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The National Manufacturing Strategy Debate

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Reposted from Campaign for America’s Future

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The National Manufacturing Strategy Debate

Dave Johnson  |  April 13, 2012  |  Campaign for America’s Future

President Obama has been pushing policies to boost American manufacturing. Democrats in Congress are pushing a package of bills under the label “Make It In America.” The Obama administration’s Gene Sperling gave a big speech recently describing the vital importance of a healthy manufacturing sector to our economy. But others say promoting manufacturing is “the wrong target” and reviving manufacturing won’t help revive our economy. So what’s the story?

Gene Sperling, Director of the Obama administration’s National Economic Councilgave a big speech at the recent Conference on the Renaissance of American Manufacturing. Sperling talked about how a manufacturing “commons” works, and why it is a good thing if government promotes this commons.

A manufacturing commons is an ecosystem, in which manufacturers, suppliers, designers, innovators and all the other manufacturers, suppliers, designers and innovators all complement each other, creating a “cluster” effect. When all of these components are working together it creates a “virtuous cycle” but when they don’t it creates a “vicious cycle.” So because the sum of these parts is greater than the whole, each component’s interests do not align with the interests of the whole — and “our” (We, the People’s) manufacturing capacity is degraded, which degrades our standard of living. So government (We, the People) must play a role in promoting the whole effort. From Spreling’s speech:

The ecosystems that grow up around these intersections of innovation and production tend to be complex. They are the result of evolutions that occur over periods of years and decades. Once the virtuous, reinforcing cycles are broken they are difficult to recreate, and they can turn to a vicious cycle. That’s why losing pieces of our manufacturing base should be such a serious concern.

… For any single firm, the decision to move production elsewhere may make economic sense. But that decision impacts suppliers and the local talent pool. This makes the decision even easier for the next firm to leave and even harder for the next firm considering coming there to say yes.

Job Loss Not Just Competition And Productivity

Sperling traces the history of our manufacturing and shows that we didn’t lose jobs when competing with Japan, and didn’t lose jobs during periods of high productivity growth. He shows that what happened between 2000 and 2009 (the Bush years, and China in the WTO) with the loss of 50,000 factories and millions of manufacturing jobs was different, saying “the dramatic loss of manufacturing employment in the past decade was a break from the past and cannot be explained by the conventional view of productivity and technology gains.”

Since 2000, the manufacturing sector lost nearly one-third of its workforce, a total of nearly 6 million jobs. Unlike the preceding decades, according to the Federal Reserve, manufacturing production, the measure of the physical amount of goods that we make, actually declined from 2000 to 2010 by five percent. This drop was not just a result of the recession. From 2000 to 2007, manufacturing production grew at only 1.3 percent per year, the worst peak-to-peak performance since World War II.

Sperling explains why this loss is so significant to our economy: manufacturing is special in that so many other jobs depend on manufacturing, extending “from the web of suppliers that support manufacturers to the communities where manufacturing plants often serve as an anchor employer.”

For those of you here from towns across the U.S. that rely on a major manufacturer, or states like Michigan where I come from, you understand the impact of manufacturing. In addition to the web of suppliers, the expansion of an auto plant brings other types of businesses to town including new restaurants, retailers, and service providers feeding off of this economic activity. If an auto plant opens up, a Wal-Mart can be expected to follow. But the converse does not necessarily hold – that a Wal-Mart opening definitely does not bring an auto plant with it.

So it is clear that this is not just about the back-and-forth of companies competing, we have a national interest in bolstering the manufacturing sector.

Finally, Sperling described some of the administrations manufacturing initiatives. He did not come out and advocate for a coordinated national industrial strategy — which every major competitor has and we don’t have. But his speech did advocate “policy to support manufacturing.” This is at least a start.

Criticisms And Agreements

Matthew Yglesias at Slate, in Forget the Factories writes that it is “foolish” and worries about the, “troubling possibility that these ideas will actually guide policy in a second term rather than simply serve as props in a re-election campaign.” Yglesias writes that.

it should be obvious that the path forward for America is to focus on our strengths in information technology and media, and not compete with the Chinese for manufacturing supremacy.

Yglesias writes that manufacturing areas are “poor” while high-tech areas are “richer” and “more prosperous” and we should “learn from the most prosperous parts of the country, not to imitate Chinese clusters that are even poorer than America’s industrial hubs.” Also, “creating new billion-dollar software startups has a lot more to do with the future of American prosperity.”

Yglasias concludes that we should “instead build and expand new industries that push living standards up and keep factory owners searching abroad for cheap labor.”

Ezra Klein, writing Is industrial policy back? at the Washington Post, writes that “cozy consensus against industrial policy is, at least when it comes to manufacturing, flawed.” Describing what Sperling’s argument, Kleinwrites,

There is, in other words, a building argument that the market is failing to appropriately price the benefits of manufacturing firms. They’re worth more to the economy than they are to individual firms. And that’s the key to this new argument: Sperling isn’t saying America should support the manufacturing sector because it delivers good jobs, or it’s been important to America’s middle class, or even because China is competing unfairly. He’s saying there’s a market failure. And even the most orthodox economists will tell you that it’s appropriate for the government to intervene to correct market failures.

Even so, he says the Obama administration isn’t really doing all that much,

For all this, the Obama administration’s strategy to promote high-tech manufacturing is modest: A couple of tax cuts, mostly. Some money for research into basic technologies and new techniques. And a sustained effort to talk up the industry’s importance and thus signal to investors that America intends to fight for its manufacturing base. None of these are gamechangers.

At least the consensus against doing anything is changing.

Economist Mark Thoma writes in Is Manufacturing the Answer?, “At one time I would have been opposed to industrial policy, but I have been reevaluating my position lately (I can’t say I’ve been convinced as of yet, but I want to stay open-minded on the question).” He links to EPI’s Lawrence Mischel, who writes in Robert Lawrence misleads the New York Times on manufacturing, saying that,

… closing the trade deficit would provide millions of jobs and boost the economy. For instance, my colleague Robert Scott has shown that growing trade deficits with China eliminated 2.8 million U.S. jobs between 2001 and 2010 alone, including 1.9 million jobs displaced from manufacturing. Similarly, correcting the currency imbalances with China, Hong Kong, Taiwan, Singapore, and Malaysia could add up to $285.7 billion (1.9 percent) to U.S. GDP, create up to 2.25 million jobs over the next 18 to 24 months (most in manufacturing), and reduce U.S. budget deficits by up to $71.4 billion per year.

… manufacturing employment will not return to 25 percent of employment. Nevertheless, we can gain a lot of manufacturing jobs by strengthening the recovery and through appropriate trade and currency policy. This would provide millions of good jobs, aid many communities, and be good for the nation.

At Financial Times, Edward Luce writes in America reassembles industrial policy that we do have an industrial policy, that favors oil and Wall Street,

Whether it is the schooner-rigging of tax incentives for Wall Street – and the federal tax system’s subsidies for debt over equity – or the panoply of write-offs for Big Oil, Washington never stopped promoting favoured sectors. Manufacturing was simply not among them.

Most are of long pedigree. Some might say it would be easier to pass through the eye of a needle than to separate the fossil fuel sector from its Washington subsidies, which date from the second world war. No presidential hopeful would dare to suggest scrapping Depression-era farm subsidies because they skew so heavily towards key states such as Iowa.

Luce points out that Facebook and Twitter might be glamorous, but making actual things is where innovation comes from,

Facebook and Twitter may bring disruptive social change. But the most valuable innovation still comes from making products such as semiconductors, batteries and robotics.

Just Look Around

I think a problem with economists (and a lot of big-city columnists and journalists) is that they somehow are unable to just look around them. All one has to do is drive around the midwest for a few days, Michigan, Ohio, etc. and you will see for yourself how important – and different – manufacturing is to the country, and what happens when factories close. It affects the entire community and those jobs are not replaced – and the ripple effect from the loss of a community’s jobs base is terrible. All the other jobs that manufacturing supports go away, too, when manufacturing goes away.

I live in Silicon Valley. Facebook, Google and Twitter employ relatively few people relative to manufacturing. Apple sends its manufacturing to China, because in China working people don’t have any say, so they can treat workers there worse than workers here in our democracy will allow. In fact Silicon Valley has high unemployment, in some areas here as much as 25% or more of the office and light industrial buildings are for lease, and our downtowns and commercial streets have plenty of empty stores. They’re just newer, so they don’t look as bad as the downtowns across the midwest. But it is as bad.

In February economist Christina Romer wrote in a NY Times op-ed, Do Manufacturers Need Special Treatment? that our government should not promote manufacturing. She wrote,

American consumers value health care and haircuts as much as washing machines and hair dryers. And our earnings from exporting architectural plans for a building in Shanghai are as real as those from exporting cars to Canada.

I responded, in Manufacturing On Planet Economus, and think it very much applies in response to this ongoing discussion:

Here is the difference: We can’t just keep servicing each other. This “service economy” thing hasn’t worked out so well here on Earth, and now we have a huge trade deficit. It is “better to produce real things” because that is what you sell to others to get the money to pay each other for haircuts (and scissors).

Manufacturing brings so much along with it that entire economies have been, are and will be supported. China isn’t making its living by cutting each others’ hair. Neither is Germany, or other countries that have realized the importance of manufacturing and manufacturing policy to an economy.

Manufacturing brings with it all the businesses in a supply chain, it brings the research and innovation that manufacturing requires, and it brings a lasting real infrastructure that requires enormous investment to duplicate elsewhere before competition is enabled. Today we have a tremendous current account imbalance that resulted from the terrible trade deficits suffered since we were invaded by this crowd from planet Economus, who told us we don’t need manufacturing – that we should transform ourselves into a “service economy.” And it will require enormous investment to restore the ecosystem that we allowed to escape to other countries in that period.
Once you’ve got it, it’s hard to lose it, and once you lose it, it’s hard to get it back. Not so much with services.

Once you’ve got it, it’s hard to lose it, and once you lose it, it’s hard to get it back. Not so much with services.

23 Responses to “The National Manufacturing Strategy Debate”

  1. Harry Moser says:

    Great article!
    The Reshoring Initiative http://www.reshorenow.org is helping companies see that it is increasingly in their own self-interest to bring some of the work back.

  2. Milt Heft says:

    It is absolutely astonishing that there is still a confusion between “jobs” and “production”. Production produces wealth, while jobs produce only sweat. The ancient Greeks knew more than some of us here today when they said: “If only the shuttle could weave itself then we would not need slaves.” Advances in technology are constantly displacing human labor. “Jobs” are only one way of distributing the wealth produced by manufacturing. The vehicle for this distribution is “money”. There are many ways of obtaining money beside through “jobs”. Money can be inherited. Money can be printed and given away. Money can be stolen. Money can be taxed. The purpose of “jobs” is to help produce wealth. When production does not need this help then we will not need “jobs”. We’ll just have to figure out a sensible, non-violent way to distribute the fruits of labor-less production. Meanwhile, let’s keep our eyes on the right ball: PRODUCTION.

  3. Mo says:

    Follow the money printing out of thin air and you can see why the US is in this situation. The US prints money out of thin air to fund outsourcing, military bases and conflicts overseas, infrastructure spending abroad and consumption of foreign made products through debt. Other countries print money to fund industrial activity and provide thier manufacturers with unlimited credit to fund production which allows them to dump products below cost.

    When it comes to work, there is always work that needs to be done. Yes some sectors through automation will demand less labor but then people will be needed to program the machines, manufacture them and maintain them. Additionally there are thousands of bridges, miles of tracks, power plants, manufacturing facilities and millions of apartment houses and homes that could always use upgrading and renovation for example. So there is always work that can be done. If the US was really losing most manufacturing jobs due to automation then more goods would say made in USA.

  4. Bruce Bishop says:

    The Democrat’s “package of bills” is a package of fluff. This is like those students who cut class all semester, then try to cram the entire load of projects, papers and studying into the night before the final exam.

    These people haven’t done diddly-squat about our lost manufacturing jobs for three and a half years, now they are going all out to “save manufacturing” up until the election, then it will be back to business as usual.

    I will believe that our government is serious about saving manufacturing when they start talking about “balanced trade” or some serious tariffs. You can Google “balanced trade.”

  5. Bruce Bishop says:

    Gene Sperling’s “manufacturing commons,” is a thinly disguised attempt to get the government more involved in manufacturing, i.e. socialism.

    The true “ecosystem” that coordinates the flow of raw materials and components to manufacturing companies is the free market. Any attempt by the government to “help” with this process will be less efficient and more costly. It will result in surplus materials and shortages, layoffs and overtime, more government employees and fewer manufacturing employees. When it becomes obvious that it is not working, the traditional government response will be to increase the amount of government involvement, thus increasing the negative effects.

    The government’s only practical, (and constitutional) role in manufacturing is to protect U.S. companies from predators like Communist China who are using essentially slave labor with no human rights, product safety, intellectual property or environmental protections. Our government has essentially FAILED at protecting U.S. manufacturing from foreign predators.

    • MK says:

      Bruce,

      You have read too much Ayn Rand and too little history.

    • Tom T says:

      China is a perfect example of a predatory nation but we have predatory companies in the U.S. who do the same thing, often when it is illegal, and get our political and judicial elite to not hold them accountable as to the damages. It is crony capitalism where money buys the excuse for such poor governance and the results are a much poorer economy and a concentration of wealth into the hands of the “cheaters” who are paying off the political and judicial elite to not be held accountable under the rule of law.

      Tom T.

      • Bruce Bishop says:

        Tom T,

        Could you give us an example of a “predatory company,” in the U.S., that is doing “the same thing,” “when it is illegal”?

        I assume you are talking about manufacturing companies. If you are talking about Goldman Sachs, then . . . nevermind.

  6. Tom T says:

    Bruce, it is illegal when it is against the law. There are many things that are against the law but if the law is not enforced, like the anti-trust laws, then there is predatory action. In the bank’s case, there are many, many large banks who came in to small bank’s lending areas and used “legal” Wall Street money because with Glass Steagal being repealed, it became legal although it was still predatory in many cases.

    Any time a bigger operation comes in and reduces their prices in that geographical area to run out companies in the short run so they can capture the market in the long run, it is predatory. It is how the big get bigger. It is how all of the trusts in the book, “The Robber Barons” did business and it cut out many small businesses so the big business could capture that business. It leverages the economy and financializes it. All one has to do is to have deeper pockets in order to run small enterprises below their average variable costs long enough and you can capture their business. It is what China is doing. In China’s case, it is a country doing it with the help of businesses in the United States. The actual cost for predators may be higher than the small business but in economic terms, the production costs matter less than the deep pockets needed to run a small business out of business and capture that market.

    There are many instances in other businesses that do the same. WalMart predatory placing of their businesses in small communities. They will build in one part of the town, dry up the businesses around, then after that competition is gone, will locate their business on the other side of town to do the same with their larger store. It is how they run small businesses out of small towns. They also have the help of suppliers like China who are able to undercut the supply chains of the smaller competitors in the short run while doing the predatory location scheme. The Robinson–Patman Act of 1936 (or Anti-Price Discrimination Act) is not being enforced. Neither are the anti trust laws that prevented predatory behavior.

    Economists come up with all sorts of games to do this. Even with strong laws against it, as in the meats industry, there are plenty of incompetent or corrupt enforcers — from regulators to judges– who do not competently apply the protections already in the law.

    I think if you will read the “Robber Barons”, you will see how it works.

    The law, in the case of China’s predatory mercantilism, are not there or as Bill Clinton claimed, are not being enforced.

    Predation is the big eating the smaller, not because of economies of scale, but because of economies of market power. Not many people know the difference.

    In business it is pretty simple. Your paid for fixed costs usually protect you from non predatory competitors but your investment in fixed costs can not protect you from predators who can use other funds to drive you below your average variable costs (with companies who have paid for their equipment, their equipment capital protects them from regular competition but not predatory competition).

    We are seeing the nation not apply the economic rules already there just so the predators can concentrate the wealth. They will use their short term sales job that it is “good for consumers” but the long term is the big worry. Here is a site discussing some of what I am talking about:

    http://abasalagandfood.wordpress.com/2012/01/17/emerging-issues-in-buyer-power-analysis/

    When the Robber Barons used this kind of predatory power, which they gained largely through the wealth they amassed legally, they were able to force out small companies and then used the capital markets to leverage their gains (and the stock market at the time) until there was the crash of 1929 which lead to the Great Depression. The same thing is happening now.

    My own business fell to these sort of powers and non enforcement of the laws of the land that protected small businesses like mine.

    Reading “The Robber Barons” will explain how it happened last time around and then you can apply that to what is happening in our economy now with the current economic predation and concentration of wealth in the nation.

    Our political leaders are getting paid to allow it to happen whether it is in the banking sector, the GE model (way over leveraged to be able to handle markets ups and downs), or the meats industry. With Walmart, it is the retail goods coming from mercantilist China’s policies of currency manipulation.

    I could give you specific examples of how the law is not being applied appropriately in the meats industry and others in their respective industries who know what is going on can do the same in their industries. Just read “The Robber Barons” and see how they leveraged our economy through these kind of economics into the Great Depression.

    Tom T.

    • Bruce Bishop says:

      Tom T.,

      It sounds like both you and I were victims of our government’s failure to protect our businesses from predators. I blame the government. You, apparently, blame the predators.

      I had investigated “The Robber Barons,” before. It was written in 1934, and presents the Marxist/socialist/leftist point-of-view from that era. Having studied several of the so-called robber barons individually, I am of the opinion that the term, robber barons, which was created by their enemies, is inappropriate.

      As an alternative, I have ordered “The Myth of the Robber Barons,” by Burton Folsom, 1991. Folsom is an actual historian (PhD, History & Management) as opposed to Josephson,(The Robber Barons) who was a poet.

      According to the reviews, Folsom divides the “Robber Barons” into free market capitalists, and political capitalists – those who used government connections (crony capitalism) to get subsidies and favored treatment. I would agree with you that crony capitalism is wrong, but I would go after the corrupt government, not the opportunists who are buying them off.

      My “mentor,” Thomas Sowell has recommended Folsom’s book highly. On the “robber barons,” Sowell says, “When I have asked people ‘Just whom did the robber barons rob?’ I have never gotten an answer. This book shows why.”

      Sowell goes on to say, “Apparently, the real sin of the ‘robber barons’ like that of Wal-Mart today, is that they charged lower prices then their competitors, many of whom went out of business because they were not efficient enough to be able to bring down their prices.”

      I grew up in a small town which had four crappy little grocery stores with dusty, over-priced, (often out-of-date) merchandise, of limited selection, with slow, surly service. Wal-Mart came three generations (of progress) later. We are in favor of progress, aren’t we? We don’t want to go back, do we?

      Wal-Mart was hugely successful before they began importing a significant amount of their goods from China. Wal-Mart would not be damaged if our government limited the amount of goods coming from China, by imposing “balanced trade,” or tariffs.

      Perhaps we will have an opportunity to compare notes once I have read, “The Myth of the Robber Barons.”

  7. Tom T says:

    “Sowell goes on to say, “Apparently, the real sin of the ‘robber barons’ like that of Wal-Mart today, is that they charged lower prices then their competitors, many of whom went out of business because they were not efficient enough to be able to bring down their prices.””

    Bruce, if this is Sowell’s conclusion, then he is not worth reading.

    My argument is not that I don’t like efficiency, it is that I don’t like companies who cheat others or society to bring us that efficiency. When so much of Walmart’s goods come from China WHILE WE HAVE HUGE TRADE DEFICITS, then Walmart is arbitraging the differences between China (non market forces because of manipulated currency) and the U.S. to the detriment of the U.S. economy and our society. They are the U.S. arm of predatory China.

    Yes, this is currently legal, but it is predatory.

    I do not dislike Walmart because of their efficiency, but because of what they are doing to the supply chains in the United States and hence the country’s economy.

    When Sam Walton was alive, Walmart was not doing these things and I had no problem shopping at Walmart.

    Sowell’s simplification misses the point completely but he is cheered on by the cheaters in the economy and misinforms the public on the issues.

    I have no problem with the hot terms of communism or socialism or others. Every person should have a part of these in their lives— I am a benevolent totalitarian communist dictator with my wife in my family, a socialist at church, and a capitalist at business. They all have their place and the words should elicit no baggage that distorts reality.

    I do not dislike the robber barons because of their use of industrialization to gain wealth but because of their abuse of economic and political power. This abuse was severely limited after the crash of the Great Depression as economists studied what and why we experienced the great crash in our economy. Those protections have once again been whittled down by the power elite in the country so that we once again are facing the same problems of a dysfunctional economy.

    Money and wealth are not the enemies— their abuse is the “enemy”. It is the old adage that “the love of money is the root of all evil” where that love supersedes the way they get the money. Greed trumps morals. It allows more excuses and as it is attained, to some, the wealth brings reverence for that power. It is a slippery slope that leads to destruction.

    Walmart is gaining a competitive edge because they decimate their supply chains and ruin the U.S. economy while they rise to the top. It is legal but it is not right. Thomas Sowell can continue to shop at Walmart if he wants. We rarely do because we see what is happening and have experienced it. Walmart does not follow the economic rules of the Robinson-Patman Act. Their meat man may be found in other stores illegally recording their competitor’s prices to undercut them. They will push those lower prices down through their supply chain through their market power, not through competitive market forces. This happens whether or not the goods are from China. They should be held accountable for it but they are not. We, as consumers, can hold them accountable by not shopping there unless we absolutely have to. To our family, cheaper prices are not the only consideration. It is only part of it. Unfortunately, many people no longer have that choice nor do they see the monster they create because of the likes of apologists like Thomas Sowell. He really knows how to push greed’s interests.

    This does not mean that I will not read the book you mention. I will try to find it at the library. Unfortunately I read a lot of things not worth reading. One must to see all points of view.

    Tom T.

    • Bruce Bishop says:

      Tom T.,

      Wal-Mart’s strategy is to have the LOWEST PRICE on every item. When Chinese goods started to enter our markets in 1985, Wal-Mart had no choice but to “meet the China price.” They were criticized for “squeezing” their U.S. suppliers, but, since China’s prices were typically one third of the U.S. price, they were forced to switch to the Chinese products.

      Today, the Chinese price is often closer to one-tenth of the U.S. price for a comparable item.

      Just curious — where do you shop, that you are able to avoid buying Chinese products? I have researched the “Buy American” websites and have found them to be mostly either dead ends or “bait & switch.” In the “high end” stores, I find the same “Made in China” products that I find at Wal-Mart.

      As to protecting the U.S. economy, that is the province of our federal government — not Wal-Mart. Wal-Mart believes that it is doing its part for the American people, especially the poor, by providing the lowest prices on all of its products.

      Our federal GOVERNMENT has FAILED in its primary duty to protect us from predators. While they shuffle their feet and make noises about currency manipulation, Communist China is eating our lunch.

      The solution to our loss of middle-class jobs would be for our government to impose *”BALANCED TRADE” with China. This would limit imports from China to an amount equal to what they import from us — gradually reducing our trade deficit to zero. This would create opportunities for U.S. firms to produce those products where we can be most efficient, to replace the Chinese imports. This would be phased in over a five-year period to allow time for adjustment.

      *You can Google “balanced trade” for an explanation of how it would work.

      By the way, it not “illegal” for the “meat man” from Wal-Mart to visit competitors to check prices. For one thing, it would be impossible to enforce. For another, it happens constantly. The I-phone has an app for that if I am not mistaken.

      • Tom T says:

        Bruce, I do know that is Walmart’s strategy. The price checking is akin to opening a closed bid and then undercutting the winning bid. In this case it is the consumers getting the bid. It is predatory pricing. I do know that it happens all the time and that is part of the problem.

        Yes, sourcing from China is legal but it doesn’t mean it is right. Of course that is what most of us here on this site are fighting. It is a very poor national policy that is undermining our economy.

        I don’t mind Walmart or any other company giving lower prices. In the case of many of these retailers, their market power allows them to get extraordinary information from their suppliers and then whittle the prices down to the retailer taking all profits or using the lower prices to beat their competition. It is exactly the example you gave on the “open exchange” example you gave, I believe, in manufacturing. It allows retailers to take the profit out of the supply chain and basically ruin that supply chain. Eventually, when the competition is eliminated in the supply chain, we are left with one big dog that has pricing power but in the mean time it totally decimates the market forces at work in the supply chain.

        Here is the actual wording of the Robinson Patman Act:

        http://www.law.cornell.edu/uscode/text/15/13a

        It shall be unlawful for any person engaged in commerce, in the course of such commerce, to be a party to, or assist in, any transaction of sale, or contract to sell, which discriminates to his knowledge against competitors of the purchaser, in that, any discount, rebate, allowance, or advertising service charge is granted to the purchaser over and above any discount, rebate, allowance, or advertising service charge available at the time of such transaction to said competitors in respect of a sale of goods of like grade, quality, and quantity; to sell, or contract to sell, goods in any part of the United States at prices lower than those exacted by said person elsewhere in the United States for the purpose of destroying competition, or eliminating a competitor in such part of the United States; or, to sell, or contract to sell, goods at unreasonably low prices for the purpose of destroying competition or eliminating a competitor.
        Any person violating any of the provisions of this section shall, upon conviction thereof, be fined not more than $5,000 or imprisoned not more than one year, or both.

        In the case of Walmart, they offer “lower prices” as long as competitors are there. Once they leave the market, those prices increase. Market power once again buys a market:

        http://www.ilsr.org/rule/antitrust-policies/

        What has happened is that federal judges and Supreme Court Justices have castrated our anticompetive laws.

        Money buys the politicians so they get away with it. Companies use short term excuses to kill the competition. Lower prices, many illegally gained, destruct the economy and put it into the hands of the few.

        Tom T.

      • Arthur Taylor says:

        It is decidedly NOT Walmart’s strategy to have the lowest price on EVERYTHING. WalMart’s strategy is to lead the consumer into their stores with the appearance of such and then turn them to non loss-leaders in the same category with significantly higher margins. Nor were they forced to introduce the Chinese price in the mid eighties. It was always their strategy to use cheap imports to drive customer volume into their stores. Read Sam Walton’s autobiography and this will become clear. Will the mistruths never end?

        • Bruce Bishop says:

          Arthur,

          If you wish to be helpful, or to advance the conversation, or to prove a point, don’t assign us 300 pages to read. I read Sam Walton’s autobiography years ago and have no desire to read it again.

          Give us a quote or an excerpt, and a page number if you have something you want to prove.

          Your bold assertion regarding Wal-Mart’s strategy could be right, but I am not convinced. You will have to offer something more substantial to back up your position if you feel it’s worth defending.

        • Tom T says:

          Then they have succeeded to a large part. There is much resistance to allowing Walmarts in some areas of the country and world because of their predatory nature that undermines other businesses. Consumers, such as I, just don’t shop there if possible, because of the way they operate, which would be illegal under any reasonable interpretation of the economics laws, but when we have the kind of judges and politicians on the take, they will make sure the cases don’t go to trial and the illegal predatory actions are continually excused by judges exceeding their authority to “interpret” or in this case, limit, the law.

          Tom T.

  8. Mo says:

    When it comes to currency manipulation its a big problem only because the US gov’t allows countries that manipulate their currency to buy up US companies and their capital. If a country manipulated their currency and was not allowed to buy up US companies then it would be subsidizing US consumers if they sold products below cost.

    Also when a country undervalues their currency, inflation should evenutally rise faster in the country that devalues their currency which is done by printing new money out of thin air faster. So technically wages in China should be rising faster then the US due to the inflation but because of various price controls they may not be.

  9. Mo says:

    Manufacturers need to create their own bank where companies and employees keep the funds deposited in their bank so that it can recycle funds to keep supply chains growing. Even better if the manufacturing bank holds state funds or works with a state bank like North Dakota has to recycle credit within state to fund industrial activity. Countries with industrial policies have state banks that grant unlimited credit to keep their companies afloat. Countries with public banks include China, South Korea, Germany and various other countries.

    • Tom T. says:

      I think this is a good summation of where we are today which includes our trade issues:

      Essentially, economic policy has not supported good jobs over the last 30 years or so,” said EPI. “Rather, the focus has been on policies that were thought to make consumers better off through lower prices: deregulation of industries, privatization of public services, the weakening of labor standards including the minimum wage, erosion of the social safety net, expanding globalization, and the move toward fewer and weaker unions. These policies have served to erode the bargaining power of most workers, widen wage inequality, and deplete access to good jobs. In the last 10 years even workers with a college degree have failed to see any real wage growth.

      From:

      http://www.huffingtonpost.com/harlan-green/what-has-caused-record-in_b_1463090.html?ref=business

      Thanks Mike, Ian, Ellen –and everyone commenting with their personal views and others for the detail articles on trade. It is one of the many policies where our politicians have absolutely failed the country.

      Maybe a blind man can bring some light on the issue.

      Tom T.

  10. Mo says:

    Printing money out of thin air to subsidize the multinationals moving overseas and to bail them out when things go south while smaller or less politically influential companies go bankrupt is the definition of free trade for the special interests that advocate it.

    • Tom T. says:

      I think you are describing the mechanics of the current day Robber Barons who are undermining employment and the economy here in the United States, Mo.

      There seems little reason for hope because our political parties cater to big money, not good governance of a capitalist based economy. Each political party wanting to change the situation will run into the flack bought by these large special interests of the opposing political party for their political self interests while the public interest goes wanting. Those catering to these special interests can rightly claim that the government is not working and is not the answer. It is because voters are not holding them responsible for making it that way.

      Tom

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