Thomas Sowell: Manufacturing confusion

Townhall.com ^ | January 15, 2004 | Thomas Sowell

[schu]

FWIIW, I like to equate the laws of economics with the laws of physics. You can defy the laws of physics, but only for a short while (usually seconds). The laws of economics are the same, but the amount of time you can defy the laws is longer. You can pay more for something for a while, but in a free market (even if not totally free), your competitors will eventually get the best of you and you’ll be broke. But the world I guess forever has been trying to defy these laws, and the results have always been the same. Marxism was a recent fad, Japan’s MITI could be in the same category.

[Last Dakotan]

Do you think American investment in the Third World (exporting jobs, I think it's called) is bad?- Depends on the case. It is particularly bad when the US company moves its design and development overseas.

If we had a "trade surplus," you think that would make you happy- I'd be happier if we weren't financing trade and governmetal debts with foreign capital.

[Taliesan]

You can defy the laws of physics, but only for a short while (usually seconds). The laws of economics are the same, but the amount of time you can defy the laws is longer. You can pay more for something for a while, but in a free market (even if not totally free), your competitors will eventually get the best of you and you’ll be broke.

There you have it. In addition, a free market economy will always overwhelm a protectionist barrier over time. Always. That's why the economists tend to agree that tariffs are useful for short-term objectives, like protecting new industries, and short-term national security measures.

They won't work permanantly. The laws of economics wear them down.

This is not a political position, any more than the periodic table is a political position. It just is.

[holdmuhbeer]

as usual sowell hits it right on the money

[schu]

The laws of economics, just like the laws of physics are irrefutable, much as we would like them not to be.

So what I would like to see is that we have a system that understands this and prepares people for the inevitable. Better education, focus on reducing infrastructure costs, efficient regulation (yes, we need some of that), lower taxes, training that change is a way of life, a business friendly society. As it turns out, the US does better than most countries, but not because of any grand plan or recognition that this is the situation.

And in the end it is all about standard of living for the populace.

[theFIRMbss]

>...you want to get paid for your work, you're a resource. If you want to live in a commune ...

Well, well. In your view
people either work for the
central committee,

or people are sheep
to be sheared by whatever
company needs wool?

[over3Owithabrain]

You leave out self-employment. But if you hire someone, be sure you never fire them, lest you be seen as heartless.

P.S. - I do like your writing style - interesting. Beats the 2000 word run-on paragraph in capital letters with no spacing.

[theFIRMbss]

>Beats the 2000 word run-on paragraph in capital letters with no spacing

DON'T ENCOURAGE ME.
(But, if you're up for it, I
have one final thought...)

Everyone can see
that, say, Apple benefits
if Apple users

think they're cool and smart.
(While actually being
dense to buy Apples...)

It seems clear to me
that on a large scale the same
demographic games

get played about jobs.
People unhappy about
corporatism

get played as commies,
and people who play along --
either as "solid"

employees or as
"hard driving" entrepreneurs --
get reinforcement,

just as Las Vegas
gives comps to make their losers
think they've gained something ...

Soon enough, people
cheering corporatism
can't even perceive

they are at odds with
democracy because their
emotions blind them...

[WilliamofCarmichael]

Thanks. Very well stated and it's something I attempt to say every now and then. What you said is definitely worth repeating. Ya know, the "investor class" simply doesn't care but if their foreign "partners" screw them they'll be the first to demand the American working class and middle class join up and do something. The American working class and middle class do have a right to that job.

"American working class and middle class who serve in our armed forces are the America lovers these days. They show it by their actions while our "investor class" cares only about profits even if they come at the expense of the America he lives in.

"GWBush's scheme to legalize illegal alien lawbreakers is a grossly unpatriotic insult to our working class and middle class. The same pool that our fighting forces are drawn from.

I will add for the benefit of our "Jesse Jacksons" that of course the American working class and middle class includes all races and ethnicities. So "Jesse," we're talking Americans here not race or ethnicity.

[dennisw]

Thanks. Just to state it a different way:
I am pro capitalist all the way. But I see our "investor class" and upper classes caring more about profits no matter how they are derived. Even if these profits and ventures drive up our trade deficits and allow China to make huge profits exporting to the USA. Though they have dubious loyalty to the United States of America they will not hesitate to demand that the "patriotic class" defend them when they are attacked. Firemen, policemen, our military.

And they don't mind screwing the "patriotic class" with BS trade agreements and with illegal alien amnesty schemes. Our "patriotic class" are our working class and middle class men and women who greatly identify with the United States of America and will join our military to

[dennisw]

BTW: Toyota, Hondas, Siemens are not owned by American investors. The first two are 95% owned by Japanese. Siemens is very similar is my guess. With 90%+ shares owned by Germans and other Europeans.

Few years back a Forbes article showed how Toyota was 95% Jap owned. Our giant American transnational corporations have more foreign ownership.

[sixmil]

Whatever technology which now allows the cheap labor to be accessed, when it couldn't be 20 years ago.

If you are talking services, fine, they are putting the Internet to use. But simply assembling something overseas and shipping it back here is the result of zero technological innovation.

[theFIRMbss]

> But simply assembling something overseas and shipping it back here is the result of zero technological innovation

Not exactly true.
Out-sourcing overseas works
in large part because

companies can still
be responsive to quick trends
thanks to high-tech ships

and very fast planes
that shuttle vast loads of freight
all over the globe.

And this high-volume,
high-speed shipping system works
only because of

satellite systems
for weather and routing, and
modern advances

in the design of
ships and planes. Technology
makes the modern world.

[kevao]

BTW: Toyota, Hondas, Siemens are not owned by American investors. The first two are 95% owned by Japanese. Siemens is very similar is my guess. With 90%+ shares owned by Germans and other Europeans.

LOL!!! You can easily remedy the situation. Just call your broker:

TOYOTA MOTOR (NYSE:TM)

HONDA MOTOR CO (NYSE:HMC)

SIEMENS AKTIEN (NYSE:SI)

Did you really think Americans couldn't own these companies? I just did a quick check and less than 10% of the shares of these companies are controlled by insiders and institutions. So back up the truck, my friend. LOL!!!

[dennisw]

Don't laugh silly goose. Fact is Toyota is owned by the Japanese. So Toyota profits go into Japanese pockets. It's known as foreign investment, a kind of economic colonialism lite.

[dennisw]

Did you really think Americans couldn't own these companies?........

What do you think? Since you are so clever why not find out exactly who owns Toyota today? 5 years ago Forbes said it was 95% owned by Japanese.

[kevao]

Don't laugh silly goose. Fact is Toyota is owned by the Japanese.

No, Toyota is owned by the SHAREHOLDERS. Whatever profits are not poured back into company operations, are remitted to the SHAREHOLDERS -- be they Japanese OR Americans -- in the form of dividends.

[Publius6961]

The high level intellectual discussions one finds on FR simply amaze me.

And thank you for your classic contribution to it...

[kevao]

What do you think? Since you are so clever why not find out exactly who owns Toyota today? 5 years ago Forbes said it was 95% owned by Japanese.

Have a look for yourself regarding top institutional holders (a lot of American firms):

http://finance.yahoo.com/q?d=t&s=TM

I have no idea who could provide you a list of the names and nationalities of each individual stock owner. I can tell you that of Toyota's 1.70 billion shares outstanding, 1.50 billion of them (88%) are floating in the market, available for purchase. (This information is also available on the link above.)

That means that you or I or any American can buy these shares. If private Japanese investors own 95% of Toyota, it's only because they bought 95% of the stock.

If Americans would save and invest more, instead of leading the world in consumer debt, we could own more of these companies.

[dennisw]

That means that you or I or any American can buy these shares. If private Japanese investors own 95% of Toyota, it's only because they bought 95% of the stock. 

Duh....Obviously. 

Japanese investors are more nationalist, they don't truest non-Japanese companies, and want to own Toyota more than do non-Japanese. Japanese have outbid the others.