More quotes from "The Deindustrialization of America"
Me, ...again!
title: "The Deindustrialization of America"
subtitle: "Plant Closings, Community Abandonment, and the Dismantling of
Basic Industry"
by Barry Bluestone and Bennett Harrison (ISBN 0465015905, Basic Books, NY,
1982)
quote from the blurb:
"During the past decade, more than 30 million jobs have been lost as a
direct result of plant closings. Communities have been disrupted, workers'
security undermined, and productivity reduced. And that is only part of
the story. Even while everyone is talking of the need to reindustrialize,
corporations have been pulling their capital out of the nation's basic
industries at an unprecidented rate. In effect, they are deindustrializing
America."
Endorsement on back of book dust jacket:
"Corporate investment policies have gone astray, exporting our jobs and
wrecking our communities. This important book can help us toward a much
more decent and rational path to economic recovery" by David M. Gordon,
Chairman, Department of Economics, New School for Social Research.
Highlight quotes from the book (just a small sample of very many details
that explain what is going on and how it hurts underlings):
page 112:
"The [USA] emerged from the Second World War with the only major
functioning army, with more than half of all the usable productive
capacity in the world, and as the banker and creditor to both former
allies and former enemies."
113 (read very carefully):
"America's domination of the global economy was cemented by the
establishment of the dollar as the capitalist world's principal reserve
currency at the 1944 Bretton Woods Conference. ...."....showed how the
Bretton Woods agreement on fixed exchange rates pegged to the dollar
contributed to the takeover of foreign industries by U.S. corporations.
Under the system of international payments that prevailed until 1971, each
nation was responsible for keeping the value of its currency within 1
percent of its par value. To keep it within that range, the central bank
of each country was required to sell or buy its own currency on
foreign-exchange markets. By running persistent and large capital-account
deficits in its balance of international payments, the United States
effectively forced foreign central banks to buy excess dollars with their
own currencies in order to decrease the supply of dollars in circulation.
This provided American investors with the francs, marks, and other
European currencies necessary to buy assets [eg. corporations, firms] in
France, Germany, and elsewhere. Thus, as the price for international
stability, foreign central banks were put in the awkward position of
financing the takeovers of their own countries industries."
[what is left out of this discussion, however, is that foreign direct
investment into the USA from European countries was also taking place and
FDI in both directions continued to take place even up to today, but this
discussion would have to include the time frames, too.]
"In this environment, American corporations were able to make massive
investments abroad in new plant and equipment, producing commodities for
foreign markets and, later on, for re-importing back into the United
States itself. These direct shifts of private American capital became
truly enormous during the 1960s. [statistics list given] By the early
1970s, nearly one third of annual U.S. automobile company investment was
being placed abroad."
"By 1970, 'close to three-quarters of total U.S. exports and upwards of
one-half of all...
page 114
...imports [were] transactions between the domestic and foreign
subsidiaries of the same [U.S. and foreign] multinational conglomerate
corporations." [more statistical examples given] "Corporation President
Harry B. Henshel said about this arrangement: 'We are able to beat the
foreign competition because we _are_ the foreign competition'."
This relevance of this to employment is that all of these companies were
investing their capital not in the USA but in Europe and what that meant
was jobs were _not_ being created in the USA with US-corporation money,
but being created in Europe. All for the benefit of US corporation net
profits, not benefit to underling US citizens.
Around pages 125+ is a great deal of detail on how tax loopholes are used
by corporations to reduce their taxes, tax strategies, etc. Many tax laws
can be cheated/trickedtweaked to actually _help_ corporation profits by
locating facilities overseas.
page 132:
"Subsidies for foreign investment have also been available to industries
through certain provisions of the U.S. Tariff Code. For example, during
the 1960s American corporations created a number of so-called "export
platforms" abroad. Components would be made in domestic plants, shipped to
low-wage European and Third World countries for assembly, and then
re-imported back into the United States for sale to the home market. Under
tariff item 806.30, which was actually created in 1930 to promote the
assembly of automobiles and other metal products in Canada, but not
utilized extensively until the 1960s, duty is paid only on the value added
in foreign assembly process, not on the entire market value of the
assembled product."
At the bottom of the page was a list of other federal programs created to
subsidize foreign investment. One wonders how much of these programs were
created at the initiative of corporations through their lobbyists.
Page 143:
Here is contained a complex, convoluted story of how American corporations
carried out, with the collusion of Japanese corporations, several
processes for net profits from the functional transfer of factories,
subcontracting (what we call offshoring today), and licensing technology
(otherwise known as making profits without work, but selling out your IP
now to lose market share in the future; the "burning the candle at both
ends" strategy).
Page 145:
"A new study of the restructuring of the American steel industry
dramaticlaly illustrates the contradictory [hypocrasy, too] nature of the
claims that U.S. capital is being 'out-competed by foreigners'--claims
that are continually articulated by some of the very same American
companies that turn out to be deeply involved in financing their own
competition abroad."
"...the shutdown of the Youngstown Sheet and Tube Company in Ohio--were
caused in part by the inability of some of the companies to finance
modernization plans. In that case, three of the principal bankers of the
conglomerate parent, the Lykes Corporation, began withdrawing their
support in the mid-1970s. At the very time they were doing so, these same
banks were significantly increasing their investments in the Japanese
steel industry." ...."Citibank increased its loans to Japanese steel from
about $59 mil to over $230 mil. Chase Manhattan's ...from $59 mil to over
$ 204 mil."
Page 146:
"Yet even as the U.S. Steel Corporation was expressing concern about
unfair competition from abroad, _it_ was investing in overseas operations
linked directly to that very competition."
Page 157:
"Even foreign capital coming into the United States is now going
principally into the acquisition of already-existing American companies
rather than into the creation of new enterprises and jobs."
Page 159:
"...the mushrooming of _corporate_, as distinct from government,
bureaucracies may explain much of the productivity decline that has caused
so much concern to the country. Between 1950 and 1980, the ratio of
'overhead' personnel--managers, their secretaries, and so forth--to all
employees in the U.S Manufacturing rose from 18 percent...
Page 160:
...to over 30 percent."
I think this process continued after the book was published through the
expansion of the CFO, COO, CTO, COO, CIO, etc., etc., executive title
proliferations.
Page 180:
"...companies across the country have been forming nonprofit political
action committess ... to circumvent the laws (on the federal books since
1907) that made it illegal for private corporations to donate money
directly to political candidates. Unions have organized PACs themselves,
but their resources are geatly inferior to those available to private
industry. Since the early 1970s, the growth of corporate PACs has been
astronomical, far outpacing organized labor's efforts."
Page 183:
A story about fake job ads. Where a job ad appears in a paper, but there
is no real job behind the ad.
Page 188-189:
The story about how screwed up Reaganomics was, and how the corporations
played loopholes, again.
Page 216:
Background information on the differences between Japanese management and
US management. Useful to know.
---------- end ---------------------
Nickname unavailable
currency manipulation, direct subsidies, uses state run enterprises,
practices protectionism, demands technology transfers to their marxist/
fascist government
please click on the link for the video
"Nobody Is Going to Be Happy": Global Trade Tensions Heat Up
Posted Sep 16, 2010 02:41pm EDT by Aaron Task
With the midterm elections looming and the broadest measure of
America's trade gap hitting its widest level since late 2008, tensions
with China are heating up this week.
"We are concerned, as are many of China's trading partners, that the
pace of appreciation has been too slow and the extent of appreciation
too limited," Treasury Secretary Tim Geithner said in a statement
released ahead of his appearance before the House Ways and Means
Committee, which began two days of hearings on China's currency
Wednesday.
Earlier this week, the U.S. file two WTO complaints against China for
allegedly blocking imports of specialty steel and denying U.S. credit
card companies access to its markets.
China is "clearly" manipulating its currency, the renminbi, and "I
think there will be a lot more pressure on China to do something,"
says David Levy, chairman of the Jerome Levy Forecasting Center. "In
this particular world the tolerance for a country running a trade
surplus with a locked-in currency is going to deteriorate."
In June, China allowed its currency to float in a wider band vs. the
dollar and it has appreciated nearly 1% since then, The FT reports.
But that's clearly not a fast enough appreciation to satisfy
policymakers, both here and abroad.
Earlier this week, the Bank of Japan intervened to weaken the yen for
the first time since 2004. Some observers believe the action was
directed at least partially at China, which recently surpassed Japan
as the world's second-largest economy, largely on the strength of its
exports.
Beggar Thy Neighbor
Because of its production of high-end capital goods, Japan competes
more directly with exports from the U.S., Europe and South Korea as
opposed to China. But that speaks to Levy's larger point: Trade
tensions are rising around the world among varying trade partners, be
it U.S.-Japan, U.S-China, Europe-China, Japan-Germany, etc.
"The Chinese feel - ‘the yuan is going up, we're having less favorable
exchange rates [because of the dollar peg] and now the U.S. wants us
to do something too'," Levy says. "Nobody is going to be happy in this
situation and I think the tensions are going to escalate the weaker
this [global] economy becomes."
Levy does expect the global economy to fall back into recession next
year, especially as governments around the world adopt austerity
measures which will leave exports as the only area of potential
growth.
"The problem is everybody around the world is struggling," he says.
"Everyone is trying to cut government stimulus because they want to
shrink deficits; everyone has overcapacity and nobody is happy with
their net exports. Everyone wants more."
With "more" meaning more exports to boost the local economy, most
nations are seeking to weaken their currencies vs. major trading
partners, a big reason why gold continues to hit record levels.
Me, ...again!
Yes, I think something has to break and break pretty soon. Next few years
(1-2 maybe)
////////////////
Nickname unavailable
> Yes, I think something has to break and break pretty soon. Next few years
> (1-2 maybe)
>
> ////////////////
i think so to. then we will go far right like germany. be prepared to
live in hell then.
Me, ...again!
Big headline on today's WSJ front page about how China demands access to
US IP if US wants access to China markets, AND how US company has to
partner with Chinese company with US getting minority control of company.
Does not look like win-win situation.
Nickname unavailable
no it does not. its the exact opposite of what we were told in the
last 30 plus years by the free market demagogues.
here is the reality of being trapped in a conservative/libertarian/
fascist nightmare:Economics vs. Fakeonomics:Free markets are always
right, always and everywhere:Free trade is just free markets applied
internationally
http://www.huffingtonpost.com/ian-fletcher/economics-vs-fakeonomics_b_720327.html
Ian Fletcher
Adjunct Fellow at the San Francisco office of the U.S. Business and
Industry Council
Posted: September 16, 2010 07:45 PM
Economics vs. Fakeonomics
We skeptics of free trade are used to being told, "You don't
understand economics." In fact, one major reason I wrote the book Free
Trade Doesn't Work was simply to expose, once and for all, that there
do exist extremely serious and intellectually reputable arguments,
within the confines of accepted mainstream economics, which question
free trade. And indeed they exist.
But I've noticed something. We skeptics are often not really
struggling against real economics at all. When I pick up a copy of the
Wall Street Journal, or Forbes, or the New York Times, or turn on Fox
TV or MSNBC, or read papers issued by the libertarian Cato Institute
or the Peterson Institute for International Economics, I don't even
find economic arguments. I find a mischievous substitute for economics
we can call "fakeonomics."
What is fakeonomics? It sounds like economics to the uninitiated. It
uses the same language, addresses the same issues and fills the same
logical hole in the national policy discourse. Most people can't tell
the difference. But fakeonomics is not the real thing.
How is fakeonomics fake? It tells a story that goes something like
this...
• Free markets are always right, always and everywhere.
• Anyone who doesn't believe this is stupid. Smart people not only
understand that free markets are best, they like free markets, because
free markets mean opportunities to get rich.
• Or maybe they're corrupt. The opposite of free markets is
government. Government is always incompetent. It never does anything
right. Ever.
• Or maybe they're evil. Anyone who doesn't believe in perfectly free
markets is a Marxist wannabe or a loser jealous of more-successful
people.
• Free trade is just free markets applied internationally.
• Therefore all smart, good, successful people must believe in free
trade.
Unfortunately, fakeonomics is at best a crude parody of economics. It
is often larded with a thick layer of moral hectoring, courtesy of a
certain variety of the American Right which seems to think that
economics is its exclusive property, a stick given it by God to beat
liberals with. There is even a whole class of people, known as
"libertarians" who elevate fakeonomics to the level of an all-
encompassing moral ideology. (Their fundamentalist sect is the old Ayn
Rand cult, who call themselves "objectivists.")
So let's be clear about one thing: real economics does not support the
idea that 100 percent pure free markets are best. Not domestically,
not internationally. That's why the U.S. has, like every other
developed nation, a mixed economy, with government amounting to about
35 percent (pre-2008; it's spiked since then) of our GDP and various
laws, from child labor laws to environmental laws and the SEC,
regulating much of the rest. It's easy to fulminate against this fact
in beautiful after-dinner speeches about economic liberty, but the
reality is that when in office, even conservative Republicans grasp
the necessity of most of these policies -- whatever adjustments on the
margin they may make.
Surveys indeed show that about 90 percent of economists support free
trade. But, and this is crucial, only about 70 percent of them support
it without reservation. Economists are, in fact, well aware of a
number of problems with free trade, like:
• Free trade for America is one-sided, with most major foreign
economies practicing managed trade of one kind or another.
• When free trade involves trade deficits, it may be optimal in the
short run but is unsustainable over longer time horizons.
• Even if it increases GDP, it has even stronger effects on income
distribution and can thus harm many, or even most, of the people in
the economy.
• The adjustment costs of declining industries -- from unemployment
checks to the rubble of Detroit -- are huge and ongoing.
• It brings us cheap goods today at the price of building up economic
rivals who will take markets away from us tomorrow.
• It helps dirty industries move from environmentally-strict
jurisdictions to environmentally-lax ones.
• Even if it is efficient in the short run, efficiency per se has
little to do with long-term economic growth.
• The theory of comparative advantage -- which supposedly proves that
free trade guarantees win-win outcomes -- doesn't hold in the presence
of capital mobility between nations.
None of the above is especially new information, though these points
are legitimately controversial like anything else. My point here is
simply that economics does not grant free trade the blank check many
people seem to think it does. Nonetheless, the juggernaut of
fakeonomics, which doesn't understand this, rolls on.
The really scary thing about fakeonomics is that it is not just a
vulgar version of economics, served up to amuse the audience of Bill
O'Reilly's TV show. It is also believed in by people who should know
better. Like it or not, fakeonomics is mistaken for real thinking by a
disturbingly large number of people with top MBAs, graduate degrees in
serious fields, congressional staffers, et cetera. (I know; my job
obliges me to talk to these people all the time, and they tell me so.)
Perhaps it's just laziness on their part, but people who should be
taking their bearings from more serious sources -- people whose
careers depend upon the idea that they have genuine expertise -- are
drawing their ideas from fakeonomics. These are people who pride
themselves on understanding the most sophisticated ideas when it comes
to, say, corporate finance, but here they are, relying upon
intellectual constructs of a chat-show level of sophistication.
Make no mistake: Fakeonomics matters. For one thing, it is the implied
theoretical model of current U.S. trade policy. That is to say, if one
looks at American trade policy and asks what picture of the economy
one would have to hold in order to believe that these policies make
sense, fakeonomics is that picture. So whatever sophisticated version
of real economics someone like ex-Harvard professor Larry Summers may
have tucked away in his head somewhere, when he acts as economic
adviser to President Obama, fakeonomics is what he dishes out.
One can, of course, gin up rationalizations bridging the gap between
real economics and fakeonomics on any given issue at will. So there's
no point confronting people like Larry Summers with the gap between,
say, their own theoretical writings and the policies they support in
office. If they weren't bright enough to pull off a piece of minor
casuistry like that, they wouldn't be where they are in the first
place.
Why are the nominally sophisticated so misguided? Because fakeonomics
tells them what they want to hear. At bottom, fakeonomics is the
ultimate free lunch story. Its seductive message is that we can
consume all we want, right now, and never worry about the
consequences. "Free" trade translates as "don't worry about" trade.
The market forgives all sins.
Unfortunately for this happy fantasy, fakeonomics can only maintain
this fantasy vision by systematically ignoring half of economic
reality. It is, for one thing, almost exclusively focused on
consumption, ignoring the production side of the economy. So it has
plenty to say about how cheap imports provide consumers lower prices,
but blithely airbrushes out of the picture the way imports deplete our
industrial base. Of course, in the long run, nobody can afford
imports, however cheap, without the ability to produce something to
exchange for them. But that, of course, is the long run, and
fakeonomics is about instant gratification and letting the chickens
come home to roost in the next administration.
What does all this mean? It means that there are really two targets,
for those of us who would criticize free trade. There is economics per
se, which tends to be pro-free trade, but is actually surprisingly
well aware of the counterarguments and becoming slowly but inexorably
more skeptical. And there is fakeonomics, which is dogmatically pro-
free trade, proactively ignorant of the counterarguments, and
determined to stick its head in the sand. Shooting at the first target
does almost nothing, unfortunately, to hit the latter, which is
arguably more important, at least in the short run, for determining
real-world policy outcomes. As a result, the first question one must
ask when querying some piece of economic reasoning offered as
justification for policy is this: is it real?
Or is it fakeonomics?
Ian Fletcher is the author of the Free Trade Doesn't Work: What Should
Replace It and Why (USBIC, 2010, $24.95) An Adjunct Fellow at the San
Francisco office of the U.S. Business and Industry Council, a
Washington think tank founded in 1933, he was previously an economist
in private practice, mostly serving hedge funds and private equity
firms. He may be contacted at ian.fl...@usbic.net.
Nickname unavailable
here is another prime example, these people belong in jail for
selling out america.
free market economics:you sell your seed corn then starvation sets
in:chicagos tax base offers little hope for rescue in large measure
because the Daleys helped drive away their hometown industries by
supporting self-destructive free trade policies
http://www.huffingtonpost.com/john-r-macarthur/decline-of-daley-chicago-_b_721453.html
John R. MacArthur
President and Publisher, Harper's Magazine
Posted: September 17, 2010 04:17 PM
Decline of Daley, Chicago and U.S.
The Democratic Party indeed must be in very bad shape if the boss of
Chicago is relinquishing his nearly absolute power. Mayor Richard M.
Daley's bombshell announcement that he won't seek reelection is the
most significant indication yet that the majority party will lose a
great many congressional seats in November and that its love affair
with Barack Obama may be on the wane.
Daley's decision to vacate City Hall after six terms cannot be for
"personal reasons" -- reasons that PR people instruct their clients to
recite. (Daley merely said it was "time to move on.")
Rumor has it that his wife's cancer was a major factor, and I don't
want to suggest that Richie Daley is immune to such considerations of
mortality. But in the Second City, the mayor comes second only to God,
and I don't see how Daley could so brusquely terminate a political
dynasty founded by his father -- a legacy that must, at times, have
made him feel immortal -- unless something was terribly wrong.
Only in Chicago is the mayor's office more attractive to a
professional politician than, say, the U.S. Senate or an important
committee chairmanship in the U.S. House. As chairman of the Ways and
Means Committee, Dan Rostenkowski was arguably the fifth most powerful
person in the U.S. political hierarchy. But he still held on to his
post as 32nd Ward Democratic committeeman and never completely lost
his hankering to become Chicago's mayor.
Daley's popularity has been way down because of such foolish
boondoggles as the leasing of the city's parking meters to a private
company. Lately his habitual arrogance has continued as he
unapologetically shops other public services, such as recycling, to
the private sector. But no serious rival had emerged to run in next
year's mayoral primary and none was likely to surface.
The Daley family's genius, passed down from Richard J. to Richard M.
and his brothers Bill, John and Michael, has been to divide and rule
the machine's foes along ethnic and racial lines. Pitting whites
against blacks, Poles against Croats, Italians against Germans and the
Irish against everybody has long proved a fruitful strategy. It is
remarkable that in historically-racist Chicago, Harold Washington, an
African-American, was able to become mayor, albeit briefly and thanks
only to a temporary split in the Irish- and white-dominated Democratic
machine. It is more remarkable still, given Chicago's demographics,
that the city has never had a Polish mayor.
Daley's move, I suspect, is mainly motivated by the decline in the
fortunes of the national Democratic Party and his reduced ability to
maneuver locally without sufficient federal aid. Daley appeared
stronger than ever after the 2008 election: His own, locally-developed
candidate had taken the White House, and the new president's entourage
included close allies of the mayor such as Valerie Jarrett, Rahm
Emanuel, David Axelrod and Arne Duncan. Emanuel, as White House chief
of staff, was expected to deliver large quantities of pork, and Obama,
too, was counted on to bring home the bacon in the form of the 2016
Olympic Games.
But Emanuel evidently got distracted and hasn't sent back enough
money, while Obama fumbled his Olympics lobbying rather badly. Daley
has to be very disappointed.
Facing a $655 million city budget deficit this year, and with Illinois
state finances in shambles, it can't be much fun being mayor of
Chicago these days. Meanwhile, the pragmatist in Daley is anticipating
a loss of his party's control of the House, or at least a steep drop
in its Democratic majority -- and with it, the ability to shift
taxpayer money to projects that benefit the machine's patronage
system.
The city's own tax base offers little hope for rescue, in large
measure because the Daleys (Richie and his brother Bill, as commerce
secretary under Bill Clinton) and Rostenkowski helped drive away their
hometown industries by supporting self-destructive "free trade"
policies, including the North American Free Trade Agreement. Nowadays,
Daley sorely needs the taxes and salaries paid by the Zenith
television and radio plants -- gone to Mexico and Taiwan -- that once
vibrated across Rostenkowski's old congressional district on the
Northwest Side.
The Olympics were Daley's bailout plan, the ultimate combination of
public money and private boodle. Had the city won its bid, he would
have served an eighth term and presided, like Caesar, at the torch-
lighting ceremony. But the realities of a declining city in a
declining region in a declining country called a halt to his Pharaonic
ambition.
Daley will no doubt try to anoint his successor, or at least block any
enemies from seizing the throne. I expect someone truly homegrown will
win next February's Democratic primary, despite Emanuel's fancy White
House resume and big-money, investment-bank connections.
Emanuel joined the machine as a young adult and served four terms in
the U.S. House from a partly Chicago district, but he grew up in the
suburbs and suffers the disadvantage of never having been a ward
committeeman. The more likely ruler of the Daley fief is brother Bill;
Cook County Sheriff Tom Dart; or the family's sometime South Side
rival, Alderman Ed Burke, chairman of the City Council's Finance
Committee -- all of whom are Irish.
A split among the Daleys, Dart, and Burke could help Emanuel, or even
a prominent African-American candidate. But the Daleys got rid of
their top black talent, Obama, by sending him to Washington, so I'd
bet on the Irish.
John R. MacArthur, who grew up in the Chicago area, is a monthly
contributor and publisher of Harper's Magazine.
Cross-posted from Harper's Magazine.