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Will higher fuel prices push buyers more toward American made goods?

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Posted by Paul_D_North_Jr on Wednesday, February 23, 2011 10:13 AM

Railway Man
  I deal with environmental regulations and the factions on all sides of the debate on a daily basis, as they affect railroad planning, construction, and operation.  The problem is really not environmental law, it's property rights.  Environmental law is at its core all about who gets to do what with private and public property.  No one wants anyone to tell them what to do with their private or public property, and no one is willing to allow anyone to do anything that might negatively affect the value of their private or public property, or their view, or their air, or anything. 

RWM 

  So "Advantage, status quo ante" - who can survive and/ or do more with just what they now have, be it rails, roads, airports, or waterways, etc. - for both this and financial/ cost reasons.  

Interesting insight and formulation - seems valid to me - wish I'd thought of it, or even seen it before. 

Railway Man
  [snip]  Democracy is messy that way.  China just takes whatever it needs from its property owners, the property owner has no rights to complain or argue, and while it's true China gets things done, is that really the way we want to live?  

  Remember the guy who promised to "make the trains run on time !", and what that was part of and eventually led to ?

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Posted by Murphy Siding on Wednesday, February 23, 2011 10:14 AM

K4sPRR

Thanks for the interesting input and thought guys,  but will higher fuel prices push buyers more toward American made goods...how about starting with American made oil.

  I would guess that "American made" oil, pumped from a well in Wyoming costs more than oil pumped in Saudia Arabia.  The reason being, when the price of oil drops too low, they cap a lot of American oil wells and keep pumping overseas.  If the foreign oil cost less,  they would be the ones capping their wells when the price went down.

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Posted by GN_Fan on Wednesday, February 23, 2011 10:22 AM

I hate to say it guys, but this buy American rhetoric is just plain flag waving hot air. The US has been uncompetitive in a world market for a half a century. The list of failed US industry is long -- steel, automotive, electronics, photography, shoes, clothing, textiles, et al. The argument says that the US rebuilt European and Japanese industry with our money. True, but what about our own industry? Did the worn out rail and steel industry get helped in any way? They were ignored by the Feds and the steel industry eventually failed. Foriegn steel unfairly competed with Euro steel and people complained about dumping, they said. Well, who funded the new, more efficient mills, them or us? You betcha, Uncle Sam did. Where were they when all the big mills in Pittsburgh died? Where were they when the rust belt began? The Feds were no where to be seen. Not a dime for any of them. It appears that the Feds don't care about anything but a big military, anything for the people comes last. I still remember Lyndon Johnson asking, guns or butter? Butter lost.

The point being of all this is, when you go shopping for ANYTHING, do you even see any American goods to buy? Americans are true capitalists from top to bottom, they buy with their wallet. If there's a foriegn car for $15,000 and an equivalent Made In America car for $20,000, which one get sold? It was once quoted somewhere that a container full of $30 blouses made in China that is delivered to NJ, the transportation cost per blouse is in the neighborhood of 30 CENTS. How can fuel costs even come close to changing that? Americans cannot compete because the Federal Govenrment is not behind them, railroad included, especially railroads.

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Posted by Paul_D_North_Jr on Wednesday, February 23, 2011 10:37 AM

Murphy Siding
  I would guess that "American made" oil, pumped from a well in Wyoming costs more than oil pumped in Saudia Arabia.  The reason being, when the price of oil drops too low, they cap a lot of American oil wells and keep pumping overseas.  If the foreign oil cost less,  they would be the ones capping their wells when the price went down. 

  "There's not much low-priced oil - but there's lots of high-priced oil out there !"  - Villanova Law School Prof. Howard Lurie, Spring 1979, in Antitrust Law course. - PDN. 

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Posted by Modelcar on Wednesday, February 23, 2011 10:50 AM

....Doesn't really make much economic sense for us...the Americans....to continue to give billions in aid / support to countries all over the world since we're not in a very good position to be doing so.

Quentin

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Posted by carnej1 on Wednesday, February 23, 2011 11:11 AM

Murphy Siding

 K4sPRR:

Thanks for the interesting input and thought guys,  but will higher fuel prices push buyers more toward American made goods...how about starting with American made oil.

 

  I would guess that "American made" oil, pumped from a well in Wyoming costs more than oil pumped in Saudia Arabia.  The reason being, when the price of oil drops too low, they cap a lot of American oil wells and keep pumping overseas.  If the foreign oil cost less,  they would be the ones capping their wells when the price went down.

We are way O.T on this thread but having said that...

It's interesting to me that currently only 9% of U.S oil imports come from the Middle East (we get more and more oil from Canada and Mexico) and yet a crisis there will drive fuel prices through the roof due to the fact that the energy market/industry is globalized...

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Posted by Ulrich on Wednesday, February 23, 2011 11:15 AM

While environmental regulations and compliance  in and  of themselves may not be  large cost factors, the real cost as it relates to the environment may be in the litigation.

The biggest negative to globalization is the risk inherent in dealing with fare flung customers and suppliers in far away lands where the laws and values are different from our own. Usually the real cost of going global is thus only realized when things go wrong (as they so often do)..

Speaking from personal  experience, I have resisted doing business on a global scale although I have customers who want me to manage their Asian and European transportation needs. As a small business I purposely stay close to home to minimize risk. Larger businesses with deeper pockets who are able to withstand larger losses  may look at the risk return equation differently.

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Posted by oltmannd on Wednesday, February 23, 2011 11:20 AM

zugmann

 

 Firelock76:

 

Yes, I'm sure corporate greed is a factor that I can't discount.  Look at the mess the "whiz kids"  made of the economy the past few years.  I have no love for those irresponsible idiots AT ALL, considering all the people they hurt.  As James Kilpatrick said "I'm a capitalist, and business has no bigger friend than me.  But they sure make it hard, sometimes."  And by the way, the standard of living in China is rising, no wonder with all the money coming in.  Not at our level yet but they're on their way.  All this being said, I stand by my previous post.

 

 

 

Once China gets too expensive, we'll move to the next 3rd world country.  But there is a bright side... some day we will get to be that 3rd world country providing slave labor for other countries.  Yay.

It's not a zero sum game.  Somebody doesn't have to go "down" for somebody to go "up" - only in relative terms.  

The last bastion of cheap labor will be Africa - and even there industrialization will eventually push up labor rates as the economy grows, just like in China.  Once labor rates equalize, then the rising tide of economic activity raises all boats.

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Posted by Paul_D_North_Jr on Wednesday, February 23, 2011 11:30 AM

Ulrich
  [snip] . . .  the real cost as it relates to the environment may be in the litigation.

[snip]. Larger businesses with deeper pockets who are able to withstand larger losses  may look at the risk return equation differently. 

Most environmental litigation - though certainly not all - such as 'Super-Fund sites" relates to acts and events from way in the past, such as clean-up ("remediation") costs and the 'toxic tort" suits.  And often the people who have to deal with it now either weren't there then, were legitimately unaware until a recent discovery or disclosure, or inherited the problem via an acquisition, etc.  No modern business that wants to stay viable and retain its assets will risk creating that kind of problem for itself.

Agree completely with your points about the risks of globalization; and for larger businesses having  taken the plunge and made the intellectual, cultural, legal, and financial investment to do that - how quick will they be to abandon and 'write-off' their overseas operations, on something as volatile as the current political instability and surge in oil prices ?

- Paul North. 

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Posted by zugmann on Wednesday, February 23, 2011 11:36 AM

oltmannd

 

 

 

The last bastion of cheap labor will be Africa - and even there industrialization will eventually push up labor rates as the economy grows, just like in China.  Once labor rates equalize, then the rising tide of economic activity raises all boats.

 

To raise all boats, you would need more water than what we have now.  Since you can't create matter - I fail to see where all this extra water is supposed to come from.  Someone will make money, and someone will suffer.

 

As someone once said on a forum somewhere - "we are fast basing our economy on selling cheap foreign-made crap to each other" .   I'm sure it can succeed, but I just think our standard of living is not going to exactly be the envy of the world.

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by Murphy Siding on Wednesday, February 23, 2011 11:41 AM

zugmann

 oltmannd:

 

 

 

The last bastion of cheap labor will be Africa - and even there industrialization will eventually push up labor rates as the economy grows, just like in China.  Once labor rates equalize, then the rising tide of economic activity raises all boats.

 

 

To raise all boats, you would need more water than what we have now.  Since you can't create matter - I fail to see where all this extra water is supposed to come from.  Someone will make money, and someone will suffer.

 

As someone once said on a forum somewhere - "we are fast basing our economy on selling cheap foreign-made crap to each other" .   I'm sure it can succeed, but I just think our standard of living is not going to exactly be the envy of the world.

   I'm no economist.....but I did sleep in a Holiday Inn last night....Clown

      Isn't the "more water"  the fact that the world's population is growing?

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Posted by Victrola1 on Wednesday, February 23, 2011 11:46 AM

Captain Kirk's replicator is not yet reality. Like Captain Kirk called the Enterprise, we now call home on a cell phone.

Watch old newsreels of flight control surfaces (fins) being fitted on the assembly line to new DeSotos. An army of men repeat their tasks like piston rods. Watch a video of an auto assembly line online. Your streaming video shows a line of robots repeating their tasks like piston rods.

Like agriculture before it, manufacturing is taking less labor per unit produced.

As automation advances, labor could become such a small part of price that it is largely decoupled from the cost of production. Assuming labor leaves the equation, what happens to the location of production and in turn the demand for transportation?

 

 

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Posted by zugmann on Wednesday, February 23, 2011 11:49 AM

But robots don't buy cars...

 

Granted the people that fix them, do... but how many of them are there vs. assembly line workers?  Is there ever a point where we cross the line and over-automate?   And don't we learn anything from movies... you know the robots will rise up against us some day.

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by Victrola1 on Wednesday, February 23, 2011 11:54 AM

I believe Mr. Marx figured that the desire to eliminate labor will lead to labor eliminating capitalists.

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Posted by oltmannd on Wednesday, February 23, 2011 12:10 PM

Railway Man

 

 waltersrails:

 

There would be a lot more American Made Products and tons more jobs if the EPA Would butt out of everyones Bizness. USA and Steamers all the way!!!!

 

 

The cost of environmental compliance is insignificant next to the cost of labor, machinery, raw materials, and energy.  Even for a very dirty process such as oil refining, environmental compliance is less than 1% of operating costs.  The American Petroleum Institute (the industry's own advocacy group) calculates that environmental compliance costs about $0.14 per barrel of refined products sold.  Cancelling every possible environmental regulation tomorrow wouldn't move significant jobs back to the U.S.

RWM 

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Posted by oltmannd on Wednesday, February 23, 2011 12:16 PM

zugmann

 

 oltmannd:

 

 

 

 

The last bastion of cheap labor will be Africa - and even there industrialization will eventually push up labor rates as the economy grows, just like in China.  Once labor rates equalize, then the rising tide of economic activity raises all boats.

 

 

 

To raise all boats, you would need more water than what we have now.  Since you can't create matter - I fail to see where all this extra water is supposed to come from.  Someone will make money, and someone will suffer.

 

As someone once said on a forum somewhere - "we are fast basing our economy on selling cheap foreign-made crap to each other" .   I'm sure it can succeed, but I just think our standard of living is not going to exactly be the envy of the world.

So, the standard of living in the US went up between 1860 and 1960 because we took it all out of someone else's hide?  The industrial revolution produced no net gain?  That is what you are saying....

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Posted by oltmannd on Wednesday, February 23, 2011 12:20 PM

Victrola1

Captain Kirk's replicator is not yet reality. Like Captain Kirk called the Enterprise, we now call home on a cell phone.

Watch old newsreels of flight control surfaces (fins) being fitted on the assembly line to new DeSotos. An army of men repeat their tasks like piston rods. Watch a video of an auto assembly line online. Your streaming video shows a line of robots repeating their tasks like piston rods.

Like agriculture before it, manufacturing is taking less labor per unit produced.

As automation advances, labor could become such a small part of price that it is largely decoupled from the cost of production. Assuming labor leaves the equation, what happens to the location of production and in turn the demand for transportation?

It becomes:  "where are the raw materials and where is the market" ...again.

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Posted by oltmannd on Wednesday, February 23, 2011 12:25 PM

zugmann

But robots don't buy cars...

Good thing.  More for us. then.

If you automate 80% of everyone's job, then we only have to work one day a week to earn a whole week's pay.  Same total economic output with only 20% of the effort.  (It's how we got from the 6x12 work week to the 5x8 work week)

Or, if you automate 80% of everyone's job and everyone works 5 days a week, then the economic output grows X5 and we all can have five times the stuff we have now.

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Posted by oltmannd on Wednesday, February 23, 2011 12:27 PM

zugmann

  Is there ever a point where we cross the line and over-automate?  

It's a really simple economic evaluation.  When the cost to own and operate the machine < the cost to hire manual labor, you automate, if not you don't.

Do you own a powered lawn mower?  Why?

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Posted by zugmann on Wednesday, February 23, 2011 12:40 PM

oltmannd

 

 zugmann:

 

But robots don't buy cars...

 

 

Good thing.  More for us. then.

If you automate 80% of everyone's job, then we only have to work one day a week to earn a whole week's pay.  Same total economic output with only 20% of the effort.  (It's how we got from the 6x12 work week to the 5x8 work week)

Or, if you automate 80% of everyone's job and everyone works 5 days a week, then the economic output grows X5 and we all can have five times the stuff we have now.

That's if you are one of the lucky few to have a job....  and you assume that the workers will actually reap some benefits.  Your numbers look great in economic text books - but you forget about variable "g". 

Greed.

Let's just stop employing people.. I bet it will be all roses and sunshine.  And maybe rainbows will shoot out my ahh...  I'll stop now. 

Sorry sir, but I am a realist.  Or pessimist - same thing.

 

 

 

 

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by zugmann on Wednesday, February 23, 2011 12:43 PM

oltmannd

 

 zugmann:

 

  Is there ever a point where we cross the line and over-automate?  

 

 

It's a really simple economic evaluation.  When the cost to own and operate the machine < the cost to hire manual labor, you automate, if not you don't.

Do you own a powered lawn mower?  Why?

If only everything was that simple...

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by Ulrich on Wednesday, February 23, 2011 1:35 PM

You're assuming there's only a limited amount of work to be done...more automation will free up people to work in other areas that cannot be automated...This will require a more educated work force as jobs that cannot be automated easily require something robots can't do well..the ability to think. That may not be such a bad thing as few of us aspire to work in boring repetitive jobs anyway.

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Posted by zugmann on Wednesday, February 23, 2011 1:39 PM

Ulrich

You're assuming there's only a limited amount of work to done...more automation will free up people to work in other areas that cannot be automated...This will require a more educated work force as jobs that cannot be automated easily require something robots can't do well..the ability to think.

 

So where are these other areas now?   Lots of people are free now.  I just don't see the huge increase of jobs - maybe I'm loking in the wrong spots?

 

And education - yeah, who is going to pay for that?

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by schlimm on Wednesday, February 23, 2011 1:41 PM

zugmann

 

 oltmannd:

 

 

Good thing.  More for us. then.

If you automate 80% of everyone's job, then we only have to work one day a week to earn a whole week's pay.  Same total economic output with only 20% of the effort.  (It's how we got from the 6x12 work week to the 5x8 work week)

Or, if you automate 80% of everyone's job and everyone works 5 days a week, then the economic output grows X5 and we all can have five times the stuff we have now.

 

 

That's if you are one of the lucky few to have a job....  and you assume that the workers will actually reap some benefits.  Your numbers look great in economic text books - but you forget about variable "g". 

Greed.

Once again zug, I agree with you.  Based on history, why would anyone believe that if even only 50% of the work were automated, all the workers would still get the same pay as before?  Probably 50% would lose their jobs or else the company would demand give-backs to "save" those jobs.

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Posted by jeffhergert on Wednesday, February 23, 2011 1:43 PM

oltmannd

 zugmann:

  Is there ever a point where we cross the line and over-automate?  

 

It's a really simple economic evaluation.  When the cost to own and operate the machine < the cost to hire manual labor, you automate, if not you don't.

Do you own a powered lawn mower?  Why?

I have a powered lawn mower.  I also have an unpowered, reel type lawn mower tucked away in the shed.  Neither are self-propelled or self-navigating.  They both require an operator to function.  When I upgraded to the powered version, I didn't permanently displace anyone.  I'm not even sure that it cut (no pun intended) the time to mow the lawn by that much, but that may be due to the operator, too.

There's an excellent Twilight Zone episode about automating factories.  I don't remember the title.  The short of it was the guy who pushed for automation thought it great, until his job was also eliminated.  I guess that's what it comes down to.  If you work, as do most of us, in a job that could be automated or outsourced you worry about it.  If you work in a job that would be hard to automate or outsource, you don't see the problem with that. 

Beware though, just like the guy in the TV episode, there's few jobs that can't be either automated, outsourced, or replaced by cheaper labor.  

Jeff

   

 

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Posted by schlimm on Wednesday, February 23, 2011 1:46 PM

And training for other jobs, requiring a college or technical degree just isn't the answer for everybody.  We (as a nation) have lost a lot of jobs that used to provide a living for many folks.  Not everybody can be a computer whiz, etc. and a lot of those jobs have been off-shored to India, etc.  And some folk's talents are with their hands and have a difficult time in the classroom.  Just what are we doing for them?

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Posted by Convicted One on Wednesday, February 23, 2011 2:00 PM

Ulrich

 

 zugmann:

 

Yep, we just have to settle for the standard of living that places like China have. 

 

Oh boy, sign me up.  Besides, if we don't employ any Americans, then who is going to be able buy the crap made in China?  But I guess that kind of long term thinking is too complicated for the lazy bums that just want to maximize their greed today.

 

 

That's correct. Globalization is a convenient  means by which we can sidestep labor and envirnomental laws by allowing one to employ cheap labor elsewhere in countries that have no environmental regulations. And since that happens "far away" we can remain smug in our belief that it isn't really happening at all.  

 

But hey, as long as the Walmart stockholders are happy, we're supposed to be happy too , right?Confused

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Posted by zugmann on Wednesday, February 23, 2011 2:04 PM

The "education" pot of gold.  That's the answer to everything anymore.  A 4-yr college degree doesn't even have the weight it once did.  Now you need a master's.. doctorate.. multiple degrees (oh yeah, and experience somewhere).

 

We also have lots of people that could better contribute more to society if they were in another line of work.  We all know people that we when we see them we wonder: "why are they wasting their talent here?"  But "here" is where they have a paycheck and health insurance for their families.  Yeah, we like to think of breaking free to get an education and a new career - but most responsible people just can't fathom doing that.

Sure, if you are unemployed - you don't have much to lose, but if you are employed - you risk it all. 

 

I speak from personal experience.  I had another employee tell me once "Tom, the best thing that could happen to you is that you get FIRED.  Then you'd be forced to do something with your life."

 

He has a point.

 

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by zugmann on Wednesday, February 23, 2011 2:06 PM

Convicted One

 

 

But hey, as long as the Walmart stockholders are happy, we're supposed to be happy too , right?Confused

 

As long as we can fill our carts with cheap crap we don't need...

 

Although I don't think the walmart stockholders are too happy...  seems they are too expensive any more.

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by Convicted One on Wednesday, February 23, 2011 2:07 PM

oltmannd

 

 

If you automate 80% of everyone's job, then we only have to work one day a week to earn a whole week's pay.  Same total economic output with only 20% of the effort.

 

Won't work that way.  What will happen is that (in your example) they will lay off 80% of the work force, convert all remaining positions except a handful to non-benefit accruing part time positions, and the stockholders will pocket the margin

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