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Saturday, June 18, 2011

Protectionist pipe dreams

Someone on Yahoo Finance posted a comment that penalizing outsourcing is a solution to the jobs problem. His particular points were:

1. Taxing Outsourcing.
2. Incentives to hire Unemployed.
3. Build a Wall to keep illegals out and stop the "Reconquista."
4. Start Deporting all the illegals and their kids until we figure out who we want back on a work permit basis. Try crossing Mexico's Southern Border with Central America they will shoot you dead.

But, it's just a pipe dream. Ain't gonna happen, will never work, etc..

Here are some inconvenient facts:

No one wants to be without their iPhone/iPod/iPad, and will not take steps to jepardize that. They don't care where it's built, they just want it. Mostly, because they've been socialized at birth to consume, consume, consume, and continue to be bombarded by reinforcing brainwashing to that effect.

Much high-tech manufacturing is highly automated, which requires expensive up-front tooling costs, and US companies have a huge amount invested in outsourcing instead, a decision made years ago.

A Made In USA device would have to retail for about $1000, where none of those low-paid manufacturing workers could afford one. The sales drop, and the companies can't survive.

Because of its high cost, a Made In USA device would have to be designed to be repaired or upgraded every few years when it breaks or becomes obsolete, but charging $299 every three years instead is a much simpler subscription plan that does a better job of keeping Apple in business-- fixing old obsolete gear is labor intensive and requires significant training.

Circumventing import duties is not all that difficult, you just "assemble" in the USA, like Toyota, Honda, Nissan, etc., and people are willing to pay more for those cars because they're percieved as "better." (whether they are or not is beside the point).

Raising import duties causes other countries to respond in kind, which hurts American companies that do a lot of exporting, such as Ford, GM, etc.

The reason Made In China is so cheap, is their government doesn't care much about the human rights of their population, and the population has little voice in the matter. In the US, child labor was cheap once too, as was labor not subject to any kind of workplace safety regulations-- and that was at a time where the "Free Market" was more free than it is today, so clearly it doesn't fix itself. And the end result was, due to the abuses of the "Free Market," manufacturing in the US will have to be unionized because companies just don't protect their workers out of the kindness of their hearts, they have to be forced to do so, and US workers not only expect better treatment than Chinese workers do, they have more of a voice if they are not getting it.

Closing the borders at the same time as making Chinese products more expensive is a double hit-- eliminating the low cost labor force in the US that's low cost mostly because it's not subject to regulations (at least, they're not well enforced), and the workers don't have a voice (because they're illegals). Costs of food and manufactured goods all go up at the same time, profits dive because people can't buy as much, companies go out of business-- yeah, it's a great plan.

Both parties are in favor of "opening up" the borders and letting the "free market" reign. NAFTA started during the George H. W. Bush administration, and finalized during the Clinton administration. I don't hear either side clamoring to repeal it.

The only thing that us peons have control over, is our desire for the products-- but we're addicted. Can't live without our iPhones, Blackberries, Androids, HDTVs, Blue-Ray, Surround Sound, GPS, designer clothing, sports and recreation equipment, etc.

So how do you fix the jobs problem? Good question. The way it used to happen is to invade other countries and try to take their stuff. Both populations take a hit in the process, and one side or the other eventually comes out ahead. But that likely won't work this time. It will be interesting to see how it plays out-- to see if there's a better solution than the old method, or if we end up finding one that's worse.

Thursday, June 02, 2011

More Randian Nonsense

This bit was in response to a comment on my review of Atlas Shrugged on Amazon. The comment ultimately cited a piece of the Galt speech essentially stating that you were either right, wrong or evil-- that those who see the gray areas in choices are the worst of all. The commenter then presumed I must be in my late 20's and "haven't produced anything," then admitting he "could be wrong," but that I should "Let them [readers of Rand] discover reason and self-reliance on their own. It can only do good in their lives and is a step in the right direction."


No, you are wrong. About many things. I'm in my late 50's and have produced a considerable amount. I've produced many things that are valued by society, and also many things that are not. I have learned that mere production is not enough. I write software, compose music, and create art, among other things. But beyond that, I've been learning how to produce something far more important than any of that, and that's how to contribute to the happiness of others. In fact, all my creations have always been with the idea of contributing to the happiness of society. But of course, Rand has nothing but her utter disdain for "society."

But to distill the world into givers and takers is in fact a simple minded picture of reality. Not only that, Rand must contrive who is who to the extreme, in order to contradict that reality-is Robin Hood a giver or a taker? Obviously, he does both-but what is the net result? When the genius corporate exec produces a new metal from resources strip mined from public lands, destroying acres and acres of forest in the process, and polluting the atmosphere with his foundries, is he a producer, or simply a "user", a "taker", a "looter?" How many successful rich people in this world are of which variety? The problems are in fact very complex, such that probably none of us fully understand. To stick to a simple black and white representation of the world that bears only vague resemblance to reality, is at best "kicking the can down the road," to use a popular phrase, and at worst, outright destructive. I claim at the very least, that it's not *useful* as it leads people to believe that the gray areas do not exist, when they may be the most important factors to consider. A healthy respect for what we do not know does not exist when we've convinced ourselves that the problems and solutions are all simple black and white ones. The false dichotomy takes hold and ignorance rules.

And then we have the Rand and her minions who have convinced themselves that it's okay if all you want to do is to take all you can, justified by what is called "production." But what they have missed is that the true value of "production" is related to the value of the products to society. Am I a worthwhile producer (in the "Randian" sense), if all I produce is great music that no one but me wants to hear? What justification does Rand have if productivity is only for the benefit of the producer? Am I a proper "Randian" producer, if what I produce makes 10 people happy at the expense of making 20 miserable? Would Rand say that as long as I am happy that's all that counts? If so, don't forget that what it takes to make me happy is to surround myself with happy people. Is an individual, even a genius one, who ultimately takes (in the form of profits and the use of common resources) more than he produces properly considered a producer? How do you measure the net-gain vs. net-loss of such a producer, and how would Rand look at the difference?

Successful producers are not just those who have a certain genius. They also have to have a certain amount of luck. For every rich genius you can find, I can show you several others who have as much genius but aren't rich because they lacked the requisite luck. Being born into money, going to school with the right people, having the right teachers, liking the right things at the right times. Genius does not develop and prosper in a vacuum; it requires a proper environment, just like seeds need water and fertile soil to grow. It needs the luck of having landed in the right environment. And that environment includes many of the rest of us.

Like it or not, you share this planet with millions of others, most of which are NOT geniuses. They may struggle far more than you because of it, but even the genius businessman needs them, as that is where customers and employees come from. And the janitor is every bit as important as he is, because without one the trash piles up and the customers and employees hold their nose, avert their eyes, and next time shop or work somewhere else where the neat and clean is valued, and the provider of it given his due.

Another thing that Rand is completely off the mark about is emotions. She thinks herself so completely rational, but clearly she is motivated by emotions-anger without a doubt. She seems to forget that happiness is itself an emotion, and one that in my opinion is pretty ridiculous when achieved in complete isolation. What she misses is the role of emotions in society and where they have value. As it turns out, emotions and irrationality have a specific and important place in successful human relationships, and modern scientific studies, in both psychology and economics, have shown this. Emotions are something that Rand herself can be seen to have no shortage of, but doesn't understand well enough to see it.

Reason and self-reliance are laudable goals. I'm all for them. Ayn Rand's path to them however, is stunningly dysfunctional. Your Galt quote is a prime example-- the "man in the middle" is not saying that no choice exists, he is saying that there are more than two "sides" to evaluate. He is saying "what about strawberry?" when Galt is claiming that the choice is only chocolate and vanilla. Only the simplest of problems can be reduced to a clear dichotomy. Often there are pros and cons to a choice, tradeoffs to be made, unintended consequences to be identified. I don't say don't make a choice, only to make sure you are not choosing from an oversimplified and propagandized pair of ideals that have little or no bearing in reality.