Sunday, February 13, 2011

Take The Buy Virginian (Or Your State) Challenge

Randy Erwin of the Buy American Challenge blog asks you to take the "Buy American Challenge" to save American jobs (see Don Boudreaux's post here for some background).

I hereby challenge Mr. Erwin, a resident of Arlington, Virginia to take the "Buy Virginian Challenge" to save jobs in Virginia (or even better yet, I challenge him to take the "Buy Arlington, VA Challenge" to save jobs in his local community).  Based on the Buy American Challenge (if you're not a resident of Virginia, substitute your state below), here are the guidelines to the Buy American Virginian Challenge:

"Keep in mind these are just guidelines, not hard-and-fast rules.  These guidelines are just here to give people who want to begin buying American Virginian a place to start.  Buying American Virginian can be confusing at first, so these guidelines are here to let people know that buying American Virginian doesn’t literally mean never buying anything not 100% made in U.S.A.  Virginia. That would be close to impossible to do in this day and age.  But we should not let that keep us from trying to buy American Virginian whenever we can.  Those taking the Buy American Virginian Challenge are committed to making a good-faith effort to buy American-made Virginian-made goods whenever an  American-made Virginian-made version of what they are looking to buy is available to them.  The more diligent we can be about it, the better.  So, here are the guidelines…

Buy American VIRGINIAN Challenge Guidelines:
  1. Buy only American-made Virginian-made finished products or American-grown Virginian grown or -raised foods.
  2. Items you buy may have parts, materials, and content that is not American-made Virginian-made, -grown, or -raised.
  3. Items you buy may be made in America Virginia by foreign-owned or multinational corporations.
  4. This challenge applies only to one’s own personal purchase decisions, not those made for households, groups, businesses, associations, or for one’s profession.
  5. Embarking on this challenge should be done willingly.  No one should ever be obligated or forced into buying American Virginian made.
Exceptions to the Buy American VIRGINIAN Challenge Guidelines:
  1. One, of course, may buy a specific foreign-made out-of-state product if a doctor, dentist, or other medical expert prescribes or recommends it.  Example: If your dentist says you need a fancy foreign-made West Virginian-made tooth brush, don’t worry about it, just get it.
  2. One may buy a specific foreign-made out-of-state product if the item is simply not made, grown, or raised in the United States Virginia, and the item does not have a suitable replacement that is made, grown, or raised in the United States Virginia.  Example 1: A lot of electronics cars just aren’t made in the U.S.A. Virginia anymore.  If you can’t find what you want American-made Virginian-made don’t worry about it.  Example 2: There is no such thing as an American-grown bananaVirginian-grown oranges. No worries, you can still eat them. 
  3. One may buy a specific foreign-made or -grown  out-of-state product if one is for some reason required to buy a specific item.  Example: If your professor assigns a specific foreign-made Texas-made TI calculator to use for a class, don’t worry about it, just get it.
  4. One may buy a foreign-made out-of-state item if it is urgently needed, and time or proximity preclude one from buying an American-made Virginian-made version of the item.  Example: You are really thirsty, and the only water available is bottled in France West Virginia.  Don’t worry about it, just get it.
  5. If one has a kinship with another country state other than the U.S.A. Virginia, he or she should feel free to buy items made, grown, or raised in that country state as well.  Example: Let’s say you have Irish Minnesotan heritage and like to buy things made wild rice harvested in Ireland Minnesota from time to time.  Go right ahead continue doing that.
  6. One is allowed five “cheat items” (or more if you really need more).  These are items that one may have an existing attachment to.  If you simply can’t live without a specific foreign-made out-of-state good (oranges, grapefruit, avocados, computers, cell phones, automobiles, potatoes, etc.), you can continue to purchase it.  Example: Let’s say you just love Swiss chocolate salt water Taffy from New Jersey.  You can, of course, continue to buy your chocolate taffy as often as you would like.
Again, these guidelines are just here to give people who are new to buying American Virginian a reasonable framework to start from.  The majority of Some items we buy can be found made in the U.S.A.  Virginia. These soft rules are spelled out simply so people don’t throw in the towel when they are forced to buy foreign-made out-of-state which is going to happen from time to time in all likelihood. 

Now that you know what the Buy American Virginian Challenge entails, I hope you will take the Buy American Virginian Challenge. Good luck on your buy American Virginian journey. Please come back to this website to share some of your buy American Virginian experiences."

Update: If Mr. Erwin and his followers find the "Buy Virginian Challenge" to be successful at creating jobs in Virginia, then they should next consider narrowing the geographical area for their "buying loyalty" and job creation to smaller and smaller areas, which would eventually end up with them taking the "Buy From My Own Household Challenge" (see below). 

68 Comments:

At 2/13/2011 8:33 PM, Blogger PeakTrader said...

The implication is to pay more for (domestic) goods, in both money and time.

Why not just give unemployed Americans spoons to dig holes and fill them up again. So, they can receive paychecks, and pay taxes, instead of receiving unemployment checks?

Of course, these schemes will not raise living standards.

The failure of a V-shaped economic recovery created a train wreck, particularly with the massive government spending spree.

California pays record $22.9 billion in jobless aid
February 11th, 2011

"Payouts for California jobless benefits totaled $22.9 billion last year, up from the previous record of $20.2 billion in 2009, the state Employment Development Department reports. In a typical year, state unemployment payments total $5 billion to $6 billion.

Since California’s unemployment insurance trust fund has long since been depleted, the state has also borrowed more than any other to keep those jobless checks going out.

As of Jan. 25, California owed Uncle Sam $9.9 billion plus interest for its federal loan. Michigan was second with $3.7 billion."

 
At 2/13/2011 10:34 PM, Blogger Michael said...

I run a blog against the "buy local" movement and you're exactly right - these are precisely the same claims they make.

 
At 2/14/2011 4:07 AM, Blogger bob wright said...

In an effort to promote jobs in Michigan, I am not going to read the Buy American Challenge blog that is produced in Virginia.

I'll read Carpe Diem, a Michigan blog.

 
At 2/14/2011 4:35 AM, Blogger Richard said...

@ Bob Wright,

I'm not an american so I will set up a 'buy european' thing. So let's make a deal: As long as you don't buy European, I will not buy American.

Sounds good, right?

(Besides, if you don't buy European, I have no dollars to buy American anyway, let alone invest in the US, so don't worry about me keeping my end of the bargain)

 
At 2/14/2011 10:43 AM, Blogger Buddy R Pacifico said...

"Please come back to our website to share some of your buy Virginian experiences."

For those of you who may prefer to buy local, rather then from foreign communist regime owned factories, I recommend: The Bath County, Virginia Farmer's Market. Every Saturday, in the Hot Springs parking lot, locally produced food and clothing -- June thru October.

My favorite is the maple syrup and candies. Individual results may vary.

 
At 2/14/2011 11:33 AM, Blogger Rufus II said...

I've sold a lot of insurance policies to my neighbors, but I've never sold a policy to a Chinese Communist (that I know of - they are inscrutable.) :)

Those neighbors also pay taxes that help pay for my children's schooling, and my police protection - not to mention water, sewage, street maintenance, National Defense, Social Security/Medicare, AND unemployment insurance in case one of my kids ever finds themselves out of work.

Anyone who honestly thinks a dollar spent with the government of China is the same as a dollar spent with their next-door neighbor is the same is naive to . . . . . . well, heck, I can't think of anything to describe it.

 
At 2/14/2011 11:38 AM, Blogger Sean said...

In Oregon, there's a chain called Burgerville that uses only Northwest-supplied beef, produce, etc.
"Buy local" is a reasonable bias people can choose: narrowing the geographical area weakens the argument for it, but does not negate it.

 
At 2/14/2011 11:48 AM, Blogger Che is dead said...

Here's a partial list of the foreign firms headquartered in Virginia:


Airbus North America
BAE Systems Customer Solutions
Dynamotive Energy Systems
EADS North America
FNH USA
Heckler & Koch Inc.
Lafarge North America
Mitsubishi Nuclear Energy Systems Inc.
Rolls-Royce North America
QinetiQ North America
Saab Aerotech of America LLC
Volkswagen Group of America


Funny, no fast food chains or cocktail umbrella factories. Go figure. Any way, where should those Virginians employed by these firms shop in order to keep the true blue American credentials intact without putting out their employers? And would doing business with any of these firms qualify as doing business with your "next-door neighbor"? Just askin'.

 
At 2/14/2011 12:11 PM, Blogger Marko said...

I use a different analogy to make a similar point - I have a huge "trade deficit" with Amazon.com. I send them a bunch of money all the time, and they send me books, TVs, etc. They have never once paid me for ANYTHING, and I have never sent them any goods.

As far as I can tell, we are both better off because of it.

 
At 2/14/2011 12:18 PM, Blogger Marko said...

And to the sentiments expressed by those that still defend "buy American", I have to ask folks: Why do you think we have so many imported cheap goods? The U.S. is the number 1 manufacturer in the world, and one of the top exporters. The answer is we consume more cheap good than we manufacture, and we produce more expensive goods than we consume. That sounds like a good thing, right? Do we really want to manufacture more cheap crap in America? Are those good jobs? Have you ever worked in a shoe factory - do you really want to? My guess is (and the data confirm it) that you don't want to work in a shoe factory, especially not for the wage that the job is worth in economic terms. So what we are doing is exporting crappy jobs, and importing good jobs. If you don't like it, I hear you can get a licence to push a cart door to door collecting rubish in Cuba.

So, we produce and export things we are good at, and import things we don't want to do - sounds like me! Isn't that what we want??

 
At 2/14/2011 12:36 PM, Blogger Che is dead said...

Damn, them furreners are creating more burger flippin' jobs. This time in our precious Memphis, Tenn.:

MEMPHIS, Tenn., Feb. 14, 2011 /PRNewswire/ -- O'Neal, Inc., a Greenville, SC-based integrated design and construction firm, announced today that it is working with Mitsubishi Electric Power Products, Inc. (MEPPI), based in Pittsburgh PA, to build a new grassroots power transformer and power components manufacturing plant in Memphis' Rivergate Industrial Port. O'Neal will provide Engineer-Procure-Construction (EPC) services for the $200 million project, which is expected to result in job creation, both in the company's three offices and at the Memphis site.

PR Newswire

SHOP LOCAL!!!

 
At 2/14/2011 12:57 PM, Blogger Buddy R Pacifico said...

Che Is...,

You may pleased to know that communist controlled petro companies are buying substantial U.S. based oil and gas assets.

 
At 2/14/2011 1:36 PM, Blogger Marko said...

@Buddy - so if I understand you correctly, you are upset if we buy foreign goods, and also upset if we sell goods to foreigners? How is foreign investment a bad thing? What is bad about foreigners sending U.S. companies billions of dollars?

 
At 2/14/2011 1:46 PM, Blogger Che is dead said...

"You may pleased to know that communist controlled petro companies are buying substantial U.S. based oil and gas assets."

As I read the article, they are buying access to technologies at a huge premium - "PetroChina's deal equates to a long-term gas price at roughly a 20% premium to the current benchmark" - that will allow them to exploit their own native oil and gas resreves. They are also contracting with U.S. firms to assist them in this effort - "New York-based Hess Corp. signed agreements with China Petroleum & Chemical Corp. and China's Sinochem Group last month to help develop China's shale reserves". The article also suggests that the U.S. will be "gas self-sufficient for at least 40 years based on 2009 gas consumption data" and that we may, in the future, be exporting gas to China and the rest of asia. What's not to like?

 
At 2/14/2011 2:03 PM, Blogger Buddy R Pacifico said...

Marko stated:

"@Buddy - so if I understand you correctly, you are upset if we buy foreign goods, and also upset if we sell goods to foreigners."

You do not understand correctly and I fail to I see how you could conclude that. I specfically stated communist controlled companies.

Communist controlled companies buying strategic commodities is not an investment but rather buying assets for foreign distribution.

 
At 2/14/2011 2:48 PM, Blogger juandos said...

Hey rufus you need to do some homework...

 
At 2/14/2011 3:49 PM, Blogger Ron H. said...

"My favorite is the maple syrup and candies. Individual results may vary.

Maple syrup is produced in Virginia? Who knew?

Or am I missing your /sarc tag?

 
At 2/14/2011 4:00 PM, Blogger Rufus II said...

Well, that makes is t all better, Juandos.

We bought $135 Billion in Electrical Machinery, and Power Generation Equipment from China,

and we sold them . . . . . $18 Billion?

Oh wait, we sold them some of that "high tech" soybeans, and apples, too.

If you think we can survive like that you need to sit down in a quiet place, and rethink.

 
At 2/14/2011 4:06 PM, Blogger Rufus II said...

Folks, I was selling this old free trade meme when some posters, here, were still in high school; But, you've got to use "common sense."

This ain't Colombia we're talking about. This is the PRC.

When it gets through eating our lower, and middle class it's going to come for you.

And, No One will have your back.

 
At 2/14/2011 4:16 PM, Blogger juandos said...

Apparently rufus you still don't get it...

Its a dynamic situation, not a static one...

All that particular page was (origins China) is an indicator that trade balances fluctuate...

At the very least I thought you might want to follow up on what that page had to say unless your bias is stronger than your curiosity...

Well maybe Don Boudreaux's explanation can help you out...

 
At 2/14/2011 4:33 PM, Blogger Buddy R Pacifico said...

Ron H, yes, in the mountains of Virginia there are maple syrup producing maples; no sarcasm and the stuff I bought was very tasty.

 
At 2/14/2011 5:13 PM, Blogger Ron H. said...

Sean,

"In Oregon, there's a chain called Burgerville that uses only Northwest-supplied beef, produce, etc."

So, their marketing strategy is to appeal to tribalism? Aren't there some seasonal limits on some of the local produce? How do their prices compare, or is a premium price worth it to support local producers?

""Buy local" is a reasonable bias people can choose: narrowing the geographical area weakens the argument for it, but does not negate it."

You are correct. A person should buy whatever they wish from whoever they wish, for whatever reason they wish. But, doesn't the "buy local" argument become pretty weak when you limit the geographic area to your own neighborhood? Who would want to sacrifice that much and limit their choices that severely?

 
At 2/14/2011 5:17 PM, Blogger Rufus II said...

Only if you consider "drowning" a dynamic situation, Juandos.

You can quote all the Academics you want, J; but we're in it real deep.

17% Under/unemployment, a 10% Budget Deficit, Trade deficit over 4% of GDP - All Growing.

Corporations moving all of their Profits overseas, along with their investment dollars (we received something like $3 Billion in taxes from Corporations in Jan.)

This is serious stuff. Arcane economic theories are going to have to take a back seat for awhile.

 
At 2/14/2011 5:23 PM, Blogger Ron H. said...

Buddy,

"Ron H, yes, in the mountains of Virginia there are maple syrup producing maples; no sarcasm and the stuff I bought was very tasty."

Hmm. I guess I don't know much about Virginia, except some really smart people lived there many years ago (T. Jefferson, G. Washington). And it has an indisputable right to secede from the union.

Before reading this thread, the only thing I could have named that is produced in Virginia is politicians. I know there is a lively market in those, and they are worth a premium compared to those produced in most other states. In my opinion, everyone should own a share in one. The prices are steep, but the payback can be phenomenal.

 
At 2/14/2011 5:24 PM, Blogger Rufus II said...

Buy "Virginian," or Buy "Tunica" is a Reducto ad Absurdum.

Our "Currency" is the U.S. Dollar. The bulk of our tax-supported programs are National.

To conflate the assertion that we need to jerk a knot in some tails, and produce more in the U.S. (such as Electrical and Power Generation Products, and equipment) with a "buy local" argument is a fallacy of logic.

 
At 2/14/2011 5:34 PM, Blogger juandos said...

"Only if you consider "drowning" a dynamic situation, Juandos"...

Drowning?!?!

ROFLMAO!

"17% Under/unemployment, a 10% Budget Deficit..."...

Hmmm, well next time you see Obama ask him about that idiotic domestic policy he's foisting off on the country and how its affecting employment...

While you're at it ask Obama about the massive debt he and his fellow travelers are running up...

 
At 2/14/2011 6:11 PM, Blogger Rufus II said...

One thing at a time, Buckaroo. :)

FYI, My plan is to cut My SS (along with all other spending) 10%, and to raise Your taxes 5%.

And, yes, I'd whop a 25% tariff on China before they could get their gun out of their holster (after that, we could negotiate to see what we could do to get them lowered - hint: it would involve them opening up their books, and letting their currency float.)

 
At 2/14/2011 6:12 PM, Blogger Rufus II said...

Oh, and Exxon would, definitely, pay some income taxes Next Year.

 
At 2/14/2011 6:55 PM, Blogger Robert Kafarski said...

This comment has been removed by the author.

 
At 2/14/2011 7:01 PM, Blogger Robert Kafarski said...

Free trade is not always fair trade. When a government subsidizes certain companies or industries, that is not fair trade. When workers paid peon wages are pitted against workers living in a developed society that is not fair trade. When a company is smothered by a hornets nest of regulations and fees competes against a company that bears no such handicap that is not fair trade. The above examples are free trade but not fair trade. And if its so advantageous to have the Chicoms, Indians and Mexicans making stuff we need at low prices why don't we make it a national goal to send all our manufacturing capacity to these countries; then we'll really get stuff cheap and we'll be set for life.

 
At 2/14/2011 7:09 PM, Blogger Ron H. said...

juandos,

"Well maybe Don Boudreaux's explanation can help you out..."

Did you notice the comments on that article? I see our buddy sethstorm has joined the discussion. Apparently, not satisfied with the level of abuse he gets here, he decided to jump right into the deep end by going to Cafe Hayek, where he can be ridiculed by experts.

As you might expect, Don is asking him "What are you talking about?"

 
At 2/14/2011 7:33 PM, Blogger bob wright said...

Che is dead noted the following companies headquartered in VA:

Airbus North America
BAE Systems Customer Solutions
Dynamotive Energy Systems
EADS North America
FNH USA
Heckler & Koch Inc.
Lafarge North America
Mitsubishi Nuclear Energy Systems Inc.
Rolls-Royce North America
QinetiQ North America
Saab Aerotech of America LLC
Volkswagen Group of America


Should VA politicians force these companies to close their doors, fire their U.S. employees, and move their companies and jobs back to their own country?

 
At 2/14/2011 7:35 PM, Blogger Ron H. said...

Rufus II

"Corporations moving all of their Profits overseas, along with their investment dollars (we received something like $3 Billion in taxes from Corporations in Jan.)"

You do realize, don't you, that one of the reasons those corporations are moving elsewhere is BECAUSE of the taxes imposed on them here which makes it harder to do business, and ultimately are paid by consumers in any case. Eliminating corp taxes would allow US companies to be more competitive globally.

"17% Under/unemployment, a 10% Budget Deficit, Trade deficit over 4% of GDP - All Growing.

This is serious stuff. Arcane economic theories are going to have to take a back seat for awhile.
"

What specifically do you recommend?

 
At 2/14/2011 10:18 PM, Blogger James Fraasch said...

Finally Rufus, someone else who gets it!

Your last point about taxes is what I tried to explain on this blog some time back but got smacked down time and again.

James

 
At 2/14/2011 10:49 PM, Blogger Ron H. said...

Robert Kafarski

"Free trade is not always fair trade. When a government subsidizes certain companies or industries, that is not fair trade."

I assume you mean, for example, the Japanese government subsidizing automakers, so that the price paid in the US for a Japanese import could be lower. What's wrong with the idea that all those Japanese taxpayers are helping you buy a car? No, it's not fair to them, but it's a good deal for you. They should be thanked.

"When workers paid peon wages are pitted against workers living in a developed society that is not fair trade."

What's your solution? Should the peon wages be raised to parity with more highly paid - and more productive - workers?


"When a company is smothered by a hornets nest of regulations and fees competes against a company that bears no such handicap that is not fair trade."

Hopefully we agree that those regulations should be dialed back.

You haven't offered any remedies for these perceived problems, but you might want to look harder at US consumers for their choices. I have shopped with a person who diligently checks each item to make sure they are getting the best price, and then on the way to the checkout points to the "made in China" label, and says with a disgusted tone of voice "Those damn Chinese are taking over all our industries!". What should I say to that person after I stop laughing?

 
At 2/15/2011 4:10 AM, Blogger juandos said...

"And, yes, I'd whop a 25% tariff on China before they could get their gun out of their holster..."...

Hmmm, nothing like inducing inflation in an already fragile economy...

This will bring nothing back to US shores other than higher prices...

"Oh, and Exxon would, definitely, pay some income taxes Next Year"...

Ahhh rufus, that'll be 'Exxon customers' will pay that income tax next year on the new and increased prices of Exxon's goods and services...

 
At 2/15/2011 10:24 AM, Blogger Sean said...

Ron H.,
So, their marketing strategy is to appeal to tribalism? Aren't there some seasonal limits on some of the local produce?
Yes. Some of the products, like sweet potato fries, blueberry swirlies, etc. are seasonal items. Hothouse tomatoes, etc. are generally available, and beef is always available. Seasonality isn't a huge problem since Oregon (at least in the Williamette valley) has a mild climate and a long growing season.

How do their prices compare, or is a premium price worth it to support local producers?
Their prices are higher than McDonald's or Sonic, but not ridiculously so. The ingredients are fresher, so they can generally justify it: the chain appeared to be successful when I lived there.


But, doesn't the "buy local" argument become pretty weak when you limit the geographic area to your own neighborhood? Who would want to sacrifice that much and limit their choices that severely?
That's why the argument gets weaker: self-sufficiency of any kind is less feasible. But you wouldn't buy from your neighborhood kid's lemonade stand before heading to the 7-11? Most of my neighbors had their power generators hooked in their circut breaker panel by the neighborhood
electrician. I tend to prefer having painting or carpentry done by local small town individual contractors that I can build a relationship with. For lunchmeat and bread, I prefer the neighborhood convenience store to the big grocery store, etc, etc.
In that sense, the argument for buying from small business actors you can build a relationship with is even stronger at a neighborhod level, even if actual self-sufficiency is impossible. And I hate seeing local businesses fail and rental properties go empty: it's bad for the town and my property values.

 
At 2/15/2011 10:24 AM, Blogger Hydra said...

I thought this was both amusing and instructive.

I still fail to understand peak Traders insistence that the lack of a V-shaped recovery is somehow a failure. With his view, in the face of a spectacular economic collapse, only a spectacular economic recovery is NOT a failure.

I would regard whatever could cause such a spectacualar recovery to be just as big a mistake as whatever caused the collapse. Acollpase follwed by normal and sustainable growth would be far preferable.

 
At 2/15/2011 10:31 AM, Blogger Hydra said...

Ron:

Maple syrup is produced in Virgina.

 
At 2/15/2011 11:57 AM, Blogger juandos said...

"I still fail to understand peak Traders insistence that the lack of a V-shaped recovery is somehow a failure. With his view, in the face of a spectacular economic collapse, only a spectacular economic recovery is NOT a failure"...

Well hydra, I'm beginning to wonder if the definition of 'recovery' needs a little tweaking...

"A_collpase follwed by normal and sustainable growth would be far preferable"...

That seems to make sense to me...

Big 'bust & boom' cycles are really losing their magic...

Oh yeah! Speaking of maple syrup, even Missouri has a maple syrup industry after a fashion...

Strictly 'mom & pop' setups on small farms...

Good stuff too! Next time you're driving through Viburnum, Mo (about 70 or so miles west of St. Louis as the crow flies) in the heart of the Mark Twain National Forest you might want to pick some up...

 
At 2/15/2011 2:02 PM, Blogger Ron H. said...

Sean,

"Their prices are higher than McDonald's or Sonic, but not ridiculously so. The ingredients are fresher, so they can generally justify it:

A Burgerville burger is not the same product as one from Sonic or McDonalds. It includes an ingredient you call "fresness", which you are willing to pay more for.

"That's why the argument gets weaker: self-sufficiency of any kind is less feasible. But you wouldn't buy from your neighborhood kid's lemonade stand before heading to the 7-11?"

Yes, I would, as I think most people would. The lemonade at the kid's stand isn't the same product as lemonade at 7-11. There are psychic values included in my purchase that aren't available in the 7-11 product. I'm willing to pay more for it.

I agree with every one of your reasons to buy locally, but all of them have value beyond just utility. There is an obvious psychic value to the personal relationships involved in local transactions. I used to buy from a local hardware store where they greeted me by name. That was worth more than the few dollars I could have saved at Home Depot. However, if I were buying something like cement at Home Depot, where only the utility of the cement mattered, I would almost certainly base my choice on price alone, no matter where the cement was made.

In each case you mentioned, you are buying a different product as it includes some value beyond the utility of the item purchased. We should each be able to buy whatever we want, from whoever we want, for whatever reason we want.

Most arguments for "buy American" or "buy local" seem to include some concern about how the money is used after it leaves my hand, and who benefits. They almost invariably include some form of "us" vs "them". These are expressions of personal preference, but are not good economic arguments.

 
At 2/15/2011 4:59 PM, Blogger Ron H. said...

Sean

Perhaps you actually call that extra ingredient "freshness" instead of "fresness".

 
At 2/15/2011 5:26 PM, Blogger juandos said...

"Perhaps you actually call that extra ingredient "freshness" instead of "fresness""...

Well Ron H, are you sure you really didn't mean Fresnes?...:-)

 
At 2/15/2011 6:14 PM, Blogger Ron H. said...

juandos

Anything's possible, but I'm not sure Fresnes would go well on a hamburger. Did you see my earlier comment about those commenting on Cafe Hayek blog?

 
At 2/15/2011 11:31 PM, Blogger Brad K. said...

I tend to think of the "Buy American" or "Buy Virginia (Oklhoma)" so-called challenge as being a related to automobiles - and big labor.

Labor unions may have been an important function 70 and 90 years ago. But there are too many OSHA employees and lawyers with time on their hands today. If labor leaders really know how to run a business - let them go into business for themselves, and stop hampering legitimate industries and businesses - and state and local governments.

Buy local sounds real warm and fuzzy. But if anyone is really interested in local jobs, they will unravel the red tape, the labor unions, and taxes on businesses and the wealthy - so that employers might be interested in working in that community, state, or nation.

You have to let people accumulate resources - wealth - to create employers. Without employers, 'Buy Virginia' is just a warm and fuzzy diversion from the shenanigans of politicians.

 
At 2/16/2011 10:16 AM, Blogger Sean said...

Ron H.,

. It includes an ingredient you call "fresness", which you are willing to pay more for.
That's certainly part of it. Though even Subway actually advertised "Eat Fresh". But if you correlate with "local" (think roadside farm stand), people can actually believe you.

In each case you mentioned, you are buying a different product as it includes some value beyond the utility of the item purchased.
Absolutely. But that's aprt of the point: if you don't include those things in your purchasing decision, you could be missing out.


Most arguments for "buy American" or "buy local" seem to include some concern about how the money is used after it leaves my hand, and who benefits.
You could argue the same about some of my examples if you wanted to: you could say they involve supporting people you know are good people rather than people whose reputations you can't vouch for. Or supporting local businesses just because you want to improve your community.


They almost invariably include some form of "us" vs "them". These are expressions of personal preference, but are not good economic arguments.
No, but that's a weakness of economics, IMO. Macro-economics values total economic output. Micro-economics is concerned with optimum personal interactions. I don't think you could even believe in the concepts of good and evil at any level without admitting that "us" and "them" (properly defined) must have at least some place.

 
At 2/16/2011 12:31 PM, Blogger Ron H. said...

Brad K.

"If labor leaders really know how to run a business - let them go into business for themselves..."

That experiment is being tried, as we speak, at a company called GM.

 
At 2/16/2011 1:31 PM, Blogger juandos said...

"Did you see my earlier comment about those commenting on Cafe Hayek blog?"...

Yeah Ron H I did and I meant to say something but then I had a phone call and had to get off my lazy @$$ and go to something and forgot about it...

My bad....

Still I find it rather amazing that the zethstorm...

Did you get a chance to see this over at Hayek?

Open Letter to Sethstorm

Or this one?

Does Trade ‘Loot’ Jobs?

 
At 2/16/2011 2:38 PM, Blogger Ron H. said...

Sean

"Absolutely. But that's aprt of the point: if you don't include those things in your purchasing decision, you could be missing out."

I think we agree on this. You are describing "psychic value", which may be different for each individual. I believe that each of us should be able to decide for ourselves what we wish to buy, for whatever reasons, and have the widest possible range of choices. For most people, I believe the most important decider is price, but there are certainly any number of other things to consider in a purchase decision.

"You could argue the same about some of my examples if you wanted to: you could say they involve supporting people you know are good people rather than people whose reputations you can't vouch for. Or supporting local businesses just because you want to improve your community."

I will generally buy from someone I know and like, but beyond that, there is little beyond price to guide me. But, that's just me. I certainly respect the right of others to buy for whatever reason they want. Many "buy Virginia" arguments include the notion that I should be forced to do so, and that I am somehow a moral defective if I don't. I don't agree with such ideas.

In my cement from Home Depot example, one product is made at a plant less than 100 miles from me, the other is from either China or Mexico. I don't know anyone involved in that local cement business, and I don't know if they are good people. I won't pay more just because of geography.

"No, but that's a weakness of economics, IMO."

You may be asking "economics" to include values that aren't strictly economic.

"I don't think you could even believe in the concepts of good and evil at any level without admitting that "us" and "them" (properly defined) must have at least some place."

Again, I agree. But, the terms "good", "evil", "us" and "them" are not in the narrowest sense economic terms. We can certainly use them in making decisions, but I would consider them to have psychic value, not strictly defined exchange value.

As Prof. Leonard Read's pencil story illustrates, most people involved in the making of the pencil don't even know each other, and don't care. It would be nearly impossible to exclude those we consider evil from our buying decisions.

I don't consider Mexicans evil, or Chinese evil, and I don't characterize Virginians as good.

 
At 2/16/2011 8:05 PM, Blogger Robert Kafarski said...

Ron H.

"I assume you mean, for example, the Japanese government subsidizing automakers, so that the price paid in the US for a Japanese import could be lower. What's wrong with the idea that all those Japanese taxpayers are helping you buy a car? No, it's not fair to them, but it's a good deal for you. They should be thanked."

Interesting concept that, let me make sure I understand it: when the U.S. imports a product produced by Zaibatsu Japan or Korea Inc. or a conglomerate run by the Communist Chinese military that is grossly cheaper than a similar product produced by an American company I get to save some money on the purchase of that product. Yes that is a benefit to me. But what if I am an employee of a company that produces a similar product that eventually moves its factory to China to avail itself of cheaper labor and I become unemployed. Sure I saved money buying that cheaper product but now I am out of work. Is it really better that I am able to buy cheap junk or the latest electronic gizmo at rock bottom prices but my nation faces an actual threat to its national security due to the imbalance of balance of payments and a terrifying trade deficit with the Chinese Communists (they are at least half Communist). Is pauperizing a nation worth keeping a check on inflation ? Oh but I forgot about how if we give the Chicoms MFN trade status we will get the better of the bargain because we will sell them a lot of turbines and electric plants and software all we had to do was open up their markets - funny thing that "open up their markets idea" doesn't always fly. I do not have an answer but I can see that the status quo isn't working.

 
At 2/16/2011 8:18 PM, Blogger Robert Kafarski said...

And one more thing let us be honest, free international trade pits one worker/ nation / society against another worker / nation / society its a Darwinian survival of the fittest much like capitalism, but is this process always the best process for each nation ? We can see what it has been doing to the U.S. in recent years. When viewed from a total national perspective is this really the best thing for America's future ?

 
At 2/16/2011 10:40 PM, Blogger Sean said...

Ron H,

and that I am somehow a moral defective if I don't. I don't agree with such ideas.
I agree with you.


But, the terms "good", "evil", "us" and "them" are not in the narrowest sense economic terms. We can certainly use them in making decisions, but I would consider them to have psychic value, not strictly defined exchange value.
I agree the values are subjective and hard to measure. I will also clarify that judging "good" based on temporal proximity to myself would be pretty warped morality. :)


You may be asking "economics" to include values that aren't strictly economic.
I only ask that it recognize that they exist, that maximization of common utility measures like money are insufficient. I think economics as a field recognizes this in theory, but economists often forget the point.

 
At 2/16/2011 10:58 PM, Blogger Ron H. said...

Sean

"I think economics as a field recognizes this in theory, but economists often forget the point.

Economics recognizes that there are "psychic values", which include all those values we have both described as reasons for a particular buying decision, and involve very personal and subject feelings and attitudes. As they are different for each individual, and impossible to quantify, economists have no way to discuss them in any meaningful way.

You haven't left me with anything to disagree with. :-)

 
At 2/17/2011 12:09 AM, Blogger Ron H. said...

juandos

"Did you get a chance to see this over at Hayek?

Open Letter to Sethstorm

Or this one?

Does Trade ‘Loot’ Jobs?


Thanks for the links. That's pretty entertaining stuff. I see our pal makes just as much sense at Hayek as he makes here.

 
At 2/17/2011 1:27 AM, Blogger Ron H. said...

Robert

Wow! This is a lot to respond to. You seem to be missing several key concepts. I'm not sure where to start, so I'll just start from the top.

"...when the U.S. imports a product...that is grossly cheaper than a similar product produced by an American company I get to save some money on the purchase of that product. Yes that is a benefit to me."

Right away, let me point out that you are making a choice. You can buy the more expensive item if you wish, to protect that American worker's job. You might want to consider being angry with the person who buys the cheaper product, not the people who produce that product. You should realize, however, that paying more than necessary for something results in everyone being poorer.

"But what if I am an employee of a company that produces a similar product that eventually moves its factory to China to avail itself of cheaper labor and I become unemployed."

Is it really a good job? Most jobs that move to China are low skill, low paying, and tedious. Is it the kind of job you want your children to do when they finish school? Also consider that the company is now paying less for that part of the business. There is now money for expansion, and jobs could be created. A good employee is an asset, so you might not lose your job.

Yes, some might lose their jobs, but the overall effect is positive, as consumers, saving money on the product, have more to spend on other things, perhaps creating job opportunities elsewhere. Also,bout half of all imports from China are raw materials and machine tools which are used by US manufacturers, thus allowing them to keep prices low.

"...but my nation faces an actual threat to its national security due to the imbalance of balance of payments..."

A threat to it's national security? How dramatic! You should know that the balance of payment must, by definition balance at zero.

"...and a terrifying trade deficit with the Chinese Communists..."

Terrifying? You are getting carried away here. A trade deficit is just the flip side of a capital account surplus. Only political hacks and uninformed reporters think this is cause for alarm. See this nice little explanation by Prof. Don Boudreaux.


"Is pauperizing a nation worth keeping a check on inflation?"

I don't know what this means.

"...all we had to do was open up their markets - funny thing that "open up their markets idea" doesn't always fly."

There's no reason for the Chinese to buy a dollar worth of stuff from us for every dollar we buy from them. This is not a zero-sum game. Besides, they need to become wealthier by selling us stuff before they can afford more of our expensive exports.

"And one more thing let us be honest, free international trade pits one worker/ nation / society against another worker / nation / society its a Darwinian survival of the fittest..."

No it isn't. No more than workers in New York are pitted against those in Idaho, or Florida is pitted against Nebraska. California has a huge trade deficit with Michigan due to auto sales, but I don't see that as a problem. Remember the balance of payments must equal zero. Did you even read the original post on this blog?

You know, I must say, you have an impressive profile. All that real estate experience, which must include a lot of finance, AND a member of Mensa. I don't understand how you have avoided picking up a better understanding of macroeconomics somewhere along the way.

 
At 2/17/2011 9:48 AM, Blogger juandos said...

You know Ron H I wonder if Robert K would appreciate free trade more if he read Milton & Rose Friedman's, "Free To Choose", or at least take time to peruse the blog site Free To Choose?

 
At 2/17/2011 11:57 AM, Blogger Robert Kafarski said...

Ron:

I have a business to manage as well as personal commitments so I cannot spend as much time blogging as I would like. So I'll make only a few comments here:

"Right away, let me point out that you are making a choice. You can buy the more expensive item if you wish, to protect that American worker's job. You might want to consider being angry with the person who buys the cheaper product, not the people who produce that product. "

"Buy American" does not work despite its worthiness.
Americans prefer to buy less expensive products, can you blame them?. American consumers can try to "Buy American" but most simply do not. And its not their fault as the American middle class has seen its wages stagnate (for 20 ? years) due in large part to competing with Chinese , Mexican and Indian workers. They are driven by necessity to save money.

"But what if I am an employee of a company that produces a similar product that eventually moves its factory to China to avail itself of cheaper labor and I become unemployed."

Is it really a good job? Most jobs that move to China are low skill, low paying, and tedious.

I do not agree with you. Manufacturing jobs have been the gateway to the middle class for generations of Americans. Manufacturing provides jobs to less educated workers (including the ones that didn't study macroeconomics) and provide higher pay and better benefits than the service jobs that much of our economy is creating. And the U.S. is not sending only low skilled jobs overseas.

Is it the kind of job you want your children to do when they finish school?"

Work in the manufacturing industry? As an engineer or manager or entrepreneur - why not?
How many unemployed or underemployed Americans would love to have a factory job? No to mention those working in retail sales or restaurants.
One of my family members was a manufacturing engineer he actually started out in the machine tool business as a blue collar worker while attending college in the 1940's. The manufacturing business stood this family and millions of other Americans well from post WWII through the 1970s.

"Also consider that the company is now paying less for that part of the business."

Don't know what you mean by this


"A threat to it's national security? How dramatic! You should know that the balance of payment must, by definition balance at zero."


Our trade deficit is a component of our balance of payments and I and others believe it is a threat to the future of our nation, as it will affect political equations and national security balances with other nations. Allowing the Chicoms unrestrained access to our markets was a political event that will have negative repercussions on the U.S.
I guess you haven't read about the Rare Earths debacle. - just one minor example of a national security issue affected by free trade.

I enjoy the discussion but I have to go back to managing my real estate investments and my business.

 
At 2/17/2011 2:27 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 2/17/2011 3:01 PM, Blogger Ron H. said...

juandos,

"I wonder if Robert K would appreciate free trade more if he read Milton & Rose Friedman's, "Free To Choose", or at least take time to peruse the blog site Free To Choose?"

It would be helpful to anyone interested in learning, but I think that Robert K. believes he already has the answers, and his mind is made up. So no, I don't think so.

I would have also recommended this great book, which I personally feel every person on the planet should read, but I didn't think it would help.

 
At 2/17/2011 4:36 PM, Blogger Ron H. said...

Robert K.

On the off chance that you will come back to read this, I will respond once again. By the way, I appreciate your responses, I just believe you are mistaken.

"Americans prefer to buy less expensive products, can you blame them?"

Not at all. It's human nature, and we all do it. You must see a lot of it in your business, when parties shop & bargain fiercely for the best price, interest rates, fees, etc. It is a good thing, and we are all better off because of it. What is UNnatural, is to consider spending more for something in support of an activity that can be done more efficiently - read cheaply - elsewhere.

"And its not their fault as the American middle class has seen its wages stagnate (for 20 ? years) due in large part to competing with Chinese , Mexican and Indian workers."

You have the cart before the horse here. Those Mexican, Chinese, and Indian workers only have jobs in the first place, because we all try to maximize our own well being by buying cheaper goods.

"They are driven by necessity to save money."

We all do it, no matter how well off we are. If we didn't, we wouldn't be well off. Striving to improve our lives is human nature. We all want more, and by paying as little as possible, we have more to spend on something else.

"Is it really a good job? Most jobs that move to China are low skill, low paying, and tedious.

I do not agree with you. Manufacturing jobs have been the gateway to the middle class for generations of Americans. Manufacturing provides jobs to less educated workers (including the ones that didn't study macroeconomics) and provide higher pay and better benefits than the service jobs that much of our economy is creating.
"

That's just not true. It's a common mistake to think of only entry level restaurant and retail jobs when we think of "services".

How many of these service jobs do you consider to be lower paying than the manufacturing jobs we are discussing?

accountant
airline pilot
aircraft mechanic
plumber
electrician
policeman
fireman
teacher
stock broker
truck driver
computer system design
computer technician
attorney
doctor
nurse
real estate broker - please add all the other real estate related skills you claim.

See page 32 of this report from the BLS for lots more information on employment by sector. Notice that as of Jan 2011, out of 108 million private sector jobs, only 12 million are in manufacturing, while 90 million are in services.

 
At 2/17/2011 6:32 PM, Blogger Ron H. said...

continued:

"And the U.S. is not sending only low skilled jobs overseas.

That's true, but most of them are.
"

"Is it the kind of job you want your children to do when they finish school?"

Work in the manufacturing industry? As an engineer or manager or entrepreneur - why not?"


You are changing the subject. Those are not the low skill jobs we were discussing, that you consider to be "the gateway to the middle class".

"How many unemployed or underemployed Americans would love to have a factory job? No to mention those working in retail sales or restaurants.

There's no good way to determine that, except to point out that there are many who have collected unemployment benefits for 99 weeks, while seasonal and temporary jobs have gone begging, so perhaps not as many as you think. It appears that some are comfortable enough to feel they can wait for their old jobs to come back at the old pay scale, as benefits keep extending over & over.

"The manufacturing business stood this family and millions of other Americans well from post WWII through the 1970s."

That is absolutely correct. After WWII, when much of the infrastructure and manufacturing of the developed world lay in shambles, the US had an the only viable economy, and it thrived.

"Also consider that the company is now paying less for that part of the business.

Don't know what you mean by this
"

If a company moves its production facilities to China, where it can operate more cheaply, the company can now put more capital into expanding other parts of the business. This can result in the creation of jobs.

Our trade deficit is a component of our balance of payments and I and others believe it is a threat to the future of our nation, as it will affect political equations and national security balances with other nations. Allowing the Chicoms unrestrained access to our markets was a political event that will have negative repercussions on the U.S.

I and others don't see the trade deficit portion as a problem, as the money comes back in other forms. If you see a problem with the tremendous amounts the US government has borrowed from China, then I agree that that's a problem. I don't however, fault the lender, but the borrower. I wouldn't blame my bank if I max out my credit card.

"I guess you haven't read about the Rare Earths debacle. - just one minor example of a national security issue affected by free trade.

Yes, I read all about it. You realize, don't you that that was posturing and saber rattling by the Chinese during a disagreement with Japan. I recall that it didn't last long, and only involved raw materials, not finished products, sales of which continued uninterrupted. One result has been that closed rare earth facilities throughout the world have started to crank back up as they see opportunities, including this one in Mountain Pass, CA.

The threat by China has backfired, and won't likely work again, as rare earth users will ensure that they have more than one source in the future.

 
At 2/17/2011 7:33 PM, Blogger Ron H. said...

Robert K,

It is my view that what is happening with manufacturing in this country, is what happened with agriculture 100 years earlier. In 1900, 40% of the US population was involved in some capacity in agriculture. Now, it's 3%. Improvements in technology and crop yields have made that possible.

We, in the US, are miles ahead of most others in innovation, inventiveness, and entrepreneurship. We should focus our efforts on those things we have a great advantage in, and leave the low margin drudgery to others. That is how comparative advantage works. It's easy to lose sight of that when we focus too narrowly on the one small corner of the whole picture.

Your doctor might be a better at bookkeeping, billing, reception, and nursing than anyone else in his office, but he is better off hiring others to do those jobs and spending his time using his most valuable skill.

 
At 2/17/2011 9:26 PM, Blogger Robert Kafarski said...

Ron I appreciate the time you took to respond to my comments. I am preparing for a several day trip so I cannot write too much now. I will jot a few thoughts: The original theme of this thread is free trade. The biggest baddest bogeyman in regards to free trade with the U.S. is China so I will limit my comments to U.S. -China trade.
First I'll pose several questions to you: Which economic sectors produces more wealth, manufacture of machine tools or accounting services, lumber production or hospitals, energy production (oil & natural gas drilling) or banking ?

Do not industries that add value to materials produce more wealth and return on capital than service industries?

China has an astounding comparative advantage over the U.S. in labor costs. They also have several other advantages including political structure (more centralized control), less regulations as well as $2 Trillion in foreign currency reserves and non existent unions and no foreign military entanglements. China is capable of absorbing all of our manufacturing capacity as well as other sectors of our economy. Just as water seeks the path of least resistance, U.S. businesses will always move to lower labor costs. China graduates more engineers and PhDs than the U.S. their entrepreneurial ability is unquestioned, it is actually a phenomenon. When or if China has absorbed say 80 % of our manufacturing sector how will that be an economic benefit to the U.S.? What will our economy look like ? Can the U.S. provide its citizens with the same standard of living that it provided in the 20th Century under a service based economy in the 21st ?

 
At 2/18/2011 4:49 PM, Blogger juandos said...

Hey Ron H, Hazlitt a very good suggestion...

A definite 'must read'...

 
At 2/18/2011 5:49 PM, Blogger Randy Erwin said...

Hey folks, before you make a bunch of generalizations about my website. Why don't you go there and check it out for yourself?
I can’t believe the things people make up without even looking at a site.

Here is my site:
www.BuyAmericanChallenge.com

I appreciate the cleverness of slashing our American and filling it with Virginia, and then mocking it. Then get you friends to say, “no make it Buy Arlington Challenge,” then, “better yet, make it buy only from my living room challenge.”

But you know what, it isn’t stupid to when Americans choose to buy American. It creates jobs, at a time when we need them most. Mainstream economists agree that our trade deficit is hurting job creation in this country. There is nothing wrong or dumb about doing something to address this problem by buying American.

Here is a quote about the U.S. trade deficit from Warren Buffet: “In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than we produce–that’s the trade deficit–we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.” Think Warren Buffett is dumb too?

We are giving away our future by incurring this kind of a trade deficit. I, for one, do not think it is right to sit around and do nothing while my country goes down the tubes. The trade deficit is a big part of the problem, and I can do something to fix that by buying more American-made things.

Those who choose to do that - make a personal sacrifice in time or money - simply to do their small part to help their country should be applauded, not mocked!

Americans have a role to play in getting our country on the right path. Every American can make a difference by buying American. Let us make our purchasing decision free of insults.

Sincerely
Randy Erwin
Founder/Auther
www.BuyAmericanChallenge.com

 
At 2/18/2011 5:49 PM, Blogger Randy Erwin said...

Hey folks, before you make a bunch of generalizations about my website. Why don't you go there and check it out for yourself?
I can’t believe the things people make up without even looking at a site.

Here is my site:
www.BuyAmericanChallenge.com

I appreciate the cleverness of slashing our American and filling it with Virginia, and then mocking it. Then get you friends to say, “no make it Buy Arlington Challenge,” then, “better yet, make it buy only from my living room challenge.”

But you know what, it isn’t stupid to when Americans choose to buy American. It creates jobs, at a time when we need them most. Mainstream economists agree that our trade deficit is hurting job creation in this country. There is nothing wrong or dumb about doing something to address this problem by buying American.

Here is a quote about the U.S. trade deficit from Warren Buffet: “In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than we produce–that’s the trade deficit–we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.” Think Warren Buffett is dumb too?

We are giving away our future by incurring this kind of a trade deficit. I, for one, do not think it is right to sit around and do nothing while my country goes down the tubes. The trade deficit is a big part of the problem, and I can do something to fix that by buying more American-made things.

Those who choose to do that - make a personal sacrifice in time or money - simply to do their small part to help their country should be applauded, not mocked!

Americans have a role to play in getting our country on the right path. Every American can make a difference by buying American. Let us make our purchasing decision free of insults.

Sincerely
Randy Erwin
Founder/Auther
www.BuyAmericanChallenge.com

 
At 2/19/2011 5:38 PM, Blogger Ron H. said...

Randy Erwin,

What exactly do you think was made up? The "buy Virginian" argument seems to make as much sense as the "buy American" one. Surely you can see that as we narrow our choices by narrowing the geographic area, we are all worse off. Self sufficiency doesn't improve our well being or standard of living.

You are asking me to "sacrifice" by buying, for example, a clock made in America, instead of one I could buy cheaper elsewhere. That means I can't also buy as much dinnerware that's made in America or go out to eat as often.. What about the poor dinnerware makers who will lose their jobs? You are asking me to pick winners and losers arbitrarily.

I urge you to re-read Bastiat on "what is seen and not seen", and Ricardo on "comparative advantage", and finally Schumpeter on "creative destruction".

Buffett is indisputably the world's best investor, but he isn't much of an economist. His quote conflates two ideas. That we consume more than we produce, which is indeed a serious problem, and the trade deficit, which is not. Foreign investment in this country creates jobs, which I believe you consider to be a GOOD thing.

If national debt is of concern to you, and it certainly should be, then the culprit is the US government, which is borrowing the money, not the people who provide the credit.

No, it isn't stupid for people to choose to buy American. People should be free to buy whatever they want, from whoever they want, for whatever reason they want.

 
At 2/20/2011 12:10 AM, Blogger Ron H. said...

Robert K.

"The original theme of this thread is free trade. The biggest baddest bogeyman in regards to free trade with the U.S. is China so I will limit my comments to U.S. -China trade."

Fair enough. Chinese imports constitute 15% of all US imports, so I suppose that's enough to worry about. About half of that, or 7.5%, are consumer goods, and the other half are raw materials, machine tools, and other production goods. The half used in production, of course, helps US producers by keeping their costs down, and allowing them to be more competitive.

"Do not industries that add value to materials produce more wealth and return on capital than service industries?"

Well, I don't know. I couldn't find anything on GDP per industry. Do you have a reference? I don't know which of the following in each pair produces more income:

machine tools or accounting
lumber production or hospitals
energy production or banking

And, I'm not sure what meaning I could assign to the answer if I did, but I don't believe it would make the point you're trying to make.

What I CAN tell you, is that 77% of US GDP is pruduced by all services, and 22% is produced by all industry, which would include all goods production as well as all energy production.

The rest of your comment could have been written almost word for word in the 1980s, with the name Japan substituted for China. It is really eerie.

They are going to take over all of our industry! Japan will soon own us!

As you are aware, that didn't happen. Why not? Well, I'm sure there are many reasons, but one might be that the Japanese became wealthier, thanks to trade, and no longer had such a cheap labor advantage.

Economic freedom seems to have more influence on standard of living and well being than the level of manufacturing activity. Consider Hong Kong, which has only light industry like clothing, toys, watches, and plastics, which contributes 9% to GDP, while services contribute 90%. The former much lower and the latter much higher than the US. Nearly half of Hong Kong's imports are from mainland China, as compared to 15% for the US. Yet, Hong Kong has a comparable standard of living and GDP per capita. The Chicoms aren't destroying them.

"Can the U.S. provide its citizens with the same standard of living that it provided in the 20th Century under a service based economy in the 21st?

I believe the answer is yes. I think regulations, taxes, and the ever increasing size of, and interference by, government is more of a danger to our well being than any foreign country.

Our standard of living is higher now than in the '80s, when we feared Japan, and it will no doubt be higher still in the future, despite this so called Chinese menace.

 

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