Zakaria: Romney’s real problem

[one...two...tree 2,762]

Fareed Zakaria, CNN

Despite the tea party's extraordinary energy over the past year, it looks like former Massachusetts Gov. Mitt Romney will win his party's nomination. At the end of the day, Republicans are following a familiar pattern: Nominating the mainstream candidate who has waited his turn. This is the party that's had a Bush or a Dole on its ticket for 20 years. It's a party that also had Richard Nixon on its presidential ticket for 20 years.

In 2011-2012, we've learned that the tea party's passion was not enough to change the Republican Party. However, something else is changing the party, and you can see it in the attack ads Romney's opponents are running against him.

His opponents have gone against Romney on two levels. First, they have called him a "Massachusetts moderate." After deploying this epithet, Romney's opponents point to specific positions of his that deviate from party orthodoxy: Romney's health care plan is strikingly similar to Obama's; Romney's positions on abortion and gays used to be a lot more liberal than they are now; etc.

Even though this seems like a fairly coherent line of attack (Romney has described himself as moderate, after all), it's not having much traction. Perhaps this is because voters think Romney would be more viable in a general election. Perhaps they feel he has genuinely changed his mind. Or perhaps they don't care that he's flip-flopped (I've often thought that hardcore activists almost like the fact that you are pandering to them; it gives them a sense of power).

Instead, a second line of attack has been gaining traction against Romney – that of Romney as job-killer or Romney as the private equity guy, who buys companies, hollows them out and outsources jobs.

Now it is striking that this attack is coming in a Republican presidential primary. After all, what Romney did while at Bain Capital was classic capitalist "creative destruction." He took over businesses and tried to make them more productive and efficient. To do so, he often had to shed jobs.

Republicans should be celebrating Romney's prior work as an example of how the market functions – driving out inefficiency, generating productivity and creating a lean, mean capitalist machine.

The fact that Romney's past has turned into a line of attack tells you that something has changed in America. Even in the Republican Party, there is a huge concern about what globalization and technological change are doing to the average, middle-class American. There is a sense that the system is not working for the median American worker.

If you look at job creation over the last 20-25 years in America, you'll notice that we haven't been able to create any jobs in what is called the "tradable sector" of the economy - those jobs that are subject to global competition. The only jobs we've really created have been in industries like health care, government, and construction, which are basically local industries shielded from global competition. You can't outsource the building of a New York skyscraper to a Chinese worker.

America hasn't been able to create jobs in any sector that's subject to global and technological pressures. As a result, there is a huge sense of disillusionment, disappointment and pessimism among Americans.

None of the Republicans are addressing this problem centrally. They're simply talking about cutting government spending as if that is going to solve the problem of creating new industries, opportunities and jobs. Simply cutting government strikes me as a very inadequate response to a massive challenge.

Hopefully during the general election, we'll have a substantive national debate about how to create jobs in America.

http://globalpublics...s-real-problem/

[SMR 368]

Actually, Republicans are addressing this problem. Democrats are just so clueless as to how to solve this problem they don't recognize the solution when Republicans suggest it.

Jobs are going to China, India, and elsewhere not only because of wage discrepancies. Taxes and regulation make the US an unattractive place to do business. Those are things that the government can actually fix. Further, we need to pressure China and others to protect their workers, control pollution, and not manipulate currency. This will take some time but is critical for creating a fair marketplace.

[ready4ONE 5,400]

So if I can nutshell the Republican position:

Regulations = bad

Taxes = bad

Worker protections = bad

Environmental protection = bad and even worse a grab at Americans very freedom!

Specifically all are bad for America, we need to export these bad things overseas? That will fix the American job creation problem?

[SMR 368]

So if I can nutshell the Republican position:

Regulations = bad

Taxes = bad

Worker protections = bad

Environmental protection = bad and even worse a grab at Americans very freedom!

Specifically all are bad for America, we need to export these bad things overseas? That will fix the American job creation problem?

No. That isn't what I said at all. And I'm really not sure how you could come to that conclusion if you read what I wrote. I said taxes, regulations, worker protections, and environmental protections need to be comparable to what is seen in other countries. Some of that can be accomplished by lowering taxes and making regulations more manageable. But some of that means we need to pressure other countries to act in ways that are sustainable for the environment and their workers so that when we do the same we aren't at an economic disadvantage.

When a Chinese company is forcing workers to work long hours in unsafe conditions or is dumping industrial waste straight into the river, that creates a cost advantage for Chinese companies that is practically impossible to overcome. When our corporate tax rate is one of the highest in the world, that creates a real incentive to go somewhere else. I know that there are many large companies that are paying much less through credits, deductions, and creative accounting. But that applies mostly to large, multinational corporations and is just further evidence that our tax code needs to be reassessed. Small and medium size businesses really end up paying close to 35% of their profit in taxes. I have no problem with getting rid of various tax breaks but you need to balance that with a base corporate tax rate in the 20-25% range, which is where most countries are.

[ready4ONE 5,400]

So we should lower our standards? Because the Third World and China are not looking to model us!

[Mr. Big Dog 10,747]

So we should lower our standards? Because the Third World and China are not looking to model us!

That's the idea. Wealth concentrates better and faster that way.

[luckytxn 2,263]

So we should lower our standards? Because the Third World and China are not looking to model us!

Because they are that way the companies can go there and not have to worry about these things. I don't want our standards to lower myself but let the states decide what level of standards they want themselves to attract those businesses back here. Why must the Feds have to dictate to what the localities want. They are punishing the states more than businesses by interfering.

[SMR 368]

So we should lower our standards? Because the Third World and China are not looking to model us!

It's a matter of creating international economic pressure to force the third world to do it or face consequences. It's not something that will happen overnight nor is it simple. It will have to happen one step at a time, starting with things like requiring certain safety standards, proper disposal of industrial waste products, and free floating currency exchanges. First world countries will need to band together to require that either these standards are followed or they won't import from those areas that are in violation. It time it will have an effect.

[one...two...tree 2,762]

It's a matter of creating international economic pressure to force the third world to do it or face consequences. It's not something that will happen overnight nor is it simple. It will have to happen one step at a time, starting with things like requiring certain safety standards, proper disposal of industrial waste products, and free floating currency exchanges. First world countries will need to band together to require that either these standards are followed or they won't import from those areas that are in violation. It time it will have an effect.

It's difficult to sell the idea to China that they need to up their regulations while trying to make the argument that regulations in this country are stifling industry. China has been economically successful because they cut corners to make cheap products that are near impossible to compete against in an open market. That's a result of laissez-faire economic philosophy.

[Obama 2012 1,714]

We are over-regulated on a national, state, and local level. There is no denying that.

However even with regulation, businesses should be able to grow if other factors are taken car of.

You want to grow job in America? Tax the living hell out of Chinese/foreign products before they even hit our soil. Tariffs! We need them!

You're not going to be production back to America without that.

[Dan J 277]

Actually, Republicans are addressing this problem. Democrats are just so clueless as to how to solve this problem they don't recognize the solution when Republicans suggest it.

Jobs are going to China, India, and elsewhere not only because of wage discrepancies. Taxes and regulation make the US an unattractive place to do business. Those are things that the government can actually fix. Further, we need to pressure China and others to protect their workers, control pollution, and not manipulate currency. This will take some time but is critical for creating a fair marketplace.

They are going because of cost and a large part of that is wages. Trying to do anything about that will just be a pyrrhic victory as it will drive business to further automate more jobs. The only reason why some of these jobs still done with manual labor is that the cost of automation is greater than the cost of labor. Over time the cost of labor will go up and the cost of automation will go down, and automation will ultimately win out.

The reason why the current recovery has been so slow is that we have reach a point of maturity in our economy where the only real internal growth is due to population growth and migration. But at the same time, increases in productivity are reducing the need to create jobs.

[Dan J 277]

We are over-regulated on a national, state, and local level. There is no denying that.

However even with regulation, businesses should be able to grow if other factors are taken car of.

You want to grow job in America? Tax the living hell out of Chinese/foreign products before they even hit our soil. Tariffs! We need them!

You're not going to be production back to America without that.

Politically that would be a non-starter. Most people are more concerned with the cost of products they buy at Walmart instead of the long-term economic stability of the US.

[luckytxn 2,263]

Politically that would be a non-starter. Most people are more concerned with the cost of products they buy at Walmart instead of the long-term economic stability of the US.

This appears true.

[Mr. Big Dog 10,747]

It's a matter of creating international economic pressure to force the third world to do it or face consequences. It's not something that will happen overnight nor is it simple. It will have to happen one step at a time, starting with things like requiring certain safety standards, proper disposal of industrial waste products, and free floating currency exchanges. First world countries will need to band together to require that either these standards are followed or they won't import from those areas that are in violation. It time it will have an effect.

Or, you could just sit back and let the jobs come back on their own. Which is precisely what's starting to happen. Manufacturing jobs are coming back to our shores. For the first time in decades. Why? Well, because all the companies that moved on over to China created a huge demand for workers thus driving up wages. Your typical Chinese worker is about a quarter as productive as your typical US worker. Add on the cost of bringing them good back to our shores and all of a sudden, the cost advantage starts to vanish. And here we are, seeing manufacturing returning to the US. That's impossible, of course, if you believe the propaganda from our friends over there on the right. But it's happening all the same.

Made in America: Trend against outsourcing brings jobs back from China

Sat Jan 14, 2012 9:59 AM EST

By Sopan Deb

Rock Center

The United States may be on the verge of bringing back manufacturing jobs from China.

Harold Sirkin, along with Michael Zinser and Douglas Hohner (all experts from the Boston Consulting Group – a leading business advising firm), says that outsourcing manufacturing to China is not as cheap as it used to be and that the United States is poised to bring back jobs from China. The three consultants first reached this conclusion in a recently published study titled “Made in America, Again: Why Manufacturing Will Return to the U.S.”

Many companies, especially in the auto and furniture industries, moved plants overseas once China opened its doors to free trade and foreign investment in the last few decades. Labor was cheaper for American companies – less than $1 per hour according to the BCG report. Today, labor costs in China have risen dramatically, and shipping and fuel costs have skyrocketed. As China’s economy has expanded, and China has built new factories all across the country, the demand for workers has risen. As a result, wages are up as new companies compete to hire the best workers.

“The tilt is now getting lower,” Sirkin says. “We think somewhere around 2015 it’ll look flat and may start to tilt in the U.S. favor at that point in time.”

By 2015, it will only be about 10 percent cheaper to manufacture in China.

“We have to recognize one thing,” Sirkin told NBC’s Harry Smith in an interview to air Monday on Rock Center with Brian Williams. “The average Chinese worker is about a quarter as productive as the average U.S. worker.”

“It’ll be a major impact. Our projections are, when you take the manufacturing jobs and then the service jobs that get created alongside those, that we will add two to three million jobs to the U.S. workforce.”

The U.S. is already seeing examples of this – starting in Lincolnton, North Carolina.

Rock Center has been following Bruce Cochrane of Lincolnton Furniture as he brings his family business back to the U.S. and re-opens the family furniture plant. Cochrane was invited to the White House last week for a forum on job creation with President Barack Obama and Vice President Joe Biden.

“Now, you don't have be a big manufacturer to insource jobs,” Obama said. “Bruce Cochrane's family had manufactured furniture in North Carolina for five generations. But in 1996, as jobs began shifting to Asia, the family sold their business, and Bruce spent time in China and Vietnam as a consultant for American furniture makers. But while he was there, he noticed something he didn't expect: their consumers actually wanted to buy things made in America. So he came home and started a new company, Lincolnton Furniture, which operates out of the old family factories. He's even re-hired many of the former workers from his family business. “

According to BCG, another manufacturer, Sleek Audio, moved production of its headphones from Chinese suppliers to a plant in Florida. Ford Motor Company is bringing back 2,000 jobs from China after striking an agreement with the United Auto Workers. Sirkin says it’s good news for the economy even though wages will be lower in those jobs than they were previously.

Sirkin believes fears that United States manufacturing is in decline are overstated and notes that the U.S. is still a manufacturing giant. In 2010, China provided 19.8 percent of global manufacturing value added. The U.S. accounted for a marginally less 19.4 percent, which, according to Boston Consulting, was “a share that has declined only slightly over the past three decades.”

Editor's Note: Harry Smith's full report, 'Made in America,' airs Monday, January 16 at 10pm/9c on NBC's Rock Center with Brian Williams.

[Ready to do it 101]

This is probably one of the silliest things I've read on this board. Keep drinking the kool-aid.

Or, you could just sit back and let the jobs come back on their own. Which is precisely what's starting to happen. Manufacturing jobs are coming back to our shores. For the first time in decades. Why? Well, because all the companies that moved on over to China created a huge demand for workers thus driving up wages. Your typical Chinese worker is about a quarter as productive as your typical US worker. Add on the cost of bringing them good back to our shores and all of a sudden, the cost advantage starts to vanish. And here we are, seeing manufacturing returning to the US. That's impossible, of course, if you believe the propaganda from our friends over there on the right. But it's happening all the same.