Posted on 02/09/2011 11:32:17 PM PST by iowamark
BEGIN TRANSCRIPT
RUSH: Here's Robert in Los Angeles. Robert, welcome, sir, to the EIB Network, great to have you with us. Hello.
CALLER: Thank you, Rush. It's a pleasure to talk to you. I just want to take a minute of your time and I want to ask your opinion on something. I constantly keep hearing the president and government officials saying that we need jobs, jobs, and jobs. I have the solution, and I'd like your opinion on this. Domestic manufacturing. We've lost it to China. We have a trade imbalance of about 200 to $300 billion a year. Why don't we either tax them at a higher rate or, my suggestion would be, reduce the taxes on anyone who makes something in the United States and the product that's made here has to be made with maybe 70%, 80% American made. I'd like your opinion.
RUSH: I have to find the story. I do not have it at my fingertips. It was a story within the past month on an anniversary of something, I forget which. It might have been in the Wall Street Journal, and the point of the story was that we are manufacturing more stuff today than ever before in this country. (interruption) Was it after the State of the Union? That was just a couple weeks ago. I thought this was a little bit longer ago than that, certainly this year. We are the number one manufacturer in the world. There's been this myth that we've shipped all of our jobs overseas. Yeah, certain kinds of jobs have been shipped overseas. And one of the misnomers with manufacturing jobs lost, take a look, for example, at the Apple iPhone. Now, the Apple iPhone is assembled in China, but all the guts are not made in China. There are parts made in America, parts made in Switzerland, parts made in parts of Europe. They're just all shipped over to Shenzhen at the manufacturing plant and they're assembled there, but the whole phone is not ChiCom. It's just assembled there. But because it comes from there, it is considered a Chinese-made product, when in fact the guts may not be. And that's how you can report accurately that we still are the number one manufacturing country in the world.
So we are nevertheless allowing the Chinese to manipulate us in a lot of ways. I'm not saying the premise of your call is wrong. We start tariffs on Chinese imports, that just never works. It just never works. The market is speaking. The market here is speaking. If we, given current labor rates and everything else, an iPhone totally put together and made in this country would cost about $1800. Well, people aren't gonna pay $1800 for an iPhone, and Apple knows it. But with all the parts made elsewhere, shipped to China and assembled over there, you can get an iPhone for 200 bucks now with Verizon thrown in as a carrier, in addition to AT&T. So I'm against Smoot-Hawley-type tariffs. I think the way you deal with the ChiComs is diplomatically, and it's tough to deal with them diplomatically when they own so much of our debt. I'm gonna tell you something, Robert. The Chinese ran rings around us in that last state visit of Hu Jintao. We sit here, we talk about human rights, we demand human rights, and we exempt them. We talk about carbon emissions and making sure that we penalize ourselves for our technological process, but not them.
Donald Trump has some I think intriguing, intelligent stuff to say about China, but he does business with them at the same time. Trump does a lot of business with the ChiComs. But in his view, Trump does not lose money doing it nor does he get humiliated or embarrassed in the process. But there are a lot of myths about manufacturing in this country and the trade deficit and all this. We're not nearly as absent manufacturing jobs as people think. Now, we might have lost sectors. I'm having a mental block. Textiles, we mighta lost a lot of the textile industry and we probably don't make many sewing machines anymore. But there are other things that have replaced them on the manufacturing scale, and we're not a totally manufacturing-free economy. It's just one of the many myths that are out there. I'm gonna have to find that story. Somebody on my crack research staff -- well, I'll look for it myself. It will take them 'til June to find it, but I'll come up with it here and -- (laughing) -- I'll probably have it in the break when we get back. BREAK TRANSCRIPT
RUSH: And, as I knew would be the case, we have a couple of stories here on the US and manufacturing. "According to the Federal Reserve data, the U.S. produced almost $3 trillion of industrial output in 2008, measured in 2000 dollars (or about $3.7 trillion in 2008 dollars The US manufacturing sector, the manufacturing sector alone is the third largest economy in the world. Just manufacturing. Compared to the GDP of the top five countries -- Japan, China, Germany, France, UK -- USA manufacturing alone is the third highest GDP, just the manufacturing sector. "If the U.S. manufacturing sector were a separate country, it would be tied with Germany as the world's third largest economy.
"It would also be larger than the entire economies of India and Russia combined. As much as we hear about the 'demise of U.S. manufacturing,' and how we are a country that 'doesn't produce anything anymore,' and how we have 'outsourced our production to China,' the U.S. manufacturing sector is alive and well, and the U.S. is still the largest manufacturer in the world." That's Federal Reserve numbers. This is Jeff Jacoby and his column in the Boston Globe on February 6th, three days ago: "There's just one problem with all the gloom and doom about American manufacturing. It's wrong. Americans make more 'stuff' than any other nation on earth, and by a wide margin," damn it! Yeah.
"According to the United Nations' comprehensive database of international economic data, America's manufacturing output in 2009 (expressed in constant 2005 dollars) was $2.15 trillion. That surpassed China's output of $1.48 trillion by nearly 46 percent. China's industries may be booming, but the United States still accounted for 20 percent of the world's manufacturing output in 2009 -- only a hair below its 1990 share of 21 percent. 'The decline, demise, and death of America's manufacturing sector has been greatly exaggerated,' says economist Mark Perry, a visiting scholar at the American Enterprise Institute in Washington." That's not a liberal think tank.
"'America still makes a ton of stuff, and we make more of it now than ever before in history.' In fact, Americans manufactured more goods in 2009 than the Japanese, Germans, British, and Italians -- combined," and as I've always said it's the European Union that's going to hell when it comes to manufacturing. It's the European Union that is in deep, deep trouble, aside from Germany. France, Great Britain, Italy, they're in trouble as a competitive enterprise. "American manufacturing output hits a new high almost every year. US industries are powerhouses of production:
"Measured in constant dollars, America's manufacturing output today is more than double what it was in the early 1970s. So why do so many Americans fear that the Chinese are eating our lunch? Part of the reason is that fewer Americans work in factories. Millions of industrial jobs have vanished in recent decades, and there is no denying" that. "But factory employment has declined because factory productivity has so dramatically skyrocketed," and not everything anymore that's manufactured in America is made in a factory or a plant.
So there.
END TRANSCRIPT
Rush is dead wrong here. The market isn’t speaking, greed is. No one in the US with our standard of living, taxes, and regulation can compete with a nation that does not have those things. That is not a fair market. It is not fair we American businesses must compete with Chinese businesses.
America is a country, not a business. We have our own economic system. If China wants to compete within our markets they must play within our system.
Get rid of the income tax. Nothing else would even come close to that in helping America manufacturing.
“What he is saying is that the amount of total manufacturing has stayed the same”
Only in dollar amounts and only when compared to decades ago. The number of items, the tonnage, and percentage of GDP has been shrinking year after year. They also play loose with the numbers in that Apple will say the iPhone is an American product and take credit for the entire amount of sales as an Amrican produced item when clearly the majority of the phone is produced outside the US.
Excellent post. Apple makes plenty of prift such as to be able to assemble in the US but they want that extra $12.
For the sake of factual accuracy, I would point out that German employers do indeed contribute to their employee's healthcare coverage. The difference is that rather than the employer paying into a managed, private health plan, the employer pays their portion of the employee premiums into a government run health-plan (for almost all employees). It is true, however, that the employer insurance premium contributions in Germany are generally much lower than the contributions paid by their American competitors.
He says the Iphone is really made in America and then lists all the places that the parts are produced. A contradictory statement. Rush is wrong about manufacturing, anyone who has lived as long as I have can see we have lost a huge base of manufacturing and only some of it can be laid to automation.
He says the iphone is really made in America and then lists all the places that the parts are produced. A contradictory statement. Rush is wrong about manufacturing, anyone who has lived as long as I have can see we have lost a huge base of manufacturing and only some of it can be laid to automation.
Actually, that's probably not accurate. They wouldn't be sold for $10 here, they'd probably be sold at a price point that is 10-15% less than the American made price point. So, if the price point for the American coffee pot is $30, then the Chinese version would be (roughly) $26-27, even though it only cost $5 to make. That's why companies move to China - there's exponentially more profit potential there.
As several others have pointed out, the Apple products are a great example of this. For what Apple charges (and gets) for the iPhone, they could still make money hand over fist even if the entire phone was built and assembled in the US. But, they can make exponentially more money if they produce in China, instead. The iPhone costs somewhere between $6-15 (depending on published report) to manufacturer in China. That same phone would cost about 7-8, times that. BUT, the iPhone is sold at a multiple between 40-50. See the difference?
It would help, but it's not a panacea. The onerous regulatory burdens placed on manufacturing create costs not incurred in foreign assembly plants. Taxes are applied to profits, not revenue. The problem is, to make something in the US at a price point that is competitive in the market place, it is (sometimes) even difficult to to turn a profit, let alone worry about the taxes on that profit.
Back to the iPhone example that seems to be popular on this thread, most electronic components aren't made in the US for two primary reason. One is labor, and the other is hazardous waste disposal. There are dozens, sometimes hundreds of hazardous waste materials generated as a bi-product of making those components. In America, that increases costs dramatically. In China, it doesn't. That goes straight to the bottom line, and it's not a little number.
Yes, our tax structure hurts us, but we have regulated our way out of the manufacturing business as well.
If, as apparently many people of this forum believe, success is measured by how many Americans work in factories as different from how much the manufacturing sector produces, then we are going downhill. But we’ve been losing people in manufacturing jobs for decades. We have to look at the total picture. The key question: is the U.S. still a country where a person can expect to succeed and have an excellent standard of living? The answer is yes, but we have to drive out all the libs and far-left radicals currently running things. Left in charge, Obama and his pals will have us looking like a third-world country in no time flat.
I had this very conversation with a Plant Manager in Mexico - this was 10-12 years ago, right at the height of shipping stuff over there.
He told me that if you pay Americans $9-10/hour, they get P.O.'d and quit on you. He said that where he was (and at that time) they paid the local labor pool $9-10 / day, plus benefit,s and they were thrilled because they were making three times what they could doing the same thing elsewhere. And working inside, with medical care, and so on.
It was an eye-opener, to be sure.
Completely ignored the point of my post. Not surprised.
Sunday Reflection: Does America have a lawyer problem, or a law problem?
http://www.freerepublic.com/focus/f-news/2669639/posts
EEOC now claims obesity is a disability under ADAAA
http://www.freerepublic.com/focus/f-bloggers/2647980/posts
Environmentalists Are Killing Jobs And The Economy
http://www.freerepublic.com/focus/f-news/2670413/posts
A License to Shampoo: Jobs Needing State Approval Rise
http://www.freerepublic.com/focus/f-news/2669925/posts
...and we wonder why we can’t compete.
Certainly regulation is part of the problem, no doubt.
But it isn’t just the tax burden. It’s the costs of compliance. It’s the burden placed on capital, which is one of the most important ingredients in any business enterprise.
Regulatory reform is structural repair. Eliminating the income tax and everything that goes with it would be a refurbishing and reinforcing of the foundations of our national prosperity.
My eye opener was when I visited China on business.
I went on several tours of Chinese factories. There were huge rooms of workers bustin their butts to make electrical switches by hand. Our company had a machine back in the US that made the same switch but could make 100 times more than each of the workers on that Chinese production line. Final cost of the switches ended up being similar.
With labor costs so cheap there is no real drive to innovate more efficient ways of production. They just figure the cost of the machine is too high to justify. They will just add more people.
Driving on a 4 lane freeway under construction we noticed no large equipment. They were only using shovels and wheelbarrows. There were at least a thousand workers.
The inefficiency is startling. The workers are busting their butts for measly wages. But somebody is making huge profits. I think they are ripe for a revolt in the future.
“42% income tax on incomes over $39k
19% Sales Tax
Employee Health Insurance: 15.5% of employee’s gross earnings”
This is an ICV look at the product and doesn’t account for the $ spent on development. As an example for a $100M in sales site our material costs are $40M, our labor&overhead are $10M which translates to a profit of 50M except that we spend 20M on engineering and another 5-10 to develop and implemnet a new product. These type of analysis are incomplete and do not account for the investment aspect of business which is all done up front and not in the ICV calculation.
those jobs STAYED IN AMERICA, that is the difference!
I dont think it is education.
We had a thread like this 4 years ago, I bookmarked it on why free trade was never the answer
It aint education, and it isn’t just the sending of jobs overseas, it does have some profit motive with greed, but much has to do with corporate survival to compete against those who went overseas while you sayed here to remain patriotic, only to move yourself overseas to keep your corporation afloat!
I’ll give you that one, particularly now in the obama era, but the rest of the answers to me on this thread are just plain stupid.
They are so obsessed with Americans making money, that it is OK to screw them over. Well OK then...
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