense, education, law enforcement, foreign relations, etc.
It's certainly true that government has always been involved in issues like trade and immigration. And that's fine -- but sometimes less is more.
While in many ways we occupy a very different world than the one Abraham Lincoln did in 1854, I think the views expressed then on this question are timeless:
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves---in their separate, and individual capacities.
In all that the people can individually do as well for themselves, government ought not to interfere.
The desirable things which the individuals of a people can not do, or can not well do, for themselves, fall into two classes: those which have relation to wrongs, and those which have not. Each of these branch off into an infinite variety of subdivisions.
The first---that in relation to wrongs---embraces all crimes, misdemeanors, and non-performance of contracts. The other embraces all which, in its nature, and without wrong, requires combined action, as public roads and highways, public schools, charities, pauperism, orphanage, estates of the deceased, and the machinery of government itself.
From this it appears that if all men were just, there still would be some, though not so much, need of government.
Right then, right now.
Most the companies listed and have bankrupted this year alone didn’t fail becuase of labor costs. They failed because of inflationary production costs, a lack of discretionary spending and the failure to reimagine themselves.
Case studies have shown in the past that companies such as Kodak and Blockbuster didn’t fail because consumers stopped taking pictures or watching movies. It was the competition and new tech the companies failed to adapt and reimagine themselves.
Not saying labor doesn’t play a part but I don’t think it’s the underlying reason companies go bankrupt.
Is there a reason why we should seek to always be a world leader in the manufacture of any particular good?
Most of those were specialty stores and department stores. For all it's warts, Walmart started as a department store following the traditional department store model but has evolved over time and adapted their model to the times.
I didn't say that labor costs were the reason they went bankrupt.
My point was that the wages of marginal employers are going to be similar to the wages of high-performing employers in the same sector. I said this in relation to the suggestion that wages and profitability are coupled together. They aren't -- much, anyway.
It is true that labor intensive companies like GM and Ford, as they were struggling, appealed to the UAW to assist in their recovery by making wage concessions. But it's not as if there was ever a wide discrepancy between unit labor costs at our Toyota assembly plant here in Princeton and GM's truck assembly plant up near Fort Wayne...despite the fact that Toyota hasn't ever struggled the way the Big 3 have.
Most of the Big 3's pain had to do with legacy labor costs, formed in CBAs from decades ago when they had the domestic auto market cornered. In that sense, the pay cuts GM & Ford workers took had more to do with paying the bills of their predecessors.
I would stay away from declaring any one particular good in perpetuity.
But I think there are plenty of reasons we would want to lead the world in semiconductor manufacturing, AI data centers, some advanced pharmaceuticals and even iPhones or Apple computers.
Especially if the nation(s) who are producing those are geopolitical adversaries or are under geopolitical threat.
Again, my point is that WalMart's wages probably didn't differ much from comps at Bed Bath & Beyond -- despite the former thriving and the latter failing.
And the thrust of my point was to respond to the suggestion that wages and profitability are tied together. If the Bed Bath and Beyonds of the world tried to stay afloat by bottoming out all of their jobs to minimum wage -- to reflect the fact that they were unprofitable -- it wouldn't have saved them, even if people did stick around under those terms (which they wouldn't have).
I’m following the money not the rhetoric. The companies that have announced to expand production here, are the ones we definitely want doing so.
Zakaria looks at how the world's economy is changing and what the future has in store for us. He talks a great deal about innovation which include subjects such as AI and robotics.
Predicting the future of change and how the world's future economy affects Joe Blow in rural Missouri is of interest to Zakaria.
Zakaria simply seeks out the opinions of Ameriicans and foreigners whose opinions he respects.
IMO, Zakaria can be critical of our political leadership while at the same being optimistic about all the positive factors we have going for us as we compete in the global economy.
Well, I have no issue with what he's saying in this video anyway.
One thing he said is that the government shouldn't be picking winners and losers. I wholeheartedly agree with that. It's another way of saying the kinds of things I learned from Milton Friedman decades ago. In fact, if somebody made a high-quality AI video of Friedman saying every word in this video, it wouldn't make me suspicious. I could imagine him saying every word.
However, there are clearly political complications with it. And these complications were always the fly in the ointment for Milton, too. While government shouldn't be picking winners and losers, that doesn't mean there aren't losers. And those losers can vote -- and, like anybody else, they're going to vote in ways they believe serve their best interests.
When Friedman discussed the origins of inflation, for instance, he always noted that the policymakers who overspent to cause it were doing so rationally. And that is because many voters are going to vote for the spending, but not the taxes to pay for them...unless they could be convinced that somebody else will pay them. So politicians chose to use inflation as the tax to pay those bills -- and then blamed everybody else for it happening.
Same issue goes here. Trump got elected largely by appealing to the people who have lost out to foreign competitors -- both here and abroad.
Making announcements, and actually executing those promises, are often miles apart.
Foxconn in Wisconsin.... Another one that Trump trumped in his first term.... Is a prime example
Trump, IMO, made a stronger appeal to voters concerning immigrants taking our jobs, commiting crimes, and taking welfare without paying their share of taxes.
The question in my mind is whether Trump painted an accurate picture of the above.
Having said that, shouldn't we be skeptical about what pols from both parties say?
First, thank you for sharing. The article was informative and though I understood his points, it seems he is singularly looking at BL's tariff ideas. And in Handley defense, he me be responding only to the op-ed piece.
Did you listen to the Tucker link? BL's 90 min conversation with Tucker was much more than just tariffs. He discussed other factors such as regulation and taxation. But, I'll admit his focus was on tariffs.
I linked the interview because I don't think a 5 min prepped segment by Fareed is enough information on the topic. I also don't think Handley's article is enough information. And BL's 90 mins, while informative, did not supply any push back from Tucker.
Like I said, I would like to see someone like Handley and BL debate the topic. I don't believe in tariffs but I also not a fan of what we have been doing to our country over the past 25+ years WRT income/asset disparity, wage stagnation, lack of GDP growth, regulations, and debt.
Man, that is a great question.
I know that one law of economics he often cited was Gresham’s Law - which states that bad currencies will push out good ones.
But it’s been extended to say that the “good” money will win out when the “bad” money is so inflated as to be refused.
I suspect a lot of crypto advocates would say that this favors their view that fiat currencies, long abused by central banks to enable excessive government spending, will be displaced.
However, how many cryptocurrencies are there? And what are the barriers to minting new ones? Advocates scoff at many of these as “shitcoins” - and with good reason. But scoffing at them doesn’t address the problem that anybody can create their own CC and what that means for CC writ large.
Bitcoin may have a hard limit, but cryptocurrencies as a whole do not.
If I had to guess, Friedman probably wouldn’t recognize them as currencies in the strict sense of the term — because they’re rarely used to trade for goods and services….and the frictional cost to do so can be comparatively high.
But I bet he’d still be intrigued by them.
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Here’s an interesting piece on cryptocurrency and Gresham’s Law. It’s written from a point of view favorable to crypto over fiat currencies.
However, there’s a big caveat in it - and that is the prospect of crypto actually being adopted as a common medium of exchange. To date, that seems to be something that’s just around the corner.
But is it really?
However, there’s a big caveat in it - and that is the prospect of crypto actually being adopted as a common medium of exchange. To date, that seems to be something that’s just around the corner.
But is it really?
Turns out that Friedman actually predicted cryptocurrency, in 1999. He used the term "e-cash".
So, given this comment, I suppose you have to say that he'd be supportive of it -- assuming, anyway, it fulfills its promise as something people regularly use to exchange value.
So, given this comment, I suppose you have to say that he'd be supportive of it -- assuming, anyway, it fulfills its promise as something people regularly use to exchange value.
That doesn't solve the problem of jobs, though. People need to work, not sit around and collect money for doing nothing (or live off some govt trust fund set up in their name and invested). I think humans have a psychological need to feel useful and they earn dignity from working.
But it would certainly help with income, wouldn't it?
I don't disagree with you. This is the reason that retired people often find volunteer opportunities, or some low-paying, low-stress job like being a greeter at WalMart (do they still have geezer greeters?). Yes, everybody needs some kind of purpose. But they also need income.
And I think we need to prepare for the possibility that many jobs of the future simply won't afford the kind of income necessary to make ends meet, if it's true that the demand for labor all along the skill continuum will be lower in the future than it historically has been.
Marx predicted this. And you're right that to stave off civil unrest, societies will have to become more socialist if that scenario comes to pass.
What I can’t distinguish is the difference between gold or silver or any metal used as currency vs bitcoin. At some point people just agreed or consented to declaring gold of value. It could have been Burl. Right? People are ostensibly doing same with crypto. If everyone buys in it’s no different
The free market decided gold has value and you're correct that the market is also saying Bitcoin has value. Now both do have great characteristics to be money, which is why people have picked gold for the past 5,000 years and Bitcoin the last 15 years.
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I haven't had the time. But I will listen to it, as this is a topic that I think is most important one going on right now.
How often are gold and silver used as currency? They used to be regularly, of course. But it's been a long time.
CC is sometimes used as currency now. But it's still exceedingly rare in a relative sense. And I would guess that Gresham's Law would explain at least part of that: if you hold two currencies, you're going to spend the one you think will have less buying power in the future...and hang on to the one you think will have more.
But is that the only reason it hasn't yet found much purchase as a medium of exchange? I'd argue that there are other things holding it back. Look at exchange rates when you use crypto to purchase something. They're almost unfailingly unfavorable to the buyer, relative to spot prices. It's even worse when you're converting USD (or any other fiat currency) into crypto. I would expect these to improve and standardize at some point. But they haven't done so yet, in my experience.
Also, they're highly volatile relative to major fiat currencies -- which necessitates the hedges that mediators and merchants have to build in. They're going to protect themselves, and I can't blame them. And that comes at the expense of the consumer.
If we'd have asked most crypto guys 7 or 8 years if crypto would be at least somewhat commonly used as a currency by 2025, I bet that most of them would've said yes. It is more commonly used today than then. But nobody would call it common, not for ordinary commerce anyway.
And I'm still skeptical it ever will be.
Bitcoin not likely to ever be used as a medium of exchange. It's too slow, and the transaction costs are too high.
Other forms of crypto are probably better suited. But the volatility issue remains.
It's basically digital gold, and only has value to the level that someone else is willing to pay for it. Physical gold has some practical real world use, but rather limited.
C2, thanks for your explanation.
Follow up query, what grade would Friedman give the Federal Reserve in handling our recent battle against inflation?
B+
Fed has a dual mandate of full employment and stable currency. Difficult things to balance
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