Monday, October 28, 2013

How to Buy American? Why?

I think one of Laurie's last comments deserves some further discussion.
"I think buy American is not easy except for a few large products such as cars and motorcycles. Are there American made TVs for instance? Or where would one find American made clothing to purchase?

In the last 5 years all of the increase in income has gone to the 1% and this is not because Americans had better shopping habits 10 or 20 years ago." Laurie


I agree that in this globally competitive world it is very difficult to buy pure "American Made" products.  However I prefer at least to err on the side of buying from American firms.  As I have mentioned before, the actual production costs are often not even half the cost of the product.

Meaning that if you pay $1,500 for a refrigerator, it is likely >$750 goes to pay for development, testing, accounting, marketing, logistics, management, etc.  Now do you want to buy that Samsung/LG unit or the GE unit?  Or that Samsung/LG phone vs the Apple/Motorola phone?  Etc.

And if you are concerned that the management of GE, Apple, Motorola, etc are paid to much...  Just remember that they likely live in the USA and they will be paying ~30% of it back to the USA.  Whereas the management of Samsung/LG will be paying ~0% back to the USA...
ABC Made In America
CNN Made In America

As for funding the Wealth Gap, the big "Buy Foreign" swing started in the late 1970s when Honda and Toyota started to be perceived as high quality low cost cars rather than cheap cars.  And the American consumers started to see the USA cars as expensive low quality gas guzzlers.  By the way, they were correct.  The Big Three and their Unions had been taking advantage of their near monopoly market power to collect their money while providing questionable product.  Of course now things have changed, and yet the customers have new brand loyalties...

So the consumers went to "Buy Foreign" to get low cost and better quality, which forced concessions by American companies and their Unions. (ie margins and compensation fell while R&D/Quality expenses increased)  Now why the Wealth Gap creation, the global competition lowered or slowed the growth rate of employee compensation in America.  Whereas the financial capital simply flowed to where ever the profits were being made. (ie people bought shares of Toyota, Honda, Subaru, etc)

Thoughts?

15 comments:

John said...

HP Wage Inequality

Please note that they start their comparison in 1983... Ironically about the same time GM and Ford felt scared enough to start asking for Deming's help. You see Deming tried to offer them guidance in ~1950 and they turned him down because they knew better.

At which time Deming found a country that was desperate enough to listen to him and his ideas. You see Japan was a mess after WWII and most of the companies there soon became his avid followers...

Kind of ironic isn't it that an American taught the Japanese how to make quality product...

The detail that I find humorous was that in 1981 Deming was ~81 years old. So when the VP's of Quality for huge corporations would contact him for help, he just said no. He said that he would only work directly with their CEO, because making the changes required huge cultural changes and he did not have time to work with companies that were not serious about improving...

John said...

A few interesting Charts they missed:

It looks like the stock markets are driving most of the increase. Which makes sense since most of the companies reward the CEO's when the value of the company goes up above the goal.
CEO Pay Multiplier

Mobility looks pretty stable.

Incarceration: Something has to change in the Black communities.

All graphs

Sean said...

The fact that mobility is stable doesn't mean it's good, though. By most such measures, our mobility is worse than Western Europe's.

John said...

Perry China USA Mfg Rates

Sean,
So who or what is causing those mobility rates to be where they are?

The folks who are incarcerated making BAD decisions. The folks who drop out instead of finishing their free education, us consumers who have promoted the shipment of low academic level/ high skill jobs over seas, those businesses who built what we asked for, etc???

Laurie said...

"One reason for the mobility gap may be the depth of American poverty, which leaves poor children starting especially far behind. Another may be the unusually large premiums that American employers pay for college degrees. Since children generally follow their parents’ educational trajectory, that premium increases the importance of family background and stymies people with less schooling."

Harder for Americans to Rise From Lower Rungs

this opportunity index shows MN as #2 in the country for a bunch of factors combined that lead to greater opportunity.

Laurie said...

about incarceration, things can change in the larger community as well.

" an overflow crowd of 400 people packed the Capri Theater on the north side of Minneapolis as Target Corporation committed to remove the criminal history box from all of its job applications. Nationwide.

Closing the racial jobs gap and creating real economic opportunity for low-wage workers is a daunting challenge that requires all of us -- community members, corporations, philanthropy, and government."

-that is from an email I received from Take action MN (after I opted not to go to the meeting as I was too tired to stick around N Mpls until 8:00 pm)

for slightly more info:
Targeting the Racial Jobs Gap

John said...

Now did you notice that they also said that most of our rungs are better off than those of the "more mobile" countries, therefore it is harder to jump rungs.

I liked the closing points. "Mr. Salam recently wrote that relative mobility “is overrated as a social policy goal” compared with raising incomes across the board. Parents naturally try to help their children, and a completely mobile society would mean complete insecurity: anyone could tumble any time.

But he finds the stagnation at the bottom alarming and warns that it will worsen. Most of the studies end with people born before 1970, while wage gaps, single motherhood and incarceration increased later. Until more recent data arrives, he said, “we don’t know the half of it.”"

So I wonder what is causing the social behavior issues? I don't think poor people are driven to crime, and single motherhood. These are choices. Maybe the reduced role of Christianity in our social fabric is having a consequence...

Do you truly believe that criminal background checks are pointless and unfair? Or did I misunderstand your point.

Laurie said...

The point is not to ask it on the initial application, thereby giving applicants with a record probably zero chance at a job. When asked later in the process people at least have chance to explain their circumstances and try to make some sort of positive impression.

Or maybe people with a record should just return to their life of crime

John said...

That sounds fine, I was just hoping you weren't recommending the end of background checks. Especially for a position that requires handling cash, handling merchandise and overseeing dressing rooms.

John said...

FYI, the Rich Gap comments are going strong at MinnPost. I just posted a comment regarding this Buy Foreign being a major cause of the wealth gap issue theory of mine. However it has not showed up yet...

John said...

And Peder's post also

Laurie said...

a two second glance over there was all I had the energy/interest for. To me it seems a fundamental divide between the liberal and conservative viewpoint is that the rich "earn" their millions/billions of dollars. I don't buy it. The game is rigged. No person is that genius or hardworking to "earn" that kind of money. Were CEO's that much dumber and lazier back when they only made 50 times more than the workers in their companies?

John said...

Interesting question...

What do you think would happen if every Liberal in the country started only buying GM & Ford products? They have a pretty good line up now. Could Michigan and Detroit start to recover, would the UAW become more powerful again?

What if we stuck to Motorola and Apple cell phones, and GE appliances? American made furniture?

How many jobs would that create in the offices and manufacturing floors of America? Thoughts?

If we get to "full employment, how much would wages increase?

Of course, Japan, Germany, South Korea, China, etc may have some cash flow problems for awhile... The question is where do you want your hard earned money to go?

The USA employees, businesses & government, or to the employees, businesses governments of those other countries?

As I usually say, I expect the Ayn Rand Conservatives to do what is best for them, but don't Liberals believe in doing what is best for the American workers?

John said...

Humorous story. I saw a VW Tiguan with a bumper sticker on it. So I guessed the political leanings that were being voiced... Yes, it was an add for a Progressive talk show or something... I dislike being correct about things like that...

By the way, this individual has an improved domestic content rating that accounts for more than just the production content. Check it out.

Kogod Now Domestic Content List

John said...

That list is cool... You can sort by all kinds of stuff.

I thought R&D was interesting because I knew that Honda and Toyota had a significant design presence here.

And I also found the variation within the Ford line interesting. If you did not know, they are in cahoots with Mazda.

Also, I think Ford, Chrysler and GM all have plants in Mexico and Canada...