View 564 March 30 - April 5, 2009 (original) (raw)
Monday, March 30, 2009
Government Motors has changed CEO's.
Will we continue to have an automobile industry in the US? Who will be in command of it? Will it make cars people want to buy, or will it make stuff people have to be coerced into buying through regulations and "incentives" (read high taxes on competing products)? It's a new ball game, and I don't think anyone knows where we will be going with this. And you ain't seen nothing yet.
In the past we have used regulations to export jobs and change the character of American industry. As an example, a lot of stuff -- consumer goods -- is made of plastic using injection molding. It is very nearly impossible to operate an injection molding machine in the United States. There are just too many environmental regulations, permits, and pollution abatement costs. As a result we have exported that industry in its entirety, and you won't find much made in the USA with that technology.
What, then, do we make in the US? More to the point, what should we be making? And who should decide this?
There are several possibilities. There's the capitalist system in which the market makes that decision, largely through experiments. We seem to be in the process of abandoning that decision process. It's not clear what we will replace it with.
We note that the auto industry got something under $20 billion in taxpayer money. This is no small sum, but it's pretty small potatoes compared to the TARP funds, and positively tiny compared to what's been shoveled into the financial products industry. Apparently the government intends to keep the financial products industry going in the US at all costs.
================
Earth Hour Report: Apparently Las Vegas turned out a lot of the glitter (although apparently not in the casinos). Reports are that Al Gore turned off some of the spotlights that usually illuminate his mansion, but not the driveway spotlights.
More later. It's time for our walk.
===============
You wrote "As an example, a lot of stuff -- consumer goods -- is made of plastic using injection molding. It is very nearly impossible to operate an injection molding machine in the United States. There are just too many environmental regulations, permits, and pollution abatement costs. As a result we have exported that industry in its entirety, and you won't find much made in the USA with that technology."
Your "glittering generalities" are inflammatory.
Where is your data? And what examples support those causal relationships?
Ask the CEO of Phillips Plastics whether he agrees with you.
I think you are poorly informed on the subject of manufacturing.
This outburst on a subject I know makes me wonder about your veracity when you expound on something I do not know.
I think you are "just too" emotional on this subject.
steven.
-- Steven @ The BAF
I was told that by someone who ought to know, but it could well be wrong. The neat thing about a public log book is that someone will correct me.
Whether in the specific case of injection molding the regulation are that severe may well be questioned; but the general case isn't unclear. I don't know how many of Phillips Plastics products are made in the USA, but I do know that it's nearly impossible to have a Chinese product free household. For a good part of this Century the US economy was supported in large part by buying consumer products from China, with many of the products paid for by the profits of financial products. This wasn't sustainable, and won't be again. My point was and remains that while there are lots of ways to make money, the route to sustainable wealth is to make things. Selling services, and particularly financial services, can be highly profitable, but at bottom an economy based on selling each other financial products is like an economy based on taking in each others' washing.
My major point remains: we have to figure out what it is we ought to be making in this country. Someone is going to make that decision; the question is who? And once areas are identified, the best thing the government can do is find out how to get out of the way; that may require research into how to make things without harming the environment; and that kind of research may well be a very legitimate activity of government, which was the real point of my musings. The free enterprise system is one of our best engines of wealth creation. Unregulated free enterprise generally has unpleasant consequences. Over regulation leads to low productivity or job export.
And some regulations are explicitly designed to make it very difficult for anyone new to enter the industry.
Apologies if I misled anyone.
For platinum subscription:
Platinum subscribers enable me to work on what I think is important without worrying about economics. My thanks to all of you.
Patron Subscription:
Did you subscribe and never hear from me? Click here!.
