Associated Press
The factory floor at American Spring Wire in Bedford Heights, Ohio.
Mitt Romney appeared in Ohio yesterday, where he hosted a roundtable discussion about the economy and manufacturing policies. In an unfortunate move, Romney's guests were exclusively owners, presidents, or corporate treasurers of Ohio companies -- rank-and-file workers and middle managers weren't invited.
But that wasn't the only problem. Romney's discussion, which featured lengthy criticisms of the Obama administration failing to get "tough" with China, was held at the American Spring Wire's headquarters in Bedford Heights, Ohio. The location has a larger significance.
The same company, along with two steel wire companies from North Carolina and Tennessee, petitioned the government on May 27, 2009 to look into a trade issue, arguing that Chinese firms were selling steel wire products in the U.S. at less than normal value. On June 17, 2009, the Department of Commerce announced a decision to start investigating the problem.
A year later, the International Trade Administration, a division within the Commerce Department, announced it was ordering an "antidumping" duty on "prestressed concrete steel wire" strands from China. It also announced a countervailing duty, aimed to counter subsidized products coming from other countries.
As part of the order, U.S. Customs and Border Protection officers were instructed to suspend liquidation on the merchandise from China and "require cash deposits equal to the estimated amount by which the normal value exceeds the U.S. price," according to a Commerce statement issuing the order at the time.
So let me get this straight. Romney spoke at the American Spring Wire's headquarters in Ohio to condemn Obama's trade policies towards China, and the American Spring Wire's headquarters benefited from Obama's trade policies towards China. Making matters worse, when Obama took these efforts, Romney criticized them as too tough on China.
Did the Romney campaign just not think this through?
Indeed, let's add this to the list of instances in which Romney's advance team failed to do its homework. Remember all the businesses Romney appeared as part of the "we built this" campaign that thrived thanks to government support?
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Romney's bungling cast of campaign characters belong in the movie The Campaign, not actually in government!
The owner of that company is the perfect example of a Republican hypocrite. The only unknown left in this campaign is just how much down ballot misery is Romney going to bring.
I can't help but wonder if Romney and his people have ever met The Google?
A 1950's campaign in a 21st century setting.
OMG He really IS a Democrat plant!!!
I've said it before and I'll say it again - Rawmoney doesn't really want to be President so he's sabotaging his chances - brilliantly.....
Yes, as I watched the homage to him at the convention (by his wife, friends, fellow church members -- not the politicians) I got the feeling that THIS was the peak, the moment of glory that he aspired to. And that was that.
Either he's happy not to win or he has to be among the dumbest people ever to run.
Could be. The Republicans got nuthin' and it's far more fun ragging on the incumbant than it is to like, actually be in charge. Because you know, we liberals pick on them so much.
Let's roll the video of Romney saying we're being to tough on China. Then video to get tough on China.
Romney's going to loose.
The reasoning here is that the owners will empathize with Mitt since they too want their tax rate to be zeroed out. The lesser "management" types may have questioned this so they were left out.
Now head straight shoulders up and say "How do you do" and never get caught carousing with commoners.
I can dimly recall the acid pose struck by a virtuous and self righteous partisan media for an awkwardly phrased and thought out riposte of Sen Kerry's made to outline the hypocrisy of calling attention to a sum of how many times he and others , by the broadest measure possible , voted to raise revenues via taxes , and of course the total media war on Gore .
Right wing agonistes believing that history started yesterday seem at ease with their astonishing , and for most thoughtful people , humiliating inability to reason past their ability to desire to have everything reflect a rosy glow of health on the cancer of anti American non cooperative republican stench , or stencharoo .
Of course Obama was too tough on China...how can all of Mr. Romney's companies that he (doesn't have any connection to nope no sir not me) runs keep shipping jobs off to China if the President is, get this- trying to protect American workers.
The nerve!
Shhhhh! We can't talk about Mitt shipping jobs to China in front of the Republicans! That goes straight into the heavily redacted Plausible Deniability for GOP Voters file, along with the Cayman accounts, Stericycle, the Secret Squirrel platform, cultural, racial, and economic condescention, his Mormonism, ect, ect, ect.
What they don't know, they can't vote against.
The only place the Romney campaign can shoot straight is when they shoot straight at their foot. Unfortunately, they think they're aiming somewhere else, But shooting first and aiming later will always do this.
"Did the Romney campaign just not think this through?"
-Did the Romney campaign EVER think ANYTHING through?
It may be that Romney is an ironic street theatre artist . A take down of that whole René Descartes thing , dont'cha know ?
Day hits it on the nose.
"...the truth is these aren't very bright guys." -- Hal Holbrook as Deep Throat in "All the President's Men.
Nixon's people + Romney's people = thing of sheer beauty.
Of course rank-and-file workers and middle management weren't invited. Many of them are, likely, in those same 47% dismissed by R-money. In his own words: "I will never convince them to vote for me". So, why bother? It's all apiece with his "I have many friends among the NASCAR owners"
This is a thread on the economy and trade policy and every single comment including the lead article is talking about personality disorders and campaign mechanics.
Anything except the very serious economic challenges facing the US. Though no economist seriously doubts we can get the economy back to 2006 status, that simply is not good enough. The middle class will continue its downward slide. This is the biggest challenge.
Worse, no one is talking about it, or wants to talk about it.
Romney actually was talking about the key problem in the New Republic article linked to above:
Romney goes on to outline ideas concerning technological progression in increasing wealth, the comparative advantage of nations and how global competition is good for making a heavily technological country even more competitive. He believes that the US middle class will benefit if the US becomes more "productive"- (his meaning).
Here's the thing- this is not Romney delusional thinking. Most Democratic elites believe the same thing.
The trouble with the idea is that US companies can become far more productive (his meaning) by not hiring US workers. Romney says: "Productivity really means that more stuff is being created by fewer people." That's not quite right. A company is more productive when it can make more stuff with the same amount of capital. But the company can just as productive if not more if they use more workers but pay them a tenth of what they pay US workers.
Because of the strange way that the US calculates GDP, these "US" companies achieving "productivity gains" this way are actually counted as increasing the US GDP when in fact what they are doing is cannibalizing US production of goods.
I am a technology guy and so I am hardly one who is afraid of technology, but what the genius economists that advise the GOP and Dem Elites are missing is this: Romney's example of the ever increasing wealth spread to the workers of his 200 person country is not an infinite progression. Think about larger time scales and you will get the picture. At some point, technology progresses to where only one person has to spend one day out of the week to provide all the food and products that the entire country needs. Where do the other 199 people get money to pay for the goods and services?
That's right. They don't have anyplace to get it.
Now return to the present time and you will see that the decline of the middle class is on the downward slope to that distant future.
That is, there is a dynamic that is working towards the progressive annihilation of the consumer economy, because the consumers are progressively being starved of cash. First by non union workers in other states willing to work for less, then by workers in other countries, then by machines that require no benefits, never strike, but unfortunately never will buy any of the company's products.
Simply patching the union laws or trade rules are attempts at patching a leaking dike that will inevitably overflow. We have to hit the challenge head on and address the dynamic in play.
What is needed is to put in place corporate tax law that is punitive towards companies who define productivity the way Romney does. The increases in wealth a company is achieving must be matched by an increase in their payroll. There is none of the regulatory capture issues or industrial micromanagement by government bureaucrats because nothing in the law needs to say anything about how the company allocates those payroll funds.
This is not punitive about wealth creation. Companies can be far more productive creating wildly popular goods and services to sell into the market. New wealth can be created this way. But they do not do it by reducing numbers of workers or how much they pay them.
If we allow the purchasing power of the US consumer to be progressively cannibalized, our consumer economy will lay in ruins. Yet our current path is one that most economists both on the right and left see no problem with.
Romney on this score is actually expressing the consensus opinion about our the economic challenges facing America. That what Obama thinks, that is what Romney thinks.
And it is dead wrong.
Interesting post, John. I enjoy reading you.
Question? Isn't there a limit to the sweat equity of workers? Corporations can carve their personnel requirements down to bones, maybe bringing in a new person who does the job that two people used to do formally, and at a much decreased wage, but at some point workloads can exceed the ability of human workers to perform.
As a consumer, I see more segregated departments of corporate businesses than I do streamlining. Brick and mortar buildings, separate from finance over here and production over there, with headquarters somewhere else. Businesses aren't saving any money, they are spending it, but rather than cut into profits for things like impressive office buildings in high dollar districts, decentralization, virtual warehousing/Db's/online presence/technology, they are carving it out of workers wages and benefits.
All "people" aspects of large business is taking a hit. Along with workers wages, product and service entities have dropped their customer service to frustrating and dehumanizing levels. This shows they are making far enough profits to no longer care about catering to their customers or employees any more than they have to. I've seen it in banks, credit cards, media providers, and even our local and state services.
I've always advocated a peaceful, non-violent boycott method of hitting these companies where it matters most to them, their bottom line. But since Americans don't want to give up their Koch Brother toilet paper, as I was told by one consumer, the message isn't painful enough yet.
We've acquiesced to the continual erosion of our quality of life.
No, there is not a limit to the sweat equity because wealth generation potential of human effort can be magnified virtually without limit by technology. My proposal addresses the fly in the ointment of this source of limitless economic boon for our species.
If this seems like fairy tale talk, it is because of a metaphor that people naively slip into. It's the trap of thinking of economics is zero sum.
There really are new sources of wealth. We really can create new products that make the owner of the company a lot of money, and make the workers a lot of money too. We have been making non polluting environmentally sustainable products like that- motion pictures, software and services for years and they are huge businesses. We only have to look at the collective wealth of the global population to know that wealth creation is not zero sum. Otherwise we would have no more wealth than we did 20,000 years ago.
But people both on the right and left apply in a lazy common sense way the laws of thermodynamics to economics. The 1% think that the path to wealth is by being the most ruthless and intelligent predator. Many on the left believe the same and feel that all business owners are essentially thieves and that the only way they make money is by hoodwinking the public by charging unfair prices and paying unfair wages.
The trouble is that our world is not a closed system. Huge amounts of free energy pours into our planet. During the agricultural revolution, this was the source of new, truly free food. Something out of apparently nothing. The intense amount of labor locked into that activity was freed up by technological innovation again, with a corresponding leap in wealth. The industrial revolution tapped into huge amounts of energy stored in fossil fuel- first the coal of Britain fueling the steam engines of the factories, and later petroleum for internal combustion engine power sources. Our access to energy sources has not technical practical limit, but look at the labor situation.
So it has and always will be the case that Both the owners of companies and its workers can become more wealthy at the same rate. The reason why from a 10,000 foot level is that more energy is flowing into the system. This energy translates into products and services we associate with wealth. Everyone can indeed be winners.
So my proposal is not to turn the 1% into losers. It simply disallows the cannibalization of the consumer economy, by pumping dry the river that sustains the economy- the river of consumer cash needed to maintain demand for goods and services.
Previously maintaining this purchasing power was no problem, because there was always an increasing demand for labor. That is no longer the case. The theory that economists have on labor reallocation has to do with the historically observed trend that there was always new demand for labor. Hunters and gatherers no longer could sustain themselves the old way but there was plenty of work and opportunity as a farmer. Individual farmers could no longer compete with more highly efficient mechanized farms, but there was plenty of work in the factories.
But look what happens in the post industrial society. High tech industries are not labor intensive. And the profound consequences of this starkly obvious fact seems lost on today's very very bright economists.
A member of the 1% might look at what I have to say and think that what I am proposing is that they not be able to extract wealth from an operation- that I am against the profit motive.
This is not the case. Take a high tech company like Zynga. They make what is essentially solitaire games with some social aspects. The employ only 3000 people yet have 300 million active customers per month, and their revenues are 1.2 billion with virtually zero expenditure or consumption of raw materials. That means that each employee is generating almost $400,000 in profit- very high "productivity" (Romney meaning). Is that money being returned to the economy? Most of it is not- it goes into inflated values of the stock portfolios of the 1%.
The way my proposal shifts this is that the 1% still get growth in their stock values. It means that Zynga has to devote more of those revenues to payroll so that there will money in consumers pockets to pay for products like theirs. They do not do this out of the goodness of their hearts they do it because the government will tax them punitively if they don't keep their payroll in balance with the profitability. This doesn't mean make work jobs, or forced unionization. Zynga can hire people to do whatever they like. Maybe they create more games for a broader product range. Maybe they open a non software division that has high labor requirements. The government doesn't tell them how to allocate their payroll.
Because all companies must adhere to the same rules, it is a level playing field. Certainly, some operations are inherently high labor requirements while others are not. This would be handled with employment credits. Operations like the Post office would have a surplus of employment credits with a very large payroll compared to their profitability. Similar to carbon tax credits, such companies could sell these surplus credits to the Zynga type companies so that the Zynga companies could avoid confiscatory taxation on the fair percentage of profits they were unable to allocate to their employees.