American Elephants

“We Are Not Manufacturing Anything Anymore” And Other Fables of the Left. by The Elephant's Child

A common complaint bandied about is that we are not manufacturing anything any more, and there are no manufacturing jobs. But we should always check on ‘common complaints’ to see if they are actually true. The reality is a bit different. America is manufacturing more than ever. Mark J. Perry is the proprietor of the Carpe Diem blog at AEI, and a professor of economics and finance at the University of Michigan’s Flint campus.

America is a very big and prosperous country — even in the slowest recovery since 1945. Obama liked to call it the worst recession since the Great Depression (blamed entirely on Bush) and he’s been talking up his recovery ever since, which has been the slowest since 1945. Obama clearly wants America to be a smaller influence in the world (stop being a bully) perhaps turn us into a gentle giant? An odd ambition for an America president. But during campaign season a frequent claim is that we don’t manufacture anything anymore.  Not so.

Our manufacturing workers are more productive than ever before. Europeans worry more about vacation time and time off. Americans for the most part expect and like to be productive, and consider that to be the way to get ahead. They hate union rules which mean that you have to wait for someone from another union to replace the lightbulb, and support right-to-work laws.

The real recession was short, ending in June 2009 — it’s the recovery that has been problematic. Keynesian economics doesn’t work. Neither does adding on hundreds of new regulations, new restrictions, higher corporate taxes, and ObamaCare.

We are manufacturing more stuff, making more profit, and increasing productivity per worker— with fewer people. Jobs that are simple and repetitive are being replaced by robots. Manufacturing output has increased more than five-fold over the last 67 years — from $410 billion in 1947 to a record-setting level last year of $2.09 trillion. The number of manufacturing employees has steadily declined to a low in 2010 of 11.6 million workers to rebounding slightly to more than 12 million last year. Remember that the jobs replaced by robots were mostly those that the worker hated. Doing exactly the same thing every 8 hours can get poisonously boring, and building robots would be way more interesting.

The ability of the U.S manufacturing sector to produce increasing amounts of output with fewer workers is a sign of economic strength and vitality. Disruptive for displaced workers, of course — but it only happens because of new inventions and new processes with more opportunity involved. Automation is here to stay, and results in lower prices and a healthier economy. Robots don’t get hurt, have pensions, make mistakes or take vacations, and they don’t join unions.

The clever engineers who devise robots will devise more machines, which will also have to be manufactured. But manufacturing isn’t really the romantic idea of “working with your hands” anymore either. For that scroll down to the clever parody of “Artisanal Firewood

Donald Trump was grumbling the other day about having to buy televisions manufactured in South Korea and wondering why the US would defend a nation that sells such reasonably priced products. “I don’t think anybody makes television sets in the United States anymore. We don’t make anything anymore.” Let’s cut the talk about “bringing jobs back.” Bad idea.

Free Enterprise Does Not Fit Into Obama’s Vision for America by The Elephant's Child

Once upon a time, in the first days of November of 2010, all that was right about the world was shattered by one of the biggest electoral swings in congressional history. Democrats are still trying to grasp what has happened.

Conservatives don’t particularly dislike Liberals, but they detest their ideas. Liberals detest Conservatives and don’t understand their ideas at all.

Conservatives believe that reality suggests we are all flawed human beings, who must be set free to learn from our mistakes and grasp for opportunity. We make a lot of mistakes, but we turn around and correct them, muddle through and do amazing things in the process. The great innovations usually originate in a single mind, not in a committee.

A transaction in the free market does not happen unless both parties find it to their advantage. Competition keeps prices low and fosters innovation. Competition increases the quality and choices of products and services. Competition is hard work for businesses, and they have to fight for customers. They  have to keep track of what their competitors are doing, and find ways to innovate. Because it is hard, they lobby lawmakers to constrain the free markets in which they originally achieved success.

The most effective way to control capitalists is through competition, not regulation. Liberals are sure that rapacious big business will cheat customers, abuse workers and charge too much if  uncontrolled. In the free market, who wants to be a customer of such a business? They’ll go where they’re treated well.

Liberals offer to control the forces let loose in the free market. But control is seldom evenly applied. Those in control will, because they are human, favor one business over another. Or they will favor the unions, or  pick winners and losers, and subsidize a favored business while ignoring the competition.

Liberals are suspicious of competition. They have tried hard to stamp it out in the schools, eliminating winners and losers. Everybody gets a medal and nobody is a winner— lording it over the others.  But if there are no winners, there is no point in trying to be best. It is failures that make us work harder to succeed.

President Obama said that “the free market is the greatest force of economic progress in human history,” but he didn’t mean it. No president in history has worked so hard to expand state control over health care, energy, the environment, the financial sector, education, and American business. If the free market fits into Obama’s vision of America, he hasn’t explained how.

Obama assumes that progress begins with the administration of government money to jump-start a business. Government investment will somehow foster innovation and create jobs and prosperity. “Government money” is not taken as seriously as is the money from the pockets of individual investors. If you run short, there is usually more government money to be had, because failure would make the giver of government money look bad. Individual investors do more due diligence in the first place, and monitor operations more carefully— it’s their money at stake.

Nobody ever said that the free market is easy. It’s hard, but it works. We have evidence over and over— from history, from developing countries, from our own successes and failures.

We are fallible human beings, yet we rise to opportunity. One fallible human being’s success opens doorways for many more. The United States of America has been a beacon to the world in demonstrating the freedom and possibilities of the free market, and more and more nations are growing and prospering because of it.

How very odd that in” the worst recession since the Great Depression,” we should forget the simple rules that made us Americans.

ObamaCare Gummed Everything Up. by The Elephant's Child

ObamaCare is in the lap of the Supreme Court, and in spite of all the analysis and dissection of motives and personalities, we don’t know what the justices will do.  The battle has changed America, derailed the recovery, and changed health care in ways that we don’t really understand yet.

Traditionally, many doctors were pleased if their children chose to go into medicine. A family with many members in the medical profession was not unusual.  Now physicians aren’t as happy with their chosen life’s work, no longer advise family members or friends to go into medicine, and according to polls are thinking about getting out.

Hospitals are consolidating, many are putting doctors on salary. Our hospital is developing satellite centers for urgent care, classes, outreach, while the hospital itself grows and expands. They are developing a different model, in reaction to ObamaCare and ObamaCare’s potential development in the future. I can’t say that I fully understand the ways in which it is changing, but it is different.

Business has examined their operations and ways of doing business in an effort to protect themselves from what the future might hold, in the light of what it has done so far. The body of regulation that has descended on companies has made them cautious, careful. The National Federation of Independent Businesses (NFIB) is a co-plaintiff in the lawsuit challenging the constitutionality of ObamaCare. That, as Liz Peek suggests, should give the supporters of the legislation pause.

And for the rest of us, our health care has changed— no matter what the Supreme Court does.  Are we stuck with the socialized medicine model that a vast majority of Americans hate? If it is not struck down, do we then engage in a tremendous civil war to get it repealed?  If it remains, can we abide the endless tinkering it would require to make an unworkable law even begin to be functional? What were liberals thinking? Did they not understand that the American people…well, no they didn’t.

Liberals do not understand the American people, though they are Americans. They don’t understand human nature. They think they can fix it, so the people who disagree with them don’t disagree any more.  In extremis, they speak of putting the’ far-right wing nuts’ in camps where they can’t annoy the better people any more. They hate to be disagreed with because they don’t know how to answer — except to call names.

They don’t understand the free market, because there are no guarantees. There is risk. There’s a reason why liberals flock to government work and to foundations. They can feel safe. The free market rewards people who take risks and face up to challenges. Life is a risk, and there is no sure security except in hard work and striving. We have safety nets, but what government gives today, it can take away tomorrow.

Obama recently said that in America, we are greater together, when everyone engages in fair play, everyone gets a fair shot, everyone does their fair share. That may be true, but in Obama’s America, the hard-earned dollars of taxpayers are turned over to union supporters, regulations are devised to shut down legitimate businesses, take away people’s rights to their own land, deprive people of their jobs. Ringing phrases come easy, but accomplish nothing.

Obama brags that he saved the auto industry, but the future was yanked away from hundreds of private businesses overnight—auto dealers with hundreds of employees were summarily put out of business. Bondholders, depending on a consistent flow of interest from their holdings in the car companies were guaranteed first call on the assets of a company in case of bankruptcy, were suddenly broke. Taxpayer money goes, not to governmental tasks, but to cronies— buddies who helped the president to get elected.

If ObamaCare is overturned, the world cannot be put back the way it was. Everything is changed, no matter how it all turns out — and not in a good way. Trust is gone or diminished. Security is damaged. And for what? Good governance is not a cheap political game — but you made it so.

Milton Friedman on the Power of the Free Market! by The Elephant's Child

Soak the Rich, Bash Business, Cripple Confidence and Create Jobs? by The Elephant's Child
September 10, 2010, 7:15 am
Filed under: Capitalism, Economy, Liberalism, Taxes | Tags: , ,

There is a lot of confusion out there about “the rich.” Politicians want to tax the rich and give to the poor — on the theory that everybody loves Robin Hood. Politicians do so want to be loved.

Americans don’t naturally think of the rich with envy.  Americans have always believed that America is a place where everyone has the opportunity to get rich, or at least richer.  And they have always believed that their children can do better than they did.  One of our national characteristics is a distinct lack of envy.  Listen to the voices of immigrants and the children of immigrants. They find America a magical place full of opportunity for everyone.  Listen to Marco Rubio’s story.

Liberals worry politically about the poor. But they don’t worry much about them when they aren’t campaigning.  Thomas Sowell noted back in 2000:

What do the poor most need?  They need to stop being poor.  And how can that be done on a mass scale, except by an economy that creates more wealth?  Yet the political left has long had a remarkable lack of interest in how wealth is created.  As far as they are concerned, wealth exists “somehow” and the only interesting question is how to re-distribute it.

The re-distributors have an excellent record of making everybody poor, but that was not what they intended.  Even Fidel Castro just admitted that the Cuban social model doesn’t work.  It apparently did make Fidel one of the world’s richest people— at least on Forbes list — as Cuban soap and food money went into Fidel’s own bank account.  This is a frequent side-effect of re-distribution.

Barack Obama said in the Labor Day speech he gave in Milwaukee:

Anyone who thinks we can move this economy forward with a few doing well at the top, hoping it’ll trickle down to working folks running faster and faster just to keep up—they just haven’t studied our history.

Mr. Obama’s economic messages have consistently focused on the idea that the “well off”, the “special interests”, the fat-cats”, the “well-connected” have somehow screwed the middle class.  He demonstrates a complete lack of understanding in how market economies operate. Entrepreneurs are non-existent,  and ideas come from the inventiveness of government bureaucrats.

The president believes that the middle class owes everything it has to the government, rather than to wealth-creating entrepreneurs or businesses or their own efforts.  He does not grasp the difference between a  truly free market where individuals decide where  to invest their resources and energies, and a government-directed economy that sets collective priorities which require individuals to follow specific policy objectives defined by the political class.

This is a president that supposedly has an economics meeting every morning. Yet he suggests that private business should be focused on pursuing non-economic objectives.  You don’t restore business confidence by bashing business.  Does this sound like a clear definition of business in a market economy?

That means making sure corporations live up to their responsibilities to treat consumers fairly and play by the same rules as everyone else.  Their responsibility is to look out for their workers, as well as their shareholders, and create jobs here at home.

Ah, and how are those jobs created?  There is the problem.  Apparently nobody knows.

Financial Regulation, As Designed by Sen. Chris Dodd. by The Elephant's Child
April 22, 2010, 5:53 pm
Filed under: Capitalism, Economy, Law, Statism | Tags: , ,

President Obama went to Manhattan today to lecture Wall Street and make a lot of promises about the financial bill that is now before the Senate that have nothing to do with the actual bill, only what he thinks you would prefer to hear.

I was going to link to several articles that explained about the importance of eliminating the notion of “too big to fail,” and ideas for accomplishing this. But then I read this editorial  from the Wall Street Journal, where they have a particular knack for getting right down to the essence:

This is the most important fact to understand about the current financial reform debate. While the details matter a great deal, the essence of the exercise is to transfer more control over credit allocation and the financial industry to the federal government. The industry was heavily regulated before—not that it stopped the mania and panic—but if anything close to the current bills pass, the biggest banks will become the equivalent of utilities.

The irony is that this may, or may not, reduce the risk of future financial meltdowns and taxpayer bailouts. A new super council of regulators will be created with vast new powers to determine which firms pose a “systemic” financial risk, to set high capital and margin levels, to veto certain kinds of business for certain firms, and even to set guidelines for banker compensation—or maybe not. The point is that these crucial questions will be settled not by statute, but by regulatory discretion after the law passes. [emphasis added]

Do take the time to read the whole thing.  Especially note the first two paragraphs. We deluged Congress with emails and phone calls about the Health Care bill,  and if it didn’t keep  the bill from passing, it certainly heightened the debate, and gave members of Congress support.

The House has already passed the Barney Frank version, and the debate goes on in the Senate.

Let’s Hear it For “Greed.” by The Elephant's Child
January 10, 2010, 11:43 pm
Filed under: Capitalism, Freedom, History | Tags: , ,

Many inventions are created by small annoyances.  Papers were fastened together for around 600 years by cutting two parallel slits in the paper and threading a ribbon through the slits.

Playing around with a piece of wire may have created the idea.  The impulse to follow through with the idea, develop it until it is not only usable, but able to be produced in quantity and marketed simply doesn’t happen without a healthy dose of “greed.”

Many on the left are deeply suspicious of money and the acquisitive instincts that make the accumulation of wealth possible.  Roger Kimball quotes an observation of Anthony Trollope in his novel Can You Forgive Her? He gives it to Plantagenet Palliser who responds to a character who announces that he lacks “mercenary tendencies,” thusly:

There is no vulgar error so vulgar, — that is to say, common or erroneous, as that by which men have been taught to say that mercenary tendencies are bad.  A desire for wealth is the source of all progress.  Civilization comes from what men call greed.  Let your mercenary tendencies be combined with honesty and they cannot take you astray.

Ideas pop into your head.  Developing them and marketing them takes effort, time, money and persistence.  How many ideas have been carelessly tossed on the rubbish pile through the absence of persistence, effort and unwillingness to spend the time.  What makes the difference?  The potential of reward — greed.

Six hundred years of tying papers together with a ribbon, and  then a small invention makes life simpler, and its use spreads and spreads.

Actually, Johan Vaaler, a Norwegian inventor, invented the paperclip in 1899.  He received a patent for his design from Germany in 1899 since Norway had no patent laws at that time.

It was a company called the Gem Manufacturing Ltd. of England who first designed the double oval-shaped standard-looking paperclip.  William Middlebrook of Waterbury, CT patented a machine for making paper clips of the Gem design in 1899.  The Gem paperclip was never patented, but the name stuck.

During World War II, Norwegians were prohibited from wearing any buttons with the likeness or initials of their king on them.  To protest, they began wearing paperclips because paperclips were a Norwegian invention whose original function was to bind together.  This was a protest against the Nazi occupation, and wearing a paperclip could have meant arrest.


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