Friday, July 12, 2013

What is the "Best Value" ?

Laurie and I have been having an interesting dialogue.(links below)  My perception is that she would like the Government to forcefully raise wages for American workers, punish companies that move jobs overseas, encourage the purchase of American Made products, take money from the "rich" to pay for it, mandate more expensive pollution control measures, etc. (ie the typical Liberal position...)  And it seems to me that she thinks the "rich" should pay more than the market requires to their employees.  Then she says something like this and I get so confused...
"I think our country needs a stronger, more comprehensive economic plan that buy American made products." Laurie  
"Now help me with this... "plan that buy American made products""  John 
"About buying an American car- I have nothing new to say. I prefer the best value on a car with less environmental impact." Laurie
Here are some questions that I have:
  • What does "best value" mean? 
  • Best for who? (See Eric's short sighted comment to me)
  • Is it all about what is the "best value" for my wallet, or something more?
  • Is it ok for "normal" people to seek the "best value" while insisting that the "rich" pay more than is necessary?  Or hypocritical?
  • How about insisting that companies and/or the "rich" who ship jobs over seas are evil, self centered, etc monsters that need to be stopped while happily purchasing products that have almost 0% domestic development or manufactured content themselves?
  • How would one evaluate "less environmental impact"?
  • Is mpg the only measure? 
  • What about manufacturing pollution in low cost countries?  Disposal of components?
 Now I respect Laurie's choice and am happy that she loves her car.  It sounds like they are a great value, probably have excellent quality, a low price, etc.

Yet this Liberal inconsistency of preaching that "they" need to be controlled and punished for sending jobs overseas and decimating Unions, while happily insisting that "we" get to still drive our fashionable VW, BMW, Mercedes, Audi, Toyota, Scion, Lexus, Yaris, Honda, Acura, Subaru, Nissan, Infiniti, Hyundai, etc cars because "we" want the best value for "our" wallet frustrates me to no end.

Thoughts?

G2A Where was Your Car Built?
G2A Burying Supply Side Economics?
G2A Prius vs Volt  FYI we had a recent comment from Richard in AZ on this post.

30 comments:

Laurie said...

maybe my typo is confusing you. I meant to write:

I think our country needs a stronger, more comprehensive economic plan THAN buy American made products.

Buy American would certainly help but it is not adequate to the size of the problem.

Here is a column with much info about how bad things are for the American worker.

The American economy is eroding the American job

My other comments have to wait as I as heading out to a soccer playoff game.

Anonymous said...

I would never drive a foreign care unless it was made in America.

--Hiram

John said...

Excellent link / quote.

"Workers in manufacturing, by contrast, had full-time jobs, averaging 40.9 hours a week — but 6,000 manufacturing jobs were eliminated in June.

Worse yet, the jobs being created paid a lot less than the jobs that were lost. While the average hourly wage of non-supervisory employees in manufacturing was $19.26 in June, it was $13.96 for retail employees and $11.75 for hotel and restaurant workers."

My point exactly, us consumers are buying product that is developed and/or built in foreign countries. Therefore we do not need as many full time higher paid manufacturing workers. We consumers are are making this choice.

Since I have spent my whole career working for American manufacturing firms that compete world wide, I am pretty aware of this issue.

John said...

Remember Hiram that manufactured here is good, but developed, manufactured and headquartered here is the best way to help the most American workers. Even if the company does source some components from overseas.

And I count Mexico and Canada as here since we are so closely tied together.

jerrye92002 said...

I don't know how instructive or applicable it is, but my definition of "best value" fits the classic definition of "marginal utility" from the economic textbook. That is, my next purchase, whatever it is, will be made because I find that the thing I am buying is worth more TO ME, for MY NEEDS, as I SEE THEM, than any other use of my money. So, for example, if I need a car and place a high value on putting less CO2 into the environment (I am a fool, but) I will buy a hybrid or very economical gas engine. (Not an electric, because they're powered by coal). Interestingly enough, if my only concern is life cycle cost for transportation, then I'm going to get that good-quality but lower cost gas engine, rather than the higher-priced hybrid. I don't care where it's made, unless I find value in "buying American" and, as we've already covered, that is a complicated thing to determine.

The basic question is how you establish your value proposition. If you are buying transportation for yourself, you want the thing with the lowest life cycle cost and that's that. If you don't have the up-front money for a good-quality car that lasts long enough to repay in lower maintenance and fuel costs, you get a used one, maybe even a clunker. But if you value US jobs, or the environment, or any number of touchy-feely political side issues, I don't know how you decide. Fortunately, not my problem.

Laurie said...

While buying an American car would help workers in the auto industry that is not my only consideration.

I also value contributing less carbon to the atmosphere and saving $ for other purposes. In my case the $800 I save each year on fuel can be spent on supplies for teaching students in my high poverty school and for donations to organizations whose work I support (Take Action MN, Growth and Justice, League of conservation voters, etc.)

I think progressive policies in congress and the legislature will do more to benefit workers than my choices as a consumer. Besides other than in the auto industry buy American is not very easy to do.

John said...

So you want and appreciate the freedom of choice regarding where and how much you spend. That makes sense to me and most Conservatives.

Yet you as a Liberal promote that the government should work actively to prevent wealthy people, companies, etc from doing the same... (ie keep jobs here, keep wealth here, pay taxes here, pay higher than necessary wages, etc)

How does this seem consistent to you?

If you are allowed to purchase a near zero domestic content vehicle because it provides you the "best value" based on your personal criteria. What is your rationale for supporting political agendas that are aimed to control the free will and wallet of others?

I would think you would be leading the charge to demand that the government encourage people to buy the Volt... I mean it is just as environmentally friendly as the Prius, it has ~75% domestic development and manufacturing content, it is built by expensive UAW labor, and it's cost/price would come down quickly as volumes increased.

As I said, a Conservative like Jerry who wants government down sized and out of our financial lives saying that he is going to buy what's best for him and his beliefs does not confuse me. (ie Conservatives are by belief system supposed to be self centered / free market) It is the Liberals who are supposed to care for the American workers and unemployed not supporting Ford, GM and their high priced Union help that have me puzzled.

Remember, true Conservatives wanted to let GM go through the real bankruptcy process. That way GM could have shed much of their financial burdens and been resurrected as a cost effective company. Yet Democrats decided that would be unfair to the workers, so they pulled strings and did a modified bankruptcy.

All this work and then the Liberal citizens are still making a personal choice to walk away from their Union friends and their product. Worse yet, the Democrats government intervention turned off a lot of Conservatives like Jerry that were dedicated to buying GM product. So you helped save a company while hobbling it.

Just imagine if every Liberal actually supported their friends in the manufacturing world with their wallet and not just their mouth. Maybe the Ford truck plant in St Paul would still be open... Market share

And remember that development and manufacturing don't only pay well and provide full time jobs, they support a whole bunch of jobs in the community. Automobiles are particularly good for a country because of their high cost and complexity.

John said...

Now I am not saying that people should not buy foreign products. I own a 2004 Honda Pilot and a 2004 Yamaha FJR 1300. However I do feel strongly that people should consider the domestic options first to see if they can meet your needs. In these 2 cases the domestics did not have a similar vehicles at the time.

And to be consistent with what you preach, the Liberal leaning folks should be doing this for sure... And yet they seem to be the most enthralled with the foreign brands. At least if their bumper stickers are an accurate indicator.

John said...

I don't remember if I mentioned this, when I was in Sweden it seemed that 60+% of the cars on the road were Volvos. Ironically I did not see a Saab anywhere. My point is that those Liberals knew how to support their domestic workers.

Of course this was still not enough to keep the relatively small company domestic.
Volvo sold

Laurie said...

I have been persuaded of the value of buying American when possible. In this case there I don't thing there is a comparable American alternative. Even with $7500 federal tax savings the Volt at $32,000 costs $13,000 more than my Prius.

I have owned many cars over the last 30 years and when we noticed that Toyotas seemed more reliable than American made cars we stopped looking at other models when car shopping.

Anonymous said...

"Remember, true Conservatives wanted to let GM go through the real bankruptcy process. That way GM could have shed much of their financial burdens and been resurrected as a cost effective company. Yet Democrats decided that would be unfair to the workers, so they pulled strings and did a modified bankruptcy."

There were a number of possible outcomes, and I am not sure that was the likeliest. The company could also have been sold for parts. A sale in bankruptcy, let's recall, is a distress in which the seller rarely gets a good price for his goods. Think of it in "It's a Wonderful Life" terms where cool headed Potter is buying when the rest of the town is selling.

==Hiram

John said...

Laurie,
I understand your view regarding the Prius and don't disagree with your purchase. It best met your personal wants in your view. You believe it has better quality, is less expensive and in general more ideal to meet your personal needs and wants. It was a very rational decision given your criteria and perspective.

My point is that you and all your Liberal peers want the freedom to ship all those jobs over seas to save some money, yet you almost always support and argue for forcing higher costs onto American business and "rich" citizens.

How do you rationalize this dual standard? That is the question I am asking.

Laurie said...

I really don't understand the question. I paid a lot of sales tax on my new car and pay gas tax every time I fill it up (with what's leftover after paying income, property, and entitlement taxes.)

What is it you think I should be doing differently to be more consistent? Should I be supporting less restrictions on free trade or more? I really don't know much about that.

Some rich people spend their $ in efforts to keep their taxes lower. I vote and spend a little of my money in support of policies that I think would be best for the state/county. Isn't that the way democracy is supposed to work. Btw if we had medicare for all, a liberal position, that would reduce a cost on business tremendously.

John said...

If you believe it is right and good for citizens to have the freedom to buy their product or service whereever they get the best value from their perspective, then I would expect you to respect and support companies and the rich doing the same.

That would mean not lobbying for and supporting policies and parties that make it hard to send jobs abroad, or punishing them financially for doing it... That would mean supporting free trade agreements, market based compensation for employees, right to work, etc.

Using the government to set minimum wages, mandate benefits, fine companies for sending jobs overseas, restrict trade, promote unions, etc is similar to having the government interfere in the decision you made. How would you have liked the government saying how much you had to pay, where you could buy your car from, what car you had to buy, etc?

It doesn't make sense, yet the Liberals want the government to control businesses and rich people in this way. They want to force these groups to choose solutions that are not the "best value" for them or their stockholders. They want to force the businesses to do what the Liberals think is the "best value" for the country.

Now I would understand if the Liberals were all huge "Buy American" supporters who put their money where their mouth is. (ie support the American worker no matter the cost) However that does not seem to be the case in my experience.

My point is not to pick on you, my point is simply that Liberals want this freedom to choose for themselves with regard to their personal decisions. Yet they want to use government to control other people and businesses. This is the inconsistency I am focused on.

As for health costs, I am pretty sure us Conservatives disagree that Medicare for all would save money while producing the same or better results. My view it would increase cost and reduce quality / innovation for most of us. Though it would possibly improve things for the unfortunate minority.

John said...

Come to think of it.

Wouldn't your "Medicare for All" comment be just like "Chevy Volts for All"... I mean you would be forcing people to choose one insurance company, whether it was the "best value" for them or not. Whether it violated their faith or not...

Just because you / Liberals think it the best value for "all" of us... Especially those that are not currently insured.

jerrye92002 said...

Laurie, you've made two mistakes here. First is probably a typo, where you say "if we had Medicare for all" I think you mean "(government paid) medical care for all" because Medicare is NOT optional! EVERYBODY is required to take Medicare at age 65, and the premiums get taken out of your Social Security. The only option you have is how much "supplemental" insurance you want to buy on your own to cover the HUGE amount of care that Medicare, for all its ridiculous paperwork and overhead, does not. Without that supplemental, many doctors are refusing new Medicare patients and Medicaid recipients (for poor folks-- expanded under Obamacare) have even more difficulty. Even with supplemental insurance, most seniors find that their quality of care goes down and their costs go up.

Again, the simple question has to be "who chooses?" If you want the government to choose for me, then you must give up the right for you to choose for you, and it doesn't matter in the least how much "good" that government choice supposedly does.

Laurie said...

I am trying but I still can't make sense of your argument. If the UAW and its supporters had successfully lobbied for protectionist policies such as a high tariff on imported cars or banned them from being sold altogether then I would be happily driving a new Ford Focus or maybe would have opted for a used car, with out a high mileage hybrid to entice me to go new.

I don't know enough to have a pt of view on free trade vs fair trade. It does seem that it makes sense to structure the tax code to make keeping jobs here more attractive to businesses. I know nothing about specifics in this area. I spent about a minute researching a liberal position on trade and found the following among many essays focused on middle out economics.

Balance Trade (center for American progress)

I didn't read it yet as it is longer that I usually prefer to read but I plan to skim it later.

About medicare for all- I think eventually we will move away from employer sponsored healthy care plans to make businesses more competitive globally, as I think we are the only country that uses this model to pay for our health care

John said...

Laurie,
Ignoring the idea of a trade war...

So you be an accepting consumer and citizen if the US government slapped a 50% tariff on all imported cars to drive US citizens to buy from Ford or GM? You would accept the government driving up the purchase cost of all American cars in this way? (new and used) You wouldn't say that it is unfair to the poor that they could not buy the much less expensive foreign cars? Or that it is unfair that only the rich can afford a foreign car?

You would just pay the extra $8,000, let government control you and happily drive your Ford Focus? Really?

Laurie said...

Why would the Ford Focus cost $8000more? If that is the case I would definitely be buying a used car (or preowned as they say.)

My point is I don't have a problem with our democratic govt making the policies then I just make my choices within that framework, and advocate for policies I think are better. I think high tariffs on imported cars are extremely unlikely.

jerrye92002 said...

Laurie, thanks for the link. I can't say I disagree with the suggestions being made there, but what I do NOT see is the notion of making the US more competitive, to avoid the problem of trade imbalance in the first place. The US worker can outproduce anybody in the world, thanks to capitalism and free markets. But when government tinkers with the free market through regulation and taxes, that advantage gets lost and consumers either pay more than necessary or we ship the jobs overseas and suffer a trade imbalance. Interestingly enough, adoption of the FAIR tax would solve this export problem better than a magic wand.

I agree with you on moving away from employer-sponsored health care. Believe it or not, Presidential candidate John McCain proposed exactly that but nobody on either side liked the idea and we got Obamacare-- an infinitely worse solution-- instead.

I'm still not grasping how you think government can make a policy restricting your choices, and then claim you still have the right to choose? Are you OK with the government telling you when and under what circumstances you could have an abortion, so long as it wasn't a total ban?

John said...

By placing a tariff on incoming goods, competitive pressure is eased and prices go up accordingly. That is why it is referred to as protectionism. This would be to help pay for those higher American wages that you support. It would also increase the price of used cars.

That is why the Chinese can say they have saved us trillions of dollars, even though it cost us a lot of domestic jobs.

When you lobby to control the actions of business and the rich it can have the same effect. (Ie raising min wage increases costs to all of us)

So are you ready to lobby for tariffs to promote American employment and wages even though you it will raise your cost of living?

jerrye92002 said...

Just a fact to throw into the mix: US manufacturing output, in constant dollar terms, has risen by 50% in the last 15 years. It isn't that we are "shipping jobs overseas," but that American workers, thanks to capital investment, have become more productive. Free (but fair) trade benefits EVERYBODY. US workers are hobbled most in competition because of government regulation and taxes, which makes the "playing field" unfair to US.

John said...

Do you any regulations in particular that you see as excessive?

Laurie said...

I don't think democrats want to make our trade policies more protectionist. Wasn't it Clinton who signed NAFTA?

I think dems would like to raise the minimum wage. If this raises the price of my hamburger I can live with that.

Maybe it would be better to raise the earned income tax credit instead for low wage workers. But which policy would be better is irrelevant as the house will do neither, though we may raise the min wage here in MN next year.

John said...

I must be doing a poor job of explaining my point... Oh well...

jerrye92002 said...

How about stiffing the GM investors, "gifting" the company to the unions, and then mandating what cars they will and will not produce? How about mandating that every employer pay more than minimum wage, arbitrarily set, or provide "free" health care to those employees? How about putting a stiff tax on coal, making it unprofitable to produce electricity, and then stopping the Keystone pipeline for phony-baloney, absolutely worthless posturing on "global warming"? How about stopping all deep-water oil drilling, arbitrarily and contrary to court order, or stopping offshore drilling for oil? How about telling car companies what their fuel efficiency must be? How about that corporate IRS code, requiring hundreds of billions of dollars in compliance cost alone?

Total cost of regulation, according to:
http://www.freedomworks.org/blog/jhammerton/the-hidden-cost-of-regulation

is $1.75 TRILLION, even greater than the annual deficits under Obama. Some of it is "good," of course, but 90% of it is just government meddling, IMHO.

Laurie said...

John,

You are right that I don't get your point, but thanks for trying to explain it. I don't think you get my point either. Just because I think taxes should be higher doesn't mean I am going to submit extra $ to the govt.

Jerry, your last comment was very amusing. It seems unlikely that much of that agenda will pass, though I am still hopeful about blocking the keystone pipeline. Why not leave some of the carbon in the ground and transition to clean energy more quickly.

jerrye92002 said...

Laurie, what you say makes good sense from a pie-in-the-sky liberal who doesn't trust people to make their own decisions. But people DO make intelligent decisions about what energy they use. If wind or solar could compete with coal and oil on a cost basis, we would use those sources-- simple as that. If they were the same price, those who worried about "carbon pollution" would buy that form of energy to get the "bonus" of reduced CO2 for the planet (thus starving all the plants). That free choice is not what's happening.

About that Keystone pipeline... does Obama really think Canada is going to leave that oil in the ground if the pipeline isn't built? If so, he's a bigger fool than even I previously believed. That oil will get burned by SOMEBODY, probably after a long, energy-intense ocean voyage, and likely with far fewer pollution controls than in the US (one more regulatory hurdle for US businesses).

Back to clean energy. We could produce 20% of US energy requirements from wind (at 3X the cost of coal) by simply covering the entire state of Minnesota with windmills. No towns, no farms, no lakes, just windmills, service roads, thousands of miles of power lines, and the same number of coal-fired power plants we would have needed anyway, for those times when the wind isn't blowing. Or one good nuclear plant which, by the way, emits far LESS radiation than the coal fired plants would.

As I said, people tend to make their decisions intelligently (given the information). Governments do not.

John said...

Laurie,
I don't think you should submit extra $ to the govt, however I do think you do want higher taxes, minimum wages, unions, regulations, etc because you want to help the poor and working poor.

As you said, you would have no problem paying an extra dollar for the burger. Yet your actions show that you will avoid spending extra to help the American worker who you claim to support.

I mean you are an ardent Union policy supporter, yet you didn't buy their product. Instead you bought a product from the suppliers who are helping to decimate our Unions in the private sector.

You also support regulations to disuade companies from moving jobs over seas, yet you fund the overseas jobs.

You want higher tax revenues in the USA to support programs, yet you spend so most of the profits, income, sales, etc are taxed overseas.

This is the Liberal inconsistency that confuses me. If Liberals are truly out to support the poor and working poor, they should be making sure they buy as much American content as possible. Yet they seem to do just the opposite, while ranting about the actions of others.

They are apparently the pot and the rich/business are the kettle.

jerrye92002 said...

Not to be glib or offensive, but I have always said that liberals want to put somebody else's money where their mouths are. If you want to help the poor, then by all means feel free to do so, do NOT demand that government steal from my hard-earned and give it away willy-nilly, so that you feel better for having "helped." I've been around charity for a long time, and I know for a fact that government cannot do charity, period. Proof on request.