The Rule of Rules

In this TED Talk, Barry Schwartz speaks on a society gone over the edge with regulations, and the ethical nature of autonomy.

It is easy to fall into the habit of seeing the populace as a conglomerate of ignorant sheep, and there is some truth to it. As a group we consistently make poor decisions, but the group is made up of individuals. They have their failings, but most of them get up every morning and go to work. When faced with decisions in their daily lives, they tend to make good ones.  They share your outrage over the state of the system. It isn’t until they are corralled and herded through all the little reverberating insurance policies against litigation that most of their decisions tend to be bad ones. We haven’t added rules over the years because people have become less upstanding, people have become less upstanding because society has increasingly suppressed their spirit of ingenuity and  drive with devices designed to take all of the rewards in order to ensure that no risks are taken. We now reap what we have sown. Fear of innovation. Bloated government, a litigious populace, listless children, high taxes, and low-flow toilets.

Toyota Republicans

 

Recently on the McLaughlin Group, Pat Buchanan coined a new term for a faction of the Republican party: Toyota Republicans. The phrase is an odd one because it is far more subtle and complicated than it seems. Under the watch of the Bush administration we saw outsourcing become the norm. We didn’t slowly lose a difficult battle to China, we eagerly gave them the plans and asked them to take over our manufacturing. The Alabama foreign car manufacturers Pat referred to are an interesting case. When we can’t even lead in our own industry in our own country selling to our own people, we have failed. It isn’t about patriotism and buying American. I’ll buy American when faced with a tough choice, but in the end I’m going with the better product, as should we all. We don’t need to bail out the failures, we need to create successes. These foreign plants on U.S. soil aren’t entirely a bad thing, although they are still sending our money overseas.

An interesting point has been made about who pays the cost of medical care. If the American auto makers are saddled with responsibility for the health care of their workers, and the foreign competitors aren’t, because the government takes care of that, then we didn’t fire the first shot in the coming Cold War Race to Socialism, they did.

As Pat puts it: “America faces nationalistic trade rivals who manipulate currencies, employ nontariff barriers, subsidize their manufacturers, rebate value-added taxes on exports to us and impose value-added taxes on imports from us, all to capture our markets and kill our great companies.“

How should we respond? Pat wants us to “produce ourselves the guns and ships to defend the republic and the necessities of our national life so we could stand alone against the world.“ He suggests we do this by putting tariffs on imports in order to level the playing field. This isn’t a wise step forward in the new global economy; it leads to foreign retaliation, reducing our exports.  When you are only selling things to yourself, you don’t earn any money. It would work well here in the U.S. Until the industries got lazy and corrupt. We already can see the results of such tactics in the corn industry. The reason everything we eat is packed with corn syrup is that we tax the import of sugar and subsidize the growing of corn. What we need is to be lighter on our feet. We need small specialized manufacturers.

Pat Buchanan puts the blame on neocons for removing tariffs imposed by Reagan:

“When an icon of American industry, Harley-Davidson, was being run out of business by cutthroat Japanese dumping of big bikes to kill the “Harley Hog,” Reagan slapped 50 percent tariffs on their motorcycles and imposed quotas on imported Japanese cars. Message to Tokyo. If you folks want to keep selling cars here, start building them here.“

Alabama is now home to several automotive plants:

• Mercedes-Benz: Headquarted in Germany
• Honda: Headquartered in Japan
• Hyundai: Headquartered in South Korea
• Toyota: headquartered in Japan

These U.S. plants make a total of more than 700,000 vehicles a year and employ over 11,000 workers.  This would all be a good thing if these vehicles were being shipped out, but they are built here to be sold here. To follow the money: You buy a Toyota. Part of that money goes to the workers in the Toyota plants in Alabama and elsewhere in the US; another part goes to Japan. To some extent it is nice to have foreign industry in our country; it gives them incentive to be nice to us so they can retain their factory. On the other hand, if we are making the product in our country with our labor and selling it to our people, we could do without sending the profits to Japan.

Pat is afraid that if we don’t do whatever it takes to keep the big three in business, that these foreign owned manufacturers will take over their market share.

Agreements like NAFTA aren’t really free trade, they are managed trade. In the end, under NAFTA, manufactuuring and agriculture find advantage in moving to Mexico. This includes companies like Toyota. The question is, are these Toyota republicans opposing the bailout on strong free trade principles, or are southern politicians trying to remove the competing U.S. manufacturers in Detroit to better their own foreign owned manufacturing?

From here on I will be using the term ‘Toyota Republican’ to describe the NAFTA loving portion of the party that is partially responsible for outsourcing and the exodus of  industry.

 

Update: Leo Gerard, the president of the United Steelworkers Union, went on Bill Moyers Joural with his take on the auto bailout and the Toyota Republicans.

Too Big to Fail?

The latest group to ask for bailout is the automobile industry. Most of their argument for bailout hinges on the thought that if they fail, they will take the economy with them. They are framing the problem backwards. The real problem is that they are too big to succeed. Any time you try to have your company do everything, you risk not being very good or efficient at any of it. What the companies really need is to be more modular. If cars were built like computers, you could choose your own build out of the most appropriate components, knowing that all of them were built by people who specialize, and that replacement parts would be standardized enough to be cheaply available. TechCrunch has a good article about the concept .

What we need is to be lighter on our feet. The days of massive self sufficient manufactueres with big pension plans should be a thing of the past. We need small specialized manufacturers. When they see a need in the market they should specialize in creating the best product at the best price to fill the need. When the need is gone, there shouldn’t be any crying about lost jobs; just restructure, retool, retrain, transfer if neccesary, and get back to work. Benefit packages should be made more easily transferrable. If another nation is seriously subsidizing an industry in order to gain market share, I think we would be better served by putting more international economic pressure on that country, which is stronger the more global the industry is. We should encourage  distributed international industry in order to make it unprofitable to cheat. The alternative is a cold war race to socialism.

Do Superpowers Inevitably Degrade Into Socialism?

The economic miracle that has been the United States was not produced by socialized enterprises, by government-union-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures, as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline. –  Milton Friedman

As our government continues to bail out big corporations, a pattern is emerging. The current bailout targets the big auto manufacturers, and just like with the banks, the government is saying that the companies are failing due to poor decisions. This presents the government with a dilemma. If it does nothing, the economy could continue a steep decline. If it bails out the failing companies, it risks the loss of the additional money, and encourages other large corporations to play dead for a handout. In order to avoid the appearance of rewarding and subsidizing failure, the government is attempting to get a share in the companies and regulate their decisions. This presents a host of difficulties.

• With no fear of failure, the company doesn’t feel the hunger to optimize and make a better, more competitive product, they just throw their newfound weight around. 
• Domestic competitors who were not failing now have the problem of a rival who has an artificial advantage. This actually serves to increase monopolistic tendencies. This is illustrated with our bailed out banks taking the opportunity to buy out competitors rather than loan money. 
• As the company attempts to find loopholes to wriggle free of its new bonds, the government counters with additional regulations, thus digging us deeper.

If we follow this to a logical end we see American car companies being given a global competitive advantage by having their cost of doing business artificially reduced. This has the same effect upon foreign competitors as the kind of corporate bullying you see when a Wal-Mart arrives in a small town and drives all of the local businesses under. Foreign governments will then have a choice. They can either let their auto manufacturers die because America played dirty, or they can subsidize their own auto manufacturers. What this could lead to is a new cold war in which we have a race towards socialism in order to conquer the global market.

Why does religion seek out a place in government?

Religions seek to grow. Those that didn’t have long since perished, each silently disappearing and forgotten; a natural selection on a cultural scale. It is not so much the focused intention of a motivated individual as it is the sum of its followers, all shaping their lives around a belief system that is so acculturated into their being as to be inseparable, each trying to prevent those around them from falling into sin by steering them down a path to salvation.

By venturing out of the realm of souls and into the real world, religion becomes subject to its rules. It is not free to go to the airport in a veil, to sacrifice heathens upon a mountain top, or to occupy land simply because it is holy. It is a double edged sword. The theology in power gets their god entrusted on our money, their morality made law, and the security of not having another religion in their place, yet they must accept women into their leadership, silence their hate for rival gods, and provide marriage ceremonies for gay couples.