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Archive for the ‘Economics & Politics’ Category

I want to openly state that I am disgusted with companies like Toms Shoes. If you are not familiar with them, they make cheap shoes cheaply in China, typically canvas flats, and sell them for around $40. Their claim to fame is that they donate a pair of free shoes to some poor person in the Third World for every pair you buy from them. Where do I begin?

It’s not enough that in order for some of us to feel good about buying something, we feel the need to simultaneously give it away to someone that did nothing to earn it. It’s not enough that companies tout their “social justice” agenda ahead of their quality and pride of manufacture. What tops it off is that Toms is a complete hypocrite! They want you to impoverish this country not once, but twice, with every pair of shoes you buy. Of course, both the pair of shoes you buy and the one you give away are made in China. Every dollar that leaves this country to achieve this impoverishes the US and enriches China. Hey, if China wants to spend some of their own trade surplus dollars on donating some of the shoes they make, have at it, I say!

I further call into question the dubious claim that donating free shoes around the world is even a good thing. How is this different than welfare? This creates no wealth around the world. It does not increase the economy anywhere. It does not increase skills or technology of poor people. It does, however, impoverish local businesses that make indigenous shoes because they can’t compete with FREE shoes. We should look no further than our own experience to see that international welfare is no better than domestic welfare and only creates poverty and dependency, not wealth or self-sufficiency. If you really want to help the third world, buy more American products and fewer Chinese products. You’ll make us richer and more able to afford imports from the country you’re currently feeling sorry for.

Chinese Made Shoes

Peruvians Love Chinese Shoes?

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I recently reviewed a great new book that aligns well with the aims of this blog.  Buying America Back by Alan Luke is an easy-read paperback (printed in USA, of course) that echoes what I say here – that a healthy economy is based on a positive or at least neutral trade balance.  It quantifies the decline in our economy in parallel with the decline in our domestic manufacturing and the rise of imports.  Did you know that the value of our imports each year is greater than the entire production of our domestic manufacturing??  Crazy and unsustainable!  So if you want to back away from the precipice, buy this book, read my blog and start caring about buying American.  I also like the detailed country-specific trade balance figures in the second half of the book.  There were definitely some surprises, such as the fact that we have a 3:1 trade surplus with Egypt – who knew?  A small bright spot.

Also, check out www.BuyingAmericaBack.org for more info.

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Dear Apple,

I’m disgusted by the fact that all your products are Chinese.  I used to love Apple, but I can’t stand your company now.  You are traitors to America and our economy.  You employ 1 million Chinese and 30,000 Americans and are held up as some kind of ideal company.  Well, you are not.  You are an example of what’s wrong in this country.  I regret that I own some of your products, but I do my best not to buy any more.  If you were American, I would be gifting Apple and touting them to everyone.  Instead, I tell everyone how much I despise Apple and how they should never gift Apple or other electronics that are made offshore.  Hope you change your ways or go bankrupt soon!

Please add your comments to give this open letter some punch!

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Have you noticed that much of the towels that you see in American stores these days say “Egyptian cotton” or “Made in Turkey”?  It’s not as though they’re cheaper than other towels, but they seem to have cornered the market.  In this time of increasing hatred of Americans in the Middle East, the rise of the Muslim Brotherhood, the anti-West Turkey, are we so sure that we should be sending them our money, either in aid or in payment for towels?  I say no and that we should spend that money on American-made towels.

In that vein, I endeavored to find American-made towels and can now report on my efforts.  After looking around online without much success, I found a result on Amazon for made in USA organic towels.  The towels from that company are not all made in USA but these were.  I received them and they do say made in USA on them with nothing about “Egyptian cotton” or the like.  I’ve used them and would say that they’re pretty nice and a really good value.  I also feel much better knowing that none of the money I spent on them went into supporting the Muslim Brotherhood, Erdogan, or their ilk.  (And please don’t start the argument, “but not all Egyptians are bad”.  It doesn’t matter, helping Egypt harms our interests – period.)

 

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Lately, Apple has been in the news for both record profits and sales, as well as labor standards in China and a trademark dispute with a Chinese firm over the Ipad name. Let’s backtrack and look back at my old post about small luxuries and Apple that made the case against Apple as bad rather than good for the American economy.  You see, I was a fan of Apple from long ago, before it was cool.  Back about 10 years ago, most Apple products were still made in USA.  Steve Jobs had not yet returned to remake Apple with a new glitzy image, but I did always prefer the ease and simplicity of Apple software.  As each new product launched by Apple, from the IMac to the Ibook to the Ipod, came to be made in China or a similar place, I quickly stopped caring about Apple’s success and lost respect for Steve Jobs.

Apple is estimated to directly employ approximately 30,000 Americans.  These are all white collar jobs, including well-paid engineering jobs.  How many jobs do you think Apple manufacturing provides for in China?  Well, we know that Foxcon, the maker of Apple’s products,  provides over 920,000 jobs in China.  This is where a large amount of the money from your Ipad and Iphone purchases goes.  So every time you buy an Iphone, some money stays in the US and some goes to China.  On balance, it’s a losing proposition for us.  There’s a great article online where I sourced this information here.

Now, Apple is under fire for doing business with “suicide factories” in China where it’s lower-paid Chinese workers crank out its products at Foxconn.  Never mind that Chinese workers face worse conditions at other Chinese factories.  It’s actually funny that our socialist unionist agitators are instructing China, a communist country, on how to promote socialism for its workers.  It’s quite comical and ironic.  That’s beside the point.  It’s also funny that Apple’s Chinese buddies are now blocking the sale of Ipads in China due to trademark infringement.  Both of these issues may or may not hurt Apple.

As an American patriot, however, I say, “who cares?”  If Apple learns a lesson that doing business in China is bad for business, then all the better for us.  As American consumers, what business is it of ours how Chinese workers are treated by Apple?  They have chosen to work for Apple and are free to leave anytime if the conditions are not acceptable to them.  They are not Apple’s slaves.  As American consumers, we should say no to Apple’s so-called “designed in California, assembled in China” bullshit.  (They shouldn’t even use the phrase “assembled in China”, as if the parts are made in the US and the Chinese workers are simply slapping them together like Legos.)  The parts are made in China, for the most part, as well.  We should boycott Apple’s products (as I have done) because money talks louder than anything else.  If Apple loses money by not producing in the US, then it will produce in the US, bottom line.

So don’t be the first one on your block to run out and buy the next Iphone 8 or Macbook SuperDuper Pro.  Who cares?  You may already have an Iphone (I have an older model).  So hold on to it longer and don’t upgrade so quickly.  Drag your feet on getting that new Apple computer if you really need one.  Don’t, whatever you do, buy Apple products as gifts.  You can give anything you want as a gift.  It just doesn’t help our economy to buy more of their stuff.  The less you spend on Apple’s products and the more you spend on domestically produced goods, the better it is for our economy.  So buy that piece of custom furniture (I did, from Naturaltique in Culver City), buy that American-made car, buy that American made clothing, buy the new air conditioner or furnace you need and put off buying that Apple gadget.

 

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As someone concerned about the success of the US economy, I have been doing a lot of thinking about my response to some of the opinions and demands put forth by demonstrators from Occupy Wall Street and related movements.  In some ways, I agree with them, but not in the way that they would think, however philosophically, we are on opposite sides of the spectrum.

The Occupy Wall Street movement is diverse and has no clear objective or political platform at this time.  However, common Occupy themes could be summarized as follows:

  1. Disgust with big banks and corporation getting bailouts while average Americans have continued to see erosion in employment and income.
  2. Disgust with inherent “unfairness” over the fact that the richest have more than they used to and that there is a growing income disparity between the richest and the poorest.
  3. A desire that the government “do something” to redistribute wealth from the richest to the poorest and regulate banks more so that the problems in 1 and 2 become less severe.

However, let’s break down what the problems are leading up to our current economic stagnation:

  1. Ongoing outsourcing of jobs, especially in manufacturing, seeking lower labor costs, development costs, and easier regulatory climate.  This leads to a shrinking jobs base and lower income in the population.  The growing trade deficit that also results shrinks Americans’ total assets and leads to growing public and private debt.
  2. Housing bubble.  Spurred by cheap lending and fiat currency and government policies aimed to make housing “affordable for everyone” caused housing prices to soar artificially.  Buying and selling houses even became a good investment business.  Of course, anyone who was honest with themselves knew that it would not last.  It was the government through Fannie Mae and Freddy Mac that pushed out and guaranteed all those loans beyond what private enterprise was willing to do on its own.  That created such a huge inflationary bubble that it was a giant explosion when it burst.  It wasn’t the banks that started it, it was our government.

Then came the bank bailouts and an even further lowering of the federal reserve interest rate.  It was hoped that this government intervention in the market would finally be useful.  What it did instead was give cheap money to banks who then turned around and invested it in stocks, created a second stock bubble.  Then stocks crashed again when the Greece news hit.

As you can see, government intervention only creates unforseen problems.  It may make a few people wealthy by riding on the misfortunes of others, but it rarely increases overall wealth and economic production.  Rather, it usually has a negative effect on overall production and tends to drive industry overseas.  The richest get richer when they are the first to spend money they receive when cheap money is allowed by the Federal Reserve.  They then buy stock, houses and other things and drive up prices for the rest of us.  This is an invisible tax on the middle class and the poor.  Then when these bubbles pop, the ones who lose the most are the poor and middle class.  Is this what OWS wants more of?

I would side with Ron Paul in stopping ALL government mucking in the markets, whether it be the Fed and too big to fail banks, the minimum wage, entitlement programs, and most workplace regulations.  Let freedom reign.  Let fit companies survive and poor performers dwindle away.  Let’s make America the most attractive place for businesses to relocate to.  (By the way, you may be surprised to learn that it was Medicare that caused the cost of medicine to skyrocket by providing unlimited payment and separating the medical consumer from the payor).

Rather than rehashing the failed social democrat/progressive policies of the New Deal, the Fair Deal, the War on Poverty and the Great Society, let’s resume the ideals of freedom and liberty that made this country great in the first place.  Let’s stop bailing out banks and stop printing money that helps only bankers.  Let’s banish workplace regulations and allow workers and employers to freely engage with each other without the government sticking its nose in it.  Let’s let those who are inclined work as hard as they want for as much money as they can get people to voluntarily pay them.

Occupy Wall Street – you should occupy the Fed and the Department of Labor!

 

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China seems to practice dumping of under-priced goods to purposely drive it’s international competitors out of business then follow this up by doubling and tripling prices.  Case in point: rare earth minerals.  Currently China produces 95-99% of the world’s rare earth minerals which are used in high-tech devices.  This is essentially a monopoly.  Prices have gone through the roof and China has been restricting supply to foreign competitors.  At the same time, it is waving the carrot of access to its rare earth supply if foreign companies locate their production in China (so that China can then appropriate their intellectual property and production capital as well).

However, China only has 1/3 of the world’s rare earth supply.  In the 80’s the US supplied a major share but mines were driven out of business by low-priced minerals that flooded the market from China.  Now that China has squeezed the supply and raised prices manifold, these same mines are in the process of reopening, but the damage to our industry has already been done (just look at our economy these days).  Of course China will surely repeat the process once international rare earth production gears up.

Another example is with fluorescent lighting.  Cheap Chinese fluorescent lights flooded US markets in the last 2 decades.  They drove domestic manufacturing out of business.  (Remember how getting energy-efficient was supposed to be good for the US economy, according to Obama?  Well, it just sent money to China.)  Now that they have done so, they have jacked up prices by double, and that’s just the beginning.  I know this from personal experience in buying fluorescent lighting for my business.

So when you buy Chinese goods for their low-price, just remember what you are doing.  You are destroying domestic competition in favor of Chinese goods dumped on our shores at below-cost prices.  As soon as they have driven your countrymen out of business, you will be paying more than you were before the Chinese.  Just think about that the next time you decide that all that matters is price.  Economics and trade are more complicated than that.

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