Obama will not rest…

… until Americans are paying more for a set of tires than Indians pay for an entire car (Tata Nano; also the subject of an analysis of what our Detroit bailout money would have bought). According to this New York Times story, President Obama has imposed a 35 percent tariff on Chinese tires, not because they were doing anything unfair, but simply because some American factories are unable to compete on price and quality, at least with their current union labor contracts. If you’re managing one of the businesses that is not fortunate enough to command Washington’s attention, e.g., a software company, you now have to pay your workers extra so that they can buy tires to get to work. This comes on top of the extra money that you have to give them because they are required to participate in the world’s most expensive health care system and the extra money you have to pay them so that they can pay enough property and state income tax to make good on public employee pension commitments from 30 years ago (more).

Separately, EMC, the data storage company, announced that it would invest $1.5 billion to expand its services, customer support, and research and development operations. Is the money going to be invested in Massachusetts, where EMC is headquartered and where we already have achieved the kind of health care reform currently being proposed in Washington? This Boston Globe article says that the money will be invested and the jobs created in India.

For an American of my age (45), there is something humiliating about being engaged in a trade war with China. The Chinese were supposed to be rural peasants in rags, too poor to feed themselves, and oppressed by Communism, the world’s worst system of government. Now it seems that our Democracy, supposedly the world’s best system of government, has transferred much of our wealth to cronies of the rulers (Wall Street executives, Detroit automakers, specific labor unions, health insurance companies (soon)). The evil and inefficient Communists, by contrast, spent their stimulus money on solar power and lithium battery technology and infrastructure. The Chinese economy is recovering nicely (source) while we continue to stagger. Can we afford to start a trade war with these guys? Aren’t we eventually going to need to buy renewable energy and battery technology from them?

6 thoughts on “Obama will not rest…

  1. There’s something humiliating about being an IT guy in America and hearing that a $1.5 billion investment from an American company will go towards creating jobs in India when you have friends struggling to get any IT work they can.

    I’m getting pretty tired of my own government making it impossible for businesses to compete at home where jobs are desperately needed, all while the cronies become rich beyond imagination on Federally borrowed dollars that the taxpayer is obligated to pay back.

  2. So as a forty-five year old American, will I be asking, “Who is P. Greenspun?” instead of, “Who is John Galt?” (I actually haven’t read _Atlas Shrugged_; I couldn’t finish reading _The Fountainhead_ because it bored me.)

    You make the valid argument that the tire tariff hurts the general populace, but we’re not important to members of the government. To the political class, we are pawns on the political chessboard. But the new tariff kicks in on 2009-09-26, so if you need new tires, get them before the date. But, you’ve read Olson and one of his conclusions is that it is best for the individual to ignore most of the political BS and focus on making his life better.

  3. It is wholly unfair to compare China or India for that matter with regards to labor and manufacturing with the United States. Let us not forget that China has traded its environment for its present prosperity. Environment of China The fact that we import so much from them is sickening.

    I would much prefer we only traded with countries that had labor and manufacturing standards equivalent to our own. Then you could have an apples to apples discussion.

  4. Why is it unfair to compare the U.S.’s labor and manufacturing to other nations?

    History shows that the U.K. cleaned up it’s act as far as population goes. The cleanup happened after the country accumulated great wealth and the populace decided that they didn’t like breathing smog and other particulate matter in the air. As far as I know, this pattern has happened to every wealthy nation. So if you want to do an apples to apples comparison, we would need to consider say the U.K. or U.S from several decades ago and modern China. The cost of labor was probably the same and the amount of pollution was probably the same.

    It would be nice to trade with a country with equivalent standards, but then are we willing to bear the much higher costs for most goods?

  5. We have adopted these labor and manufacturing standards because we believe them to be correct. If we no longer hold that view then we should reverse ourselves, rape our environment reduce our standard of living and put ourselves back on an even footing.

    We added the cost to the goods when we created the regulations. Either we accept that cost, innovate to reduce that cost or go back to the system we had prior to regulation.

    Anything else is hypocrisy, not to mention economic suicide.

  6. MikeK: We don’t need to make a conscious decision to reduce our standard of living. Barack Obama has already reduced it for any American consumer who needs to buy tires. The consumer will have perhaps $100 less to spend on other stuff. The loss of the $1.5 billion that EMC chose to invest in a country other than the U.S. also reduces the standard of living here because fewer Americans will have jobs.

    I’m not sure that we should be so smug about how much better our environmental standards are than China’s. Aside from the embarrassingly disproven facts that we we were smarter than the Chinese and that our system of government was better in all ways, keep in mind that there are 1.3 billion people in China sharing a smaller plot of land than our 300 million. If we had China’s population density our environment would be a lot worse than it is. China is far ahead of the U.S. in solar power and they might clean up their environment faster than we imagine possible (just as they have done a lot of other stuff faster than we imagined possible).

    Finally, in order to pay off the deficits now being accumulated by local, state, and federal governments, it is quite likely that we will need to grow our population close to what China has at present. With 1 billion new immigrants (a.k.a. taxpayers) here in the U.S., we’ll see what our labor and environmental conditions are. I don’t think all 1 billion will be joining the United Auto Workers and drawing a full pension starting in their 50s.

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