Disclaimer: No technical information follows, just food for thought, a nutrition that zealots have no taste for.
Last week I wrote the story: Made in America – data plates – obituaries to US manufacturing jobs . The basic premise of the story was pointing out what we lost as a country when we turned to buying cheap products from overseas.
Above, a 2,850 cc Corvair. The only used parts in this engine are the case halves, the head castings, the oil case casting, the distributor body and some misc. hardware. The rest, including the cylinders, pistons rods, crank, and all conversion parts are brand new, made in the United States of America.
5 Replies to “Thought for the Day: Adam Smith, capitalism in a theoretical vacuum”
Another effect of spending money within your own community is that the ‘velocity of money’ goes up. Basically, the more times money passes from one to the next within your community the wealthier the community becomes. This concept scales at all levels from families to countries. The way I understand it, the United States is losing over $900 Billion yearly in trade deficits. I am not sure whether the cost of providing free defense services such as NATO is part of this number. If not, the sum is much larger. This is wealth that does not come back to the US so long as the deficit exists. We become that much poorer as a nation. A trillion here and a trillion there, eventually, it adds up.
I can never understand the people who think buying cheap imported goods is a good thing for the country. When you buy those goods you end up putting an American who used to make them out of work on onto government subsidies which of course raise your taxes (or at least should if we were paying our way). And that quote from Ross Perot is so timely and I have been surprised that no mention of that rouge candidate’s prediction given the current political election process.
The worst thing is that buying American is getting harder and harder to do these days, personally I never shop at Wal-Mart because of their high import content. With the rise of Harbor Freight and Craftsmen turning to import products it is really hard to find good Made in America tools and equipment. What we really need is to get country of origin clearly marked so we do not have to search the small print on the label for the info but then that is a bit of a shift to wrong thinking, rather anti capitalism.
Keep up the writing William, you are one of the few voices in the dark who are willing to stand up for this great nation and its workmanship.
I always enjoy your thoughts on engineering, systems, philosophy and personal responsibility/self reliance. Your parsing of Adam Smith is spot on. There are some items that you missed though.
1. NAFTA: The person you should be vilifying is George HW Bush, who started NAFTA negotiations in 1990 and signed the treaty in 1992 while pushing to fast track ratification. Why? This was a treaty that benefitted Republican 1%ers far more than Democratic working class people. 700000 jobs lost, but in fairness, it has clearly benefitted close to 150000 small businesses (Wikipedia) in increased trade.
2. Small motors/Data Plates: I miss the quality and heritage of companies like Briggs & Stratton and Tecumseh. And your data plate essay made we want to cry. But what do you do about the pollution that an old side valve produces vs a newer OHV model? Or vs a new car w current emissions? Also, the plant that built that old reliable engine, and the plant that built the steel for it, and the plant that built the rubber for the gaskets, etc. had smokestacks pouring who knows what into the air and drain pipes sending more mystery chemicals into the rivers they were built next to. Lastly, Briggs & Strattons are now built in China, but Kawasaki builds small engines in Missouri, and Honda builds lawn mower engines in North Carolina. So what do you do to buy American?
3. Which leads to trucks (and cars): 70% of Toyota truck parts are domestic sources and assembled (Texas) in the USA. 45% of Chevy parts are domestic and trucks are assembled in Mexico. Fords are built in Michigan and Missouri, as well as Mexico and Venezuela.
– Cars: Camrys (Kentucky), Avalons (Indiana), Corolla (Mississippi), Accords and Civics are built in (Ohio) the USA.
– Minivans: The Honda Oddessy and Toyota Highlander & Sienna (Indiana) have more USA content and assembly than the Dodge Caravan and Chrysler Town & Country (Yet owned by Fiat).
– The Ford Transit (Built in Spain), Buick Encore (Korea), Chevy Spark (Korea), Trax (Korea), SS (Australia) and Caprice (Australia) all are considered less than 10% USA made by the DOT.
– Honda had a U.S. payroll in 2014 of $2.2 billion for 29,500 U.S.-based employees. There are 153,000 people in the U.S. employed by dealerships that sell Honda cars, motorcycles, generators, lawnmowers and other equipment. Using the average 2014 annual U.S. individual wage of $44,206, that would be an additional $6.76 billion in wages. Plus $35.6 billion spent on parts and supplies in the USA.
– Toyota had 33,765 direct employees in the U.S. in 2014, reported a total payroll of just under $2.9 billion. The company’s 1,500 Lexus, Scion and Toyota dealerships had 132,900 employees, good for a $5.8 billion annual payroll at the 2014 average wages. $32.9 billion spent on parts and supplies in the USA.
– For reference, General Motors counted 91,000 U.S. employees and about 4,300 dealerships with more than 250,000 workers at the end of 2014.
– Ford Motor Co. had 80,000 U.S. employees and 3,247 dealerships.
– Chrysler (Owned by Fiat) had 55,000 U.S. workers and 2,630 dealerships. (Edmunds.com for all of the above vehicle info)
– Your BMW was likely built in South Carolina, VW in Tennessee, Volvos in South Carolina (but they are wholly owned by the Chinese now), Mercedes (C Class and SUVs of course) in Alabama.
– As an aside, SAAB was a great car maker started in 1947 in the image of the old Briggs & Stratton. Yet since they’ve been owned by GM in 2000 (50% in 1989), they’ve gone straight into the ground by 2010, and are now (you guessed it) a Chinese holding company who has sold the IP rights to Turkey.
Conclusion: It’s really hard to simply cite American made in vehicles (or most item) nowadays.
The big picture: It doesn’t matter if you’re Republican or Democrat. Our country won’t get fixed until 4 things happen:
1. Stop cutting taxes and deficit spending, and cut waste. You can’t bring in less money and hope to pay your bills and repair the long term infrastructure. When your B&S was made, Eisenhower was president and tax rates were above 50%. The economy was sound, people had jobs, your parents could split the work load of earning and family. As for spending, let’s cut wars too. Most importantly, the lives criminally wasted. Cut all of the money spent (over $3 trillion) on the unbelieveable and absurd “wars” in Iraq and Afghanistan, as well as the side effect of the unnecessary creation of the money pit Department Of Homeland Security ($300 billion dollars spent on a new bureaucracy over the existing agencies – Brown University), all of which money could have fixed every road, highway, bridge, tunnel, canal, channel and air traffic system in the USA, with money left over to build enough solar, wind and geothermal power for the Western half of the country. Which would end our foolish dependence on Middle Eastern oil.
2. Reverse Citizens United and SpeechNOW. These two rulings have opened the door for SuperPACs and corporations to spend hundreds of millions of dollars in unidentified money on “independent expenditures” and lobbying. What politician is going to resist or ignore those sums of monies? You and I can donate $2700 on a candidate or $5000 on a PAC. Who wins that battle?
3. Banning lobbying. See above. When most of the legislation is drafted by lobbyists and others, you are not serving your country’s interest. You’re serving corporate interests.
4. Corporate/shareholder greed. On a related note, it costs 5 times more to pay a US auto worker than a Mexican. Why is that relevant to our country’s health? Greed. It’s not the government, it’s the corporations seeking to cut costs and boost profit and stock prices. So send manufacturing to Mexico, or wherever. Add service to that, as in call centers and computer programming. I’m no fan of his and most of his movies, but Oliver Stone hit it on the head in Wall Street. Take a successful small company, cut costs and workers/salaries, sell off the pieces, gut the pension plan, pump the stock price, and show a profit for investors in capital gains. Oh, but you’ve lost 500 jobs to foreign companies now, and increased the trade deficit, and the money spent by those 500 employees now no longer goes into the local and national economy. See Mitt Romney’s M.O. Greed…Stop allowing corporate compensation to be tied to stock prices/stock options. No CEO is going to put long term profitability and stability in front of short term profit and stock price appreciation if they can get an option on 1 million shares at $20 (or less) for a company that’s trading at $25 as a regular incentive. The only focus will be stock price. Which benefits only shareholders. Which is the root of why most of the expansion in wealth since 1980 has gone to the top 5% of the population wealth-wise. If we stop obsessing with growth in stock profits, prices and earnings, we won’t have to keep raising salaries to keep up, and we can be more competitive in keeping jobs here. Which allows people to have relatively more money. Which allows them to afford more homegrown/made items.
Thanks William. Keep writing.
Your very detailed thoughts illustrate that I may shine some light on problems, but the solutions which will have to take into consideration detailed factors like the ones you mention, are going to be long hard work for very determined and resilient people. I hope they are up to it.
I love flatheads, but not enough to advocate returning to manufacturing them in mass and tolerating their pollution. I just want to broaden the discussion on what we should make, from myopically looking at “clean” to include durable and other factors like conservation in use, while being honest about what disposable appliances take to build.
Part of what I look at when considering “made in USA” is not just the assembly plant, I want to know about who keeps the profits, are they really respecting US laws ( did I just say Volkswagen?) how they treat workers, and are their engineering jobs in the US. It will also become a factor at some point if the US has to get involved in a just war, will these foreign owned companies refuse to allow us to come to the aid of a small ally or will the boycott US? all possibilities in the long run that need answers now.
I am from NJ, and my older brother lives here and is a state wide expert on water pollution and how to combat it without killing industry. He thinks of Flint’s problems as the most colossally stupid, completely foreseeable, error on record. We can’t afford to make too many errors like that. NJ once was the dirtiest of states, but know 25 years later is corrected, and they still make things here, which shows it can be done.
I pick on Gore because he is easy, the environmental guy whos son was caught with a pharmacy of drugs driving a prius at 100 mph. But an aware that NAFTA had supporters in both parties, people who put profits ahead of jobs and national security. As far as Billionaires running for president, I found Ross Perot to actually understand business beyond casinos and beauty pageants. His support of POW issues and educational reforms made him a good guy in my book, and time proved he was right about NAFTA. There are a lot of trade statistics with Mexico, but few of them consider the deficit of the drug users in our country who send uncounted billions south, making some vile people wealthy and corrupting our neighbors chances at a just government.
thanks again -ww.
I want to expand on the premise of building it yourself vs. cheaply made somewhere else. To me this is essence of homebuilding. Who actually runs their household by the maxim “never to attempt to make at home what it will cost him more to make than to buy”?
Making meals at home, growing food in a garden, doing crafts, repairing things, brewing beer, and building airplanes. These are the things that make my house a home. All of the items produced can be purchased elsewhere with cheaper costs, when you factor in the cost of my labor or my wife’s labor. But no purchased item has the same value to me as those I make.
It is a joy to make something.
It is a joy to build something with my hands.
It is a joy to restore something.
It is a joy to build something in the mind and then bring it to life.
It is a joy to share the creation with friends.
It is a joy to learn.
As with any philosophy, knowing when to apply it is important. I am definitely a consumer, but not in all things.
This weekend Mindy and I visited New Orleans. Two notable events:
1. We visited Longue Vue House and Gardens: Hand built, high quality, long lasting, American made. (Highly Recommended)
2. We took a ride on the Steamboat Natchez and toured the engine room. Hand built, high quality, long lasting, American made. (Highly Recommended)
We also went on Bourbon Street for Halloween. Consumerism gone wild. Low quality. Fun. American made. (Highly Recommended)
Lets be safe out there. Lets be smart out there.