American Elephants


Donald Trump’s New Social Contract and Industrial Policy by The Elephant's Child

Donald Trump, president and chief executive of Trump Organization Inc. and 2016 Republican presidential candidate, stands for a photograph after a Bloomberg Television interview at his campaign headquarters in Trump Tower in New York, U.S., on Thursday, Oct. 15, 2015. According to Trump, Janet Yellen's decision to delay hiking interest rates is motivated by politics. Photographer: John Taggart/Bloomberg via Getty Images *** Local Capton *** Donald Trump

Editor in chief of American Thinker Thomas Lifson has two important articles today, explaining Donald Trump’s Carrier deal. There has been much angst about the jobs saved at Carrier in the wake of tax incentives from the State of Indiana, because there are still a significant number of jobs going to Mexico. We misunderstand what Trump is doing, Lifson says, and explains what the President-elect has in mind. Do read both pieces, they really are important. What Trump intends:

He has announced that, reigning globalist economic theory to the contrary notwithstanding, the United States must maintain a manufacturing sector. The shift of manufacturing to low wage countries is not a law of nature, not an inevitability, and not a path that America will take in the future. We cannot abandon the regions of our country that have devoted themselves to manufacturing.  He has not mentioned the national security dimension of such a policy, but it is obvious to all but a few theorists that you cannot maintain a strong nation if you depend on others to do your manufacturing.

The combination of information technology, robotics, new materials, and many other advances (including management advances such as lean manufacturing and continuous improvement organizational disciplines) has squeezed low value labor out of manufacturing.  Global companies that locate within their most important market are able to create serious competitive advantages over companies assembling products in low wage companies through flexibility and rapid response time.

The second of the two companion pieces is “The Key to Trump’s Carrier deal: Next-generation manufacturing.” Do read both articles. There is a lot of important insight here.

Progressives are confident of their own knowledge and expertise, and feel completely confident in their ability to issue rules and regulations (backed up with enormous penalties to make sure you understand their importance) so that you will run your business in a way that the progressives find more agreeable. When I was looking for a new car last year, I learned the extent to which automobile design and performance has been changed and controlled by the EPA’s fuel efficiency standards. More aluminum, more substitution of light things for heavy things. One dealer said the outside mirrors would go soon because of that. Some have said that higher highway fatalities are probably due to the Fuel efficiency standards.

The addition of ethanol to gasoline, deadly for small engines like lawn mowers and appliances, has been shown to accomplish nothing in the prevention of greenhouse gases, and was a deal with the corn lobby to get enough votes to pass the 1990 Clean Air Act. Useless, but a highly expensive boondoggle that affected far more things than the amount of CO2 in car exhaust.

The federal demand to show calorie numbers for fast food on signs and menus has been shown to be completely ineffective because people don’t care. They know fast food is more caloric than an ordinary meal, but they want it because it’s fast and tasty. For the industry, the costs are enormous, but federal regulators are not interested in that. Ditto the drive for a $15 minimum wage, which is simply an unemployment program for the beginning or unskilled worker. McDonalds is already committed to a nationwide program of installing computer kiosks to replace workers.

The EPA is probably the biggest offender. Their ideas about what is environmentally friendly are weak on science and heavy on agency power and control. It’s an agency of zealots, and should be abolished. That may not happen, but their power will be cut back. Myron Ebell will be a terrific advisor on the EPA and it’s overreach.

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