Fact Checking the "Fact Checkers"

[GannonFan]

[
We had and still have huge cometitive advantages regarding resources and purchasing power. The rest of the world still needs our markets and (Cluck will love this ) capital. But we don't use that to leverage our position from a BIG PICTURE or LONG TERM standpoint.

Ok, so how do we leverage our position? It's sounds wonderful in a soundbite, but let's hear the details.

[kalm]

[
We had and still have huge cometitive advantages regarding resources and purchasing power. The rest of the world still needs our markets and (Cluck will love this ) capital. But we don't use that to leverage our position from a BIG PICTURE or LONG TERM standpoint.

Ok, so how do we leverage our position? It's sounds wonderful in a soundbite, but let's hear the details.

But soundbit is my preferred mode of communication!

In all honesty, I agree that the cats mostly out of the bag, the global economy is very intertwined, and there may not be whole hell of a lot that can be done. But a big picture start would be to protect domestic manufacturing and resources, create an innovation rich envirnonment through infrastructure and education/research investments, make our markets difficult to approach for bad players.

I know, I know, pie in the sky stuff and no details...but I've got to go fishing in a few. I'll have to try and come up with my specifics to save America at another time.

[GannonFan]

In all honesty, I agree that the cats mostly out of the bag, the global economy is very intertwined, and there may not be whole hell of a lot that can be done. But a big picture start would be to protect domestic manufacturing and resources,

How would that be done? Does all domestic manufacturing get protected? Do we apply tarriffs to foreign-made goods? Same with the resources - do we not allow exportation of resources (for instance current 50 year boom coming up in natural gas production). When consumer costs increase as a result of all of this protection, how do we decide what is and what isn't too much protection? Japan's still coming out of a 20 year stagnant period due to protecting domestic companies - how do we avoid that trap?

create an innovation rich envirnonment through infrastructure and education/research investments,

Again, great soundbite, I mean, who's against creating rich anything environments and of course education and research investments are always super. Yay! Problem is, again, how do you pick and choose on these things? What does an "innovation rich environment" look like? What infrastructure are we talking about for innovation? More interstates and bridges? Not sure what roadways have to do with innovation. And aren't we already investing a lot in education and now starting to think that it may not be the best thing in the world for everyone in the country to have a college degree? Do we pick certain majors now for people to study and invest in those? And what research makes the grade to be invested in, how do we pick that?

make our markets difficult to approach for bad players.

What's a bad player? Someone who makes the same thing we do but can do it more cheaply? What's the sliding scale for other countries when it comes to evaluating their employee compensation and environmental record to determine if they are bad players or not? And again, when this raises costs for consumers are we prepared to take that hit? What if other countries decide we are bad players and raise barriers to us being in those countries?

As you say, the world is pretty intertwined (and really, it's always been intertwined so that's not really anything new that's "out of the bag") - previous attempts at doing what you say to do, which basically amounts to simple protectionism, don't work in the long haul, and are often disastrous, and other countries have had more leverage then than we do now. Protectionism is fine and makes for great soundbites, but it never seems to work in terms of a long-term, sustainable economic position. You're always going to sacrifice growth when you seek to constrain markets, and you risk not only lack of growth but actual constriction of the economy by doing so. When it comes down to it, the only alternative to competition is failure, even if you try to hide that by calling it protectionism.

[kalm]

In all honesty, I agree that the cats mostly out of the bag, the global economy is very intertwined, and there may not be whole hell of a lot that can be done. But a big picture start would be to protect domestic manufacturing and resources,

How would that be done? Does all domestic manufacturing get protected? Do we apply tarriffs to foreign-made goods? Same with the resources - do we not allow exportation of resources (for instance current 50 year boom coming up in natural gas production). When consumer costs increase as a result of all of this protection, how do we decide what is and what isn't too much protection? Japan's still coming out of a 20 year stagnant period due to protecting domestic companies - how do we avoid that trap?

create an innovation rich envirnonment through infrastructure and education/research investments,

Again, great soundbite, I mean, who's against creating rich anything environments and of course education and research investments are always super. Yay! Problem is, again, how do you pick and choose on these things? What does an "innovation rich environment" look like? What infrastructure are we talking about for innovation? More interstates and bridges? Not sure what roadways have to do with innovation. And aren't we already investing a lot in education and now starting to think that it may not be the best thing in the world for everyone in the country to have a college degree? Do we pick certain majors now for people to study and invest in those? And what research makes the grade to be invested in, how do we pick that?

make our markets difficult to approach for bad players.

What's a bad player? Someone who makes the same thing we do but can do it more cheaply? What's the sliding scale for other countries when it comes to evaluating their employee compensation and environmental record to determine if they are bad players or not? And again, when this raises costs for consumers are we prepared to take that hit? What if other countries decide we are bad players and raise barriers to us being in those countries?

As you say, the world is pretty intertwined (and really, it's always been intertwined so that's not really anything new that's "out of the bag") - previous attempts at doing what you say to do, which basically amounts to simple protectionism, don't work in the long haul, and are often disastrous, and other countries have had more leverage then than we do now. Protectionism is fine and makes for great soundbites, but it never seems to work in terms of a long-term, sustainable economic position. You're always going to sacrifice growth when you seek to constrain markets, and you risk not only lack of growth but actual constriction of the economy by doing so. When it comes down to it, the only alternative to competition is failure, even if you try to hide that by calling it protectionism.

Yep, it's a complicated issue for sure. But the idea of chopping down a tree in the US, shipping it 1000's of miles to China, having them turn it into chair, then shipping it all of those 1000's of miles back over here to be sold to some poor schmuck who thinks he's getting a deal is not only crazy, it's not even sustainable in the long run once oil costs become a serious issue.

You wanna talk soundbite terminology? Free trade is as good a one as free markets. They are both utopic, sound real nice, and neither exists.

[kalm]

Perhaps we start by formulating a national trade policy as this article suggests. Hell even the CEO of Dow Chemical is pining for it. You may not like market intervention Ganny, but if other countries are doing, don't we have to level the playing field? After all you DO like competition right?

The article also mentions the importance of factory floor innovation which has gone away with manufacturing, again, giving those countries another leg up in developing new and better technologies.

Or consider wind turbines. China's biggest windmill makers, Sinovel Wind Group Co. and Xinjiang Goldwind Science & Technology Co., have received more than $15.5 billion in credits from state-owned banks. As a result, despite many concerns about quality, they won their first major foreign orders in the past year. They plan to establish plants abroad, including China's first in the U.S. Over time, they will gain experience, improve quality and further reduce costs. In industry after industry, the same pattern emerges.

In theory, I am deeply skeptical of government industrial policy. Government doesn't know how to pick winners and losers, it will make mistakes, and the process will get politicized. All this is true. And yet when I look at China and South Korea and also Germany and Japan, I see governments playing a crucial role. They do make mistakes--their versions of Solyndra--but they seem to view them the way venture capitalists would. Their role is to seed many companies, only a few of which will succeed. Once these companies are identified, government helps them compete against big U.S. multinationals. There used to be a joke about Marxist economists who would say of a deviation from pure communist economics: "It might work in practice, comrade, but it doesn't work in theory." That's what industrial policy looks like these days. The theory doesn't make sense, but it's hard to argue with the result.

Read more: http://www.time.com/time/magazine/artic ... z2IiFr4Wgj" onclick="window.open(this.href);return false;

[GannonFan]

Yep, it's a complicated issue for sure. But the idea of chopping down a tree in the US, shipping it 1000's of miles to China, having them turn it into chair, then shipping it all of those 1000's of miles back over here to be sold to some poor schmuck who thinks he's getting a deal is not only crazy, it's not even sustainable in the long run once oil costs become a serious issue.

You wanna talk soundbite terminology? Free trade is as good a one as free markets. They are both utopic, sound real nice, and neither exists.

Why is it crazy for the chair example? If the guy making the chair in China is doing it cheap enough compared to the guy in the US doing it, and if the transportation costs to and from don't level that, then yes, it makes perfect sense to make the chair there. And while the guy in the US isn't making the chair he can make something else that the guy in China can't make as cheaply or doesn't even know how to make.

And your comment about it being sustainable shows your flaw in all of this thinking - who said it has to be sustainable? Economies are not and should not be static and non-changing, but that seems to be the thinking you come from. It's not surprising that you harken back to the 1950's as an example of when things were better because back then economies were more static. It was simpler, but it doesn't exist anymore. The guy in China doesn't need to make that chair for the next 5, 10, 25, or 50 years. He only needs to make it as long as it makes sense and makes economic sense for him to make it. When someone can make it better and cheaper or when he can make something he can make more of a profit off of he should stop making the chair. And shockingly, we've been seeing that same thing play out for several years now - China is not the low cost manufacturer they were even 10 years ago and now they are trying to make things that others just can't while low cost manufacture goes elsewhere. Things change, so this idea that something needs to be "sustainable" is incorrect when people try to extend it to mean the same person making the same thing for a long period of time. If you want that kind of "sustainability" then you need to create a time machine and travel back to the halcyon days of the '50s.

[GannonFan]

Perhaps we start by formulating a national trade policy as this article suggests. Hell even the CEO of Dow Chemical is pining for it. You may not like market intervention Ganny, but if other countries are doing, don't we have to level the playing field? After all you DO like competition right?

The article also mentions the importance of factory floor innovation which has gone away with manufacturing, again, giving those countries another leg up in developing new and better technologies.

Or consider wind turbines. China's biggest windmill makers, Sinovel Wind Group Co. and Xinjiang Goldwind Science & Technology Co., have received more than $15.5 billion in credits from state-owned banks. As a result, despite many concerns about quality, they won their first major foreign orders in the past year. They plan to establish plants abroad, including China's first in the U.S. Over time, they will gain experience, improve quality and further reduce costs. In industry after industry, the same pattern emerges.

In theory, I am deeply skeptical of government industrial policy. Government doesn't know how to pick winners and losers, it will make mistakes, and the process will get politicized. All this is true. And yet when I look at China and South Korea and also Germany and Japan, I see governments playing a crucial role. They do make mistakes--their versions of Solyndra--but they seem to view them the way venture capitalists would. Their role is to seed many companies, only a few of which will succeed. Once these companies are identified, government helps them compete against big U.S. multinationals. There used to be a joke about Marxist economists who would say of a deviation from pure communist economics: "It might work in practice, comrade, but it doesn't work in theory." That's what industrial policy looks like these days. The theory doesn't make sense, but it's hard to argue with the result.

Read more: http://www.time.com/time/magazine/artic ... z2IiFr4Wgj" onclick="window.open(this.href);return false;

First of all, from a factory floor standpoint and innovation, we do have that here in the US and in abundance. While the press likes to report that manufacturing in the US is dying, that's actually incorrect. What has been dying have been the manufacturing jobs in the US. We make more today in the manufacturing sector than we've ever made before - we just do it with even less people than we had when we were making so much less. Productivity, whether it's the workers themselves or through automation, is thoroughly rampant in US manufacturing. While in the short term this is problematic, long term it is the more "sustainable" (see, I'll even use your word) way forward. When we do manufacture things that can't be made in China or other low cost centers, not only do we do it here, but we do it so efficiently here that it makes sense to keep it here, even keeping the proprietary part of it aside.

You bring up Dow as an example - I actually have more than 10 years experience in speciality chemical manufacture such as what Dow does. The reason they don't make more here in the US is very simple - much of the specialty chemical market has become and is pretty much a commodity - it doesn't take immense amount of know-how to do, it can be done in very bare bones conditions, and those products are so early in the process of what they get used in that they don't need to be terribly close to the final market. That's why countries like China and India are still places where a lot of speciality chemicals get made. Of course, there's also the more lax environmental standards in those places as well, but to use your word again, that's certainly not "sustainable" and once people in those countries start to move from worrying where the next meal is going to come from to worrying about their air they breathe and the water they drink, they will clamor for better standards - such as what's already taking place in China.

To the other point, I've never said that government can't be part of the equation in terms of helping the economy or even particular companies. However, the example of flooding a market sector with government funds in an attempt to get one or two successful companies out of it is not a terribly efficient way to go about it. Even in China there is already blowback for their policy of funding every solar panel company under the sun (heh, pun intended there) and then to find that the market for solar panels has slowed down again. The act of a government choosing particular companies or even a particular technology to champion and then funding that as much as they can is the political equivalent of a person in a wind chamber and releasing thousands of dollar bills and giving them a minute to catch as much as they can. I'm always shocked at the end as to how much money ends up on the floor in those things rather than in the person's pockets or hands. Same thing happens with governments - some money hits, but most of it ends up wasted on the floor.

[kalm]

Good points in the last two posts Ganny. Especially regarding productivity and automation. And yes, I realize the realities and fluidity of the current situation.

I like the past, current, and present. Funny you are now playing the role of the progressive in that things will always be moving forward. I just happen to think that resources are finite. Hence the sustainability issue at some point becomes very real. To my thinking, huge cities and population centers in the desert make about as much sense as exporting our timber and then importing the finished product, or, to use your example, slave labor. Yes it's a reality right now, but I'm looking at the long term, big picture ramifications.

[GannonFan]

Good points in the last two posts Ganny. Especially regarding productivity and automation. And yes, I realize the realities and fluidity of the current situation.

I like the past, current, and present. Funny you are now playing the role of the progressive in that things will always be moving forward. I just happen to think that resources are finite. Hence the sustainability issue at some point becomes very real. To my thinking, huge cities and population centers in the desert make about as much sense as exporting our timber and then importing the finished product, or, to use your example, slave labor. Yes it's a reality right now, but I'm looking at the long term, big picture ramifications.

I'm not now playing the role of a progressive, in these matters of economics I've always been progressive. I'm actually shocked as to how conservative and even stoic you are in some of your economic posts, though. Like the comment about resources being finite - yes, in theory and in practicality, resources are certainly finite. But that doesn't necessarily lead to the conclusions you are trying to draw when you speak of sustainability. One day we will run out of fossil fuels. There is no real argument there. The argument comes up, though, as to when we will. It's funny you bring this up when we are at the dawn of a natural gas boom in this country and even the world, a boom that will significantly alter the economics for decades, if not the century, to come. Looking big picture is great, but we're going to have resources well past the time we and even our kids are alive. And even then, when fossil fuels finally dry up, I am very progressive in that I know that mankind will find another resource and another way to keep going forward. There are plenty of options out there (wind, solar, nuclear, etc) that are all viable alternatives when that comes about. However, without the need for them yet (and the need coming from the imminent end of fossil fuels) they will remain novelties until they are truly needed. And if someone comes up with an astounding breakthrough and one of those technologies can cost effectively replace fossil fuels (and that would be like the golden ticket in Willy Wonka - everyone wants to discover that) then it will happen sooner.

Looking at the big picture, the longer term picture, is always fine and well. However, it becomes less useful when you mistake the fact that that longer term isn't terribly relevant in the present or even the near future. We all know the Sun is going to one day burn out - but we would be negligent if we started moving underground today for that eventual circumstance. There's plenty of time between now and then to get ready.

[AZGrizFan]

Note to self: never get on GF's bad side.

[UNI88]

Note to self: never get on GF's bad side.

He's like the Spock of cs.com. He will hammer you with logic and a depth of knowledge and grind you down.

[AZGrizFan]

Note to self: never get on GF's bad side.

He's like the Spock of cs.com. He will hammer you with logic and a depth of knowledge and grind you down.

[kalm]

He's like the Spock of cs.com. He will hammer you with logic and a depth of knowledge and grind you down.

No shit!

[GannonFan]

Note to self: never get on GF's bad side.

While kalm and I may disagree, don't get me wrong, I think he's a perfectly good and civil poster. I like the guy. Nothing wrong with disagreeing. Heck, I think it makes for a nice back and forth. Kind of like the exact opposite that happens when D1B posts.

[kalm]

Note to self: never get on GF's bad side.

While kalm and I may disagree, don't get me wrong, I think he's a perfectly good and civil poster. I like the guy. Nothing wrong with disagreeing. Heck, I think it makes for a nice back and forth. Kind of like the exact opposite that happens when D1B posts.