In fact a great number of the jobs lost are to automation in its various forms. Those jobs will never return unless we have some sort of 21st century Luddite movement. [sarcasm ]
JPS1 oltmannd The shipping container flattened the world. Ever since, manufacturing has been chasing low cost labor around the globe. What was 50 cents an hour in China 20 years ago is now $3 an hour. Labor costs in Mexico have doubles since (and because of) NAFTA (which has cut the flow of Mexican men looking for work in the US to a trickle). Jobs aren't coming back to the US. The only way you can compete with low cost labor is by highly automating - which costs gobs of capital, that you need an even higher margin to cover. Chasing low cost labor around the globe has drastically cut the number of people living in extreme poverty. This is a GOOD thing. What's this mean for RRs? It means the future and growth look like an intermodal container. Yes!!!!
oltmannd The shipping container flattened the world. Ever since, manufacturing has been chasing low cost labor around the globe. What was 50 cents an hour in China 20 years ago is now $3 an hour. Labor costs in Mexico have doubles since (and because of) NAFTA (which has cut the flow of Mexican men looking for work in the US to a trickle). Jobs aren't coming back to the US. The only way you can compete with low cost labor is by highly automating - which costs gobs of capital, that you need an even higher margin to cover. Chasing low cost labor around the globe has drastically cut the number of people living in extreme poverty. This is a GOOD thing. What's this mean for RRs? It means the future and growth look like an intermodal container.
Jobs aren't coming back to the US. The only way you can compete with low cost labor is by highly automating - which costs gobs of capital, that you need an even higher margin to cover.
Chasing low cost labor around the globe has drastically cut the number of people living in extreme poverty. This is a GOOD thing.
What's this mean for RRs? It means the future and growth look like an intermodal container.
Yes!!!!
Yes it such a good thing for those who've been displaced from the middle class over the years. It's such a good thing for communities that have been decimated has their factories and jobs moved south or off-shore.
Jeff
And another point to consider. Much of that displacement is due to wage stagnation for the last ~40 years. If all those appliances etc. were made here, most folks couldn't afford them or new vehicles due to the high price tickets.
Agree. This sort of change has been occurring throughout modern history, unfortunately for some, at an accelerating pace. Think of the stagecoaches, canal packets and riverboats of old. They were labor-intensive industries but were replaced rapidly by the rails.
One message I always told my students was to learn to be flexible, as most will not have the luxury of jobs in the same field throughout their working lives. Be prepared to retrain, possibly more than once.
charlie hebdoBe prepared to retrain, possibly more than once.
too bad the system isn't set up to make it easy or cheap.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.
I doubt that automation coupled with our high labor cost is even remotely competitive with China. Certainly, Peter Navarro, the architect of our developing trade war with China, does not believe that most our out job losses were due to automation.
It’s true that this sort of job displacement has been going on forever. But according to Mr. Navarro, it does not necessarily have to happen, and he is on a life mission to not only stop it, but also reverse it and bring our jobs back. He will destroy China if he has to.
Tariffs render moot all the arguments about loss of jobs to Chinese competition. Being China’s biggest customer, we are in the driver’s seat if we choose to boycott their products, or make them too costly for our consumers by the use of import tariffs. We can destroy China by destroying their manufacturing economy if we want to. And Mr. Navarro and his boss do want to if China doesn’t meet their demands. And China has no intention of meeting their demands. So I doubt we can bring the jobs back, but we surely can destroy China and wreck the world economy to boot.
All the arguments about whether fee trade is a good thing are now water over the dam. Free trade is now replaced with fair trade. And with fair trade, a county is prevented from stealing the jobs of another country. So it is a new day and all that old free trade hoo-ha about trade being governed by competition has gone out the window.
The job loss and destruction of job markets was a disaster for our country. I would generally support free trade, but at the time this outsourcing began, I did feel that it would be too much, too fast, and we would lose all our best jobs like an avalanche. The difference in ours and China’s cost of living meant that we could not possibly compete until our cost of living and China’s cost of living adjusted towards each other to some extent. Maybe some method of restraint would have been wise in order to let things adjust more naturally rather than suddenly throwing the door open. But that would have been branded as protectionism, and the free traders would have none of it. Where are they now that free trade has been thrown on the scrap heap of history?
Of course with China holding $1T+ (that's trillion) of our governmental debt, they certainly have the power to destroy ours were they to even dump a small part of it on to the market at one time.
Higher interest rates raised too fast too soon slows down consumer orders. China been unfairly trading consumer goods with us far too long.stealing tech from us too long.and much more evil against USA. 500000000000billion trade deficit or so for years. Can't have a commie county rip us off and want to destroy us at same time. Sad
I believe that Trump and his followers are trying to return to a world that doesn't exist anymore, being the postwar period from about 1945 to 1963 when the United States dominated world commerce. This situation existed largely because the rest of the Western world was still rebuilding from WW2 and the Eastern bloc was not really a part of the world market for ideological reasons. Both of those factors are not really in play anymore.
matthewsaggie Of course with China holding $1T+ (that's trillion) of our governmental debt, they certainly have the power to destroy ours were they to even dump a small part of it on to the market at one time.
CSSHEGEWISCH I believe that Trump and his followers are trying to return to a world that doesn't exist anymore, being the postwar period from about 1945 to 1963 when the United States dominated world commerce. This situation existed largely because the rest of the Western world was still rebuilding from WW2 and the Eastern bloc was not really a part of the world market for ideological reasons. Both of those factors are not really in play anymore.
I think you hit the nail squarely on the head. Throughout modern western history, there are many examples of autocratic leaders or autocrat wannabees redirecting the public's attention to external enemies when their rule is threatened.
charlie hebdo CSSHEGEWISCH I believe that Trump and his followers are trying to return to a world that doesn't exist anymore, being the postwar period from about 1945 to 1963 when the United States dominated world commerce. This situation existed largely because the rest of the Western world was still rebuilding from WW2 and the Eastern bloc was not really a part of the world market for ideological reasons. Both of those factors are not really in play anymore. I think you hit the nail squarely on the head. Throughout modern western history, there are many examples of autocratic leaders or autocrat wannabees redirecting the public's attention to external enemies when their rule is threatened.
Thanks to Chris / CopCarSS for my avatar.
JPS1 matthewsaggie Of course with China holding $1T+ (that's trillion) of our governmental debt, they certainly have the power to destroy ours were they to even dump a small part of it on to the market at one time. China has been unwinding its holdings of U.S. Treasury securities. At the end of June 2018, it held $1,191.2 billion of U.S. Treasury securities. By the end of June 2019, the amount had dropped to $1,112.5 billion, a decrease of $78.7 billion or approximately 6.5 percent. It is not a major change, but it is noticeable. It did not appear to have a significant impact on the market for U.S. Treasury securities.
Back during the cold war, there was palpable paranoia about communism hiding behind every bush. We were to find them and root them out for our own survival. I think they called it “Red Scare.” Today, most people are not so concerned about the threat of communism although the justification is still there. I think it is rare today for people to have those feelings about China even though they are Communist nation.
But there are still people who adhere to that Red Scare diligence and I believe that China tariff architect, Peter Navarro is one of those people. He elevates the trade imbalance to a moral threat coming from an evil nation that we must not trust in any way. He has codified the Seven Deadly Sins that China is committing, and he is demanding that China stop doing so, or else we will break them economically.
His life’s work seems to have evolved to this way of regarding China as a major problem that must be fixed. Here is a link to an essay about Mr. Navarro’s path and philosophy. One thing that is noticeable in Navarro’s thinking is that there is no clear line between trade war and actual war. Such is the struggle we face with China according to Navarro:
https://www.cato.org/sites/cato.org/files/serials/files/regulation/2018/9/regulation-v41n3-1.pdf
He's a real outlier.
http://businessinsider.com/what-is-trumpenomics-according-to-peter-navarro-2017-1
https://www.washingtonpost.com/news/wonk/wp/2016/10/24/trumps-advisers-see-another-conspiracy-far-from-the-campaign-trail/
Murphy Siding If China's selling, maybe we should be worried about who's buying $78.7 billion in U.S. Treasury securities?
charlie hebdo He's a real outlier. http://businessinsider.com/what-is-trumpenomics-according-to-peter-navarro-2017-1 https://www.washingtonpost.com/news/wonk/wp/2016/10/24/trumps-advisers-see-another-conspiracy-far-from-the-campaign-trail/
That is an excellent article that should be read by those who want to understand what is happening with the tariffs against China and several related fronts. When I say that Peter Navarro is the architect of our current trade war, I mean that literally. The American people need to wake up and realize that there is a grand economic departure underway with the United States, and it is essentially the work of one man who has impressed our Administration with his ideas.
I have watched Navarro in several different interviews lately and he comes off as intelligent, articulate, and professional. But he also has an uncanny self-assuredness with arguments that he makes without the facts that would reveal the trail of his reasoning in a way that would convince a listener.
Instead, his assertions come across as bullet points glibly made as though he is threatening a listener to accept them. Yet they are quite technical, and he gives a listener nothing by which to evaluate them on the cause and effect reasoning. I try to follow him as he makes his arguments in his confrontational, vindictive manner; and I suddenly am struck by the sense that he is pure tinfoil hat. And yet this is not at all apparent in his professional, highly educated demeanor.
If it is true that the current slump in rail traffic is a precursor to a coming recession, it raises the question of why a recession is coming. Recessions may be cyclic, but that does not mean that they just happen routinely. Generally recessions are caused by other effects and actions. Particularly, with a recession looming now, it seems out of place because of all the celebration of the “Best economy in U.S. history” that we were hearing up until the sudden onset of slowdown about the first of this year. So this would seem to be driven by a well-defined cause.
In my opinion, what Navarro and the Administration have been doing with the tariffs over the last year or so is more than enough to slow down the economy. A leader can slow an economy just by uttering something that undermines confidence. The official utterances about imposing the Chinese tariffs are way more than enough to deeply affect the economy.
The onset of a recession normally lags behind the cause. In this case, I believe the cause is much greater than anybody realizes, and the effect we are just starting to see is just the tip of the iceberg. As such, it make take another year of gathering momentum to reach a point where the American people will realize what they have been led into by this major confrontation with China and other similar supposed enemies.
+1 He's wrong and dangerous.
Best quote in article: "The thing about Peter Navarro is that he was never apart of the group of economists who ever studied the global free-trade system," Branstetter said.
"He doesn't publish in journals. What he's writing and saying right now has nothing to do with what he got his Harvard Ph.D. in ... he doesn't do research that would meet the scientific standards of that community. As far as I'm concerned he doesn't know what he's talking about in terms of trade policy."
What's this mean for RRs? It means it is extremely difficult to determine where to deploy long-lived assets. All you can count on is the very short run.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
oltmannd charlie hebdo He's a real outlier. http://businessinsider.com/what-is-trumpenomics-according-to-peter-navarro-2017-1 https://www.washingtonpost.com/news/wonk/wp/2016/10/24/trumps-advisers-see-another-conspiracy-far-from-the-campaign-trail/ +1 He's wrong and dangerous. Best quote in article: "The thing about Peter Navarro is that he was never apart of the group of economists who ever studied the global free-trade system," Branstetter said. "He doesn't publish in journals. What he's writing and saying right now has nothing to do with what he got his Harvard Ph.D. in ... he doesn't do research that would meet the scientific standards of that community. As far as I'm concerned he doesn't know what he's talking about in terms of trade policy." What's this mean for RRs? It means it is extremely difficult to determine where to deploy long-lived assets. All you can count on is the very short run.
I'm curious to discover what factors, including psychological and personal, made him such a rabid protectionist?
charlie hebdoI'm curious to discover what factors, including psychological and personal, made him such a rabid protectionist?
There are some interviews with him around. Basically, he recalls the income equality of the 1950s and thinks a smaller, but more equal "pie" is desirable. He thinks isolationist US manufacturing is the goal.
This article provides a lot of insight into his thinking. He is particularly riled by our job losses to China since they were admitted to the WTO. He does not regard the job losses to be due to fair competition. Instead, he regards the job losses to be entirely due to crimes committed by China against us. He uses provocative language such as China “dumping product into our country” to destroy our manufacturing economy. He attributes all of China’s success to cheating such as exploiting child labor and having no environmental protection. He says our trade deficit amounts to a theft by China, which of course is inflammatory nonsense. If I go to a gas station and fill up for $80, has the gas station ripped me off for $80? That is the Administration/Navarro view of our China trade deficit.
So he is on a mission to reverse the entire trend of our job loss to China. He is a rabid protectionist, but seemingly most driven by a hatred of China for what they have done to us. And that fundamentally goes back to a hatred of them because they are a communist nation, which he sees as a criminal ideology. Navarro seems to give his grievance with China the stature of an actual war. He has written a book called The Coming China Wars: Where They Will be Fought and how They Can be Won. He also wrote Death by China.
Part of this aligns with our Administration’s view that the U.S. has been taken advantage of by the rest of the world for the last 50 years, and so now we are taking a stand to show the world that we are not going to take it anymore. Supporters have referred to this as a project to re-order the last 50 years of world history.
He has been on several news interviews lately with a lot of focus on his recent assertion that the tariffs will not raise prices on our consumers, but will only be paid by China. This is economically absurd. They may hurt China by causing them a loss of business, but they will also hurt our economy by reducing the amount of money in the pockets of our consumers.
https://www.politico.eu/article/trumps-attack-dog-on-trade/
And this lunatic with delusional/distorted/paranoid ideation is in a position of influence. Dangerous.
EuclidHe has been on several news interviews lately with a lot of focus on his recent assertion that the tariffs will not raise prices on our consumers, but will only be paid by China. This is economically absurd. They may hurt China by causing them a loss of business, but they will also hurt our economy by reducing the amount of money in the pockets of our consumers.
Since the bi-lateral trade balance is in their favor, a trade war will hurt them more than us in the long run. A Pyrrhic victory. We lose. They lose a bit more.
The world has become riffe with all these lose - lose equations.
Never too old to have a happy childhood!
The damage of a trade war is not just limited to the tit for tat as each side retaliates against the other, thus slowing down the cash flow of each other. There is also perhaps greater damage in the loss of investment confidence on both sides and all of their other trading partners.
Our moves in ramping up these tariffs have been highly aggressive and accompanied by publically insulting the Chinese leadership by accusing them of criminal activity in their trade policy. This level of aggression will have very large consequences.
A few weeks ago, our Administration announced that they wanted all U.S. China-based business to leave China now. Are you kidding me? For our leadership to just say something like that will cause landslides in investor confidence. We have some big companies with plants in China, and we are telling them they must move out. Then we announced that we would seek the authority to order those U.S. China-based businesses to pull out of China.
This incredible disruption, hostility, and economic uncertainty will paralyze worldwide investment, and could lead to a financial collapse and depression that we could never dream of happening in this era.
Euclid The damage of a trade war is not just limited to the tit for tat as each side retaliates against the other, thus slowing down the cash flow of each other. There is also perhaps greater damage in the loss of investment confidence on both sides and all of their other trading partners. Our moves in ramping up these tariffs have been highly aggressive and accompanied by publically insulting the Chinese leadership by accusing them of criminal activity in their trade policy. This level of aggression will have very large consequences. A few weeks ago, our Administration announced that they wanted all U.S. China-based business to leave China now. Are you kidding me? For our leadership to just say something like that will cause landslides in investor confidence. We have some big companies with plants in China, and we are telling them they must move out. Then we announced that we would seek the authority to order those U.S. China-based businesses to pull out of China. This incredible disruption, hostility, and economic uncertainty will paralyze worldwide investment, and could lead to a financial collapse and depression that we could never dream of happening in this era.
Exactly. No kidding. Business investment in manufacturing isn't stalled because interest rates are too high, it's for uncertainty.
If you are Walthers and you are getting your model kits manufactured in China where labor is $3/hr, what do you do? Move out? To where? The US where labor is $13 an hour plus SSI plus employer supplied health insurance? Viet Nam? Where the labor rate is tiny but could have tariffs imposed in a heartbeat? Mexico? NAFTA is still in place, for now. But new NAFTA is stalled in Congress and Mexico is one tantrum away from who knows what?
If I was a business, I'd just hunker down and save my cash.
US businesses paid ~65% more in tariffs July 2019 Vs July 2018. Those increased costs will be passed on largely to consumers.
Here is an interview of Peter Navarro by Chris Wallace. The key point is Navarro’s assertion that our tariffs on Chinese imports are only hurting China because they are paying 100% of our tariffs. Our President echoes that assertion by saying that we are “taxing the hell out of China.” That is simply not possible.
The tariffs are collected from U.S. import companies as they import Chinese products. China does have the option of reimbursing the import companies as a business decision to offset the burden on the import companies. The import companies also have the option to pass the tariffs on to U.S. merchants of the products, and the merchants have the option of passing the tariffs on to their consumers. What is likely is some combination of this sort of cost sharing after the tariffs are collected by our government from U.S. import companies of the Chinese products.
So the question of who pays the tariffs is very complex when you consider all of the options for reimbursement shifting the cost of the tariffs according to market demand and marketing decisions, always changing to produce the best financial advantage. This is so complicated that comprehensive data is not available.
So you can see how inaccurate it has to be to assert that China is paying 100% of the tariffs. Not only would the chance of that be infinitesimal, but also there is no way to amass the data that would prove it. And this whole bizarre claim comes only out of Mr. Navarro. Yet, while the data to prove Navarro’s point that China is paying 100% may be insufficient, it is possible to produce limited data that proves that China is not paying 100%. All that is needed is some data that shows that someone other than China is paying at least part of the tariff burden.
Chris Wallace does just that by providing data showing that entities other that China are paying part of the tariff cost. Notice how combative and angry Navarro becomes when challenged on this point. And also notice that it is impossible to follow the technicality of Navarro’s response. His response reminds me of “Trust me; I know what I am talking about.”
Notice also that after Navarro insists that the tariff burden is not falling on U.S. consumers, he then accuses China of illegally dodging their responsibility for paying the tariffs by doing currency manipulation. This is a man who believes China is pure evil, and even when we punish them, they cheat by dodging our punishment.
Regarding the question of how this will affect our railroads, I think the answer is simple. Depending on how far this war goes, it will affect the railroad just like it affects everybody else. That is by creating a monumental recession/depression that sets us all back a decade or so.
https://video.foxnews.com/v/6067883892001/#sp=show-clips
I don't think anyone with half a brain thinks Chinese businesses are picking up the difference on all the tariffs levied on imports from there.
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