Brian Gongol Show on WHO Radio - March 20, 2016
Please note: These show notes may be in various stages of completion -- ranging from brainstormed notes through to well-polished monologues. Please excuse anything that may seem rough around the edges, as it may only be a first draft of a thought and not be fully representative of what was said on the air.
"[T]he final product of a dwindling bloodline that his proud forebears fought relentlessly to advance even before the dawn of history, decided to spend his free time after work watching the 1989 Tom Hanks comedy film The 'Burbs."
A Chinese insurance firm is spending $6.5 billion to buy a batch of luxury hotels in the United States. That's one way the cash that has been leaking out of the United States to China (in the form of trade deficits) comes back home -- through asset sales.
It has become clear that a lot of people think that trade is responsible for the supposed erosion of the manufacturing base in America. This reasoning is faulty.
The truth is that the manufacturing sector in the United States is doing very well -- but certain very specific groups of workers hav been left behind. They tend to be highly visible -- we saw it here in Iowa when Maytag closed its Newton plant in 2007 (leaving 1,900 people out of work) and when Electrolux closed in Webster City in 2011, leaving hundreds out of work.
But the changes in manufacturing work are driven as much by productivity and technology as by anything else. The old changes were driven mainly by labor costs: Lots of manufacturing required repetitive labor that wasn't especially skilled, and wherever labor was cheap, there went the jobs. That's a large part of why the textile industry left New England and went to the South before then moving off-shore.
But here's the thing: The lowest-skilled stuff can and is being done by machines as often as by people. The leftover work is in the hands of higher-skilled workers, whose wages have been rising all over the world. The old, low-skill work is simply gone. Blame technology. It's just gone.
But that same job-destroying technological change has brought us things like freeze-dried melts for toddlers to eat, and smartphones for adults, and high-efficiency washers that save energy and minimize environmental impact.
And the manufacturing that remains is getting better than ever. The automotive columnist for the Detroit News reviewed the new Acura NSX sportscar the other day and returned with a positively glowing set of compliments. His rave review underscores the fact that the car is made by a subsidiary of Honda in Marysville, Ohio. American workers are perfectly capable of producing world-class products, and as wages rise around the world, we're going to see lots of incentives for manufacturers to step up their game here -- producing premium products with skilled workers. That will especially be the case when manufacturers can learn a thing or two by producing in the same local markets where they want to sell.
Those workers are going to find their jobs dramatically enhanced by the use of technology. But the technology will put some people out of work. If we're smart, we won't reject trade or technology -- on balance, both are extremely good things for civilization. But we do need to examine thoughtfully the consequences for the people who are directly affected, because they exist. By the same token, we don't do ourselves any favors by over-stating the costs without balancing them fairly against the benefits. The benefits are many, and they are very, very widespread. They also tend to be semi-invisible, which means we have to consciously acknowledge them so we don't forget they're happening.
Yay Capitalism Prize
20 automakers have agreed to "make automatic emergency braking a standard feature on virtually all new cars" by 2022. Almost all new cars sold in the US should be included. Note that the government itself admits that this voluntary agreement "will make AEB standard on new cars three years faster than could be achieved through the formal regulatory process". That says something rather disappointing about the pace of regulatory standards, but it's pleasing to see that they're willing to circumvent their own policy in order to get to a desirable goal sooner.
The election process continues
The country can survive a bad President or two. But we shouldn't be willing to try.
The Speaker of the House is one of the most prominent "adults in the room" in the GOP right now, and his presence is needed more than ever
Speaker of the House Paul Ryan is one of the most important "adults in the room" in politics right now. His voice is badly needed at a time when a major candidate in the Presidential race seemingly cannot tell the truth under any circumstances and addresses women with pathological disrespect.
In his recent discussion on Reddit, Bill Gates said, "I think very few people take the extreme view that the government should be blind to financial and communication data but very few people think giving the government carte blanche without safeguards makes sense." The government isn't necessarily wrong to try to get its hands on data, nor is Apple wrong to resist. By the same token, the government isn't necessarily trustworthy to have access to people's private data, nor is Apple perfectly patriotic and flag-waving in resisting cooperation with the government. Rather than polemic from people who don't understand what they're talking about, these kinds of issues demand attention from sober people with technical knowledge.
Capitalist solution of the week
Shouldn't the interest rates on college loans at least somewhat reflect the priorities of the public interest, if the government is going to be a major supplier or backer of those loans anyway? Shouldn't some majors come with a higher interest rate, reflecting their higher levels of risk (some majors are more likely to lead to jobs than others)? Shouldn't some come at lower rates to help incentivize people to go into majors with attractive social benefits (like the STEM fields, for example)?
Also newsworthy this week
But as a class, analysts have generally proven to be far too credulous when they should have been skeptical, and often too pessimistic when they should be seeing potential. Investors and other observers should reach their own judgments accordingly.
They need to be programmed to recognize when users need help but don't know how to ask for it -- like when they are suicidal, depressed, or otherwise in need of human help (but brokered by artificial intelligence)
The war has now lasted so long that children are reaching kindergarten age having never seen peace. Some 400,000 to 500,000 people have died in the course of the war.
Very important reading. The manufacturing sector in the United States is actually doing well right now -- but there are specific groups of workers who are falling behind. Instead of blowing up the systems of international trade that make modern prosperity possible, we need to think about ways we can help the affected individuals recover and come back even better.
Seeing the flow of international trade aboard the ships on the high seas is actually a very helpful way to see how the world is interconnected. Trade is, on balance, a good thing. It leads to peace.
This is a serious problem for the Midwestern economy generally. If farmers get into cash-flow trouble, that affects the implement dealers and seed reps and other primary resource providers...and then it spills over to Main Street.
The government is blaming "Kurdish militants", which may or may not be true. It certainly would fit a narrative being pursued by the government, so independent and objective study of the evidence is required. Whoever is responsible, it's a large attack and a tragic display of destruction.
- Podcast of this episode - segment 1 (Manufacturing is far from dead - part 1)
- Podcast of this episode - segment 2 (Manufacturing is far from dead - part 2)
- Podcast of this episode - segment 3 (Automatic braking and how voluntary agreement beats a government mandate)
- Podcast of this episode - segment 4 (How trade deficits work themselves out)
- Official station page for this episode (forthcoming)