Category Archives: Economics & Politics

The economics of buying American and the trade deficit.

Lawsuit Against Restoration Hardware Alleging Navy Chair Chinese Knock-off

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I am writing to you because your organization caught my attention as being committed to promoting American manufacturing, and keeping American jobs in America. My organization, Emeco, produces high quality chairs originally developed for the U.S. Navy that are designed and manufactured in America.   Emeco has just filed a law suit against furnishing giant Restoration Hardware and its former CEO and present Gary Friedman, asserting claims for trade dress and trademark counterfeiting and infringement.

“What Restoration Hardware is trying to do is bad for the American consumer, bad for American jobs and bad for the global environment.”–Gregg Buchbinder, Emeco CEO.

The lawsuit alleges that Restoration Hardware has engaged in willful and flagrant infringement of Emeco’s trade dress and trademark rights for its world-renowned Navy Chair Navy Chair® by selling a series of cheap knockoffs with the near-identical “Naval Chair” name that copy verbatim the iconic and highly distinctive design of the Navy Chair®. The irreparable harm caused by Restoration Hardware to Emeco’s reputation and significant goodwill is massive, incomparable to that caused by a typical, small-time counterfeiter.. We see this as a direct attack on our livelihood as an American manufacturer and would appreciate your support.

http://us2.campaign-archive2.com/?u=c6ba4bb82a8750b50c7999232&id=0e6e10d23a

http://www.scribd.com/doc/108610035/Press-Release-Emeco-Sues-RH

Emeco Industries, Inc.
Lia Forslund,
Director of Communications
+46708111826
lia@emeco.net

 http://www.emeco.net/press

What’s Wrong With Toms Shoes

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I want to openly state that I am disgusted with companies like Toms Shoes. If you are not familiar with them, they make cheap shoes cheaply in China, typically canvas flats, and sell them for around $40. Their claim to fame is that they donate a pair of free shoes to some poor person in the Third World for every pair you buy from them. Where do I begin?

It’s not enough that in order for some of us to feel good about buying something, we feel the need to simultaneously give it away to someone that did nothing to earn it. It’s not enough that companies tout their “social justice” agenda ahead of their quality and pride of manufacture. What tops it off is that Toms is a complete hypocrite! They want you to impoverish this country not once, but twice, with every pair of shoes you buy. Of course, both the pair of shoes you buy and the one you give away are made in China. Every dollar that leaves this country to achieve this impoverishes the US and enriches China. Hey, if China wants to spend some of their own trade surplus dollars on donating some of the shoes they make, have at it, I say!

I further call into question the dubious claim that donating free shoes around the world is even a good thing. How is this different than welfare? This creates no wealth around the world. It does not increase the economy anywhere. It does not increase skills or technology of poor people. It does, however, impoverish local businesses that make indigenous shoes because they can’t compete with FREE shoes. We should look no further than our own experience to see that international welfare is no better than domestic welfare and only creates poverty and dependency, not wealth or self-sufficiency. If you really want to help the third world, buy more American products and fewer Chinese products. You’ll make us richer and more able to afford imports from the country you’re currently feeling sorry for.

Chinese Made Shoes

Peruvians Love Chinese Shoes?

Buying America Back by Alan Luke

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I recently reviewed a great new book that aligns well with the aims of this blog.  Buying America Back by Alan Luke is an easy-read paperback (printed in USA, of course) that echoes what I say here – that a healthy economy is based on a positive or at least neutral trade balance.  It quantifies the decline in our economy in parallel with the decline in our domestic manufacturing and the rise of imports.  Did you know that the value of our imports each year is greater than the entire production of our domestic manufacturing??  Crazy and unsustainable!  So if you want to back away from the precipice, buy this book, read my blog and start caring about buying American.  I also like the detailed country-specific trade balance figures in the second half of the book.  There were definitely some surprises, such as the fact that we have a 3:1 trade surplus with Egypt – who knew?  A small bright spot.

Also, check out www.BuyingAmericaBack.org for more info.

An Open Letter to Apple (Please add your comments)

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Dear Apple,

I’m disgusted by the fact that all your products are Chinese.  I used to love Apple, but I can’t stand your company now.  You are traitors to America and our economy.  You employ 1 million Chinese and 30,000 Americans and are held up as some kind of ideal company.  Well, you are not.  You are an example of what’s wrong in this country.  I regret that I own some of your products, but I do my best not to buy any more.  If you were American, I would be gifting Apple and touting them to everyone.  Instead, I tell everyone how much I despise Apple and how they should never gift Apple or other electronics that are made offshore.  Hope you change your ways or go bankrupt soon!

Please add your comments to give this open letter some punch!

Made in USA Towels

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Have you noticed that much of the towels that you see in American stores these days say “Egyptian cotton” or “Made in Turkey”?  It’s not as though they’re cheaper than other towels, but they seem to have cornered the market.  In this time of increasing hatred of Americans in the Middle East, the rise of the Muslim Brotherhood, the anti-West Turkey, are we so sure that we should be sending them our money, either in aid or in payment for towels?  I say no and that we should spend that money on American-made towels.

In that vein, I endeavored to find American-made towels and can now report on my efforts.  After looking around online without much success, I found a result on Amazon for made in USA organic towels.  The towels from that company are not all made in USA but these were.  I received them and they do say made in USA on them with nothing about “Egyptian cotton” or the like.  I’ve used them and would say that they’re pretty nice and a really good value.  I also feel much better knowing that none of the money I spent on them went into supporting the Muslim Brotherhood, Erdogan, or their ilk.  (And please don’t start the argument, “but not all Egyptians are bad”.  It doesn’t matter, helping Egypt harms our interests – period.)

 

Poetic Justice for Apple

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Lately, Apple has been in the news for both record profits and sales, as well as labor standards in China and a trademark dispute with a Chinese firm over the Ipad name. Let’s backtrack and look back at my old post about small luxuries and Apple that made the case against Apple as bad rather than good for the American economy.  You see, I was a fan of Apple from long ago, before it was cool.  Back about 10 years ago, most Apple products were still made in USA.  Steve Jobs had not yet returned to remake Apple with a new glitzy image, but I did always prefer the ease and simplicity of Apple software.  As each new product launched by Apple, from the IMac to the Ibook to the Ipod, came to be made in China or a similar place, I quickly stopped caring about Apple’s success and lost respect for Steve Jobs.

Apple is estimated to directly employ approximately 30,000 Americans.  These are all white collar jobs, including well-paid engineering jobs.  How many jobs do you think Apple manufacturing provides for in China?  Well, we know that Foxcon, the maker of Apple’s products,  provides over 920,000 jobs in China.  This is where a large amount of the money from your Ipad and Iphone purchases goes.  So every time you buy an Iphone, some money stays in the US and some goes to China.  On balance, it’s a losing proposition for us.  There’s a great article online where I sourced this information here.

Now, Apple is under fire for doing business with “suicide factories” in China where it’s lower-paid Chinese workers crank out its products at Foxconn.  Never mind that Chinese workers face worse conditions at other Chinese factories.  It’s actually funny that our socialist unionist agitators are instructing China, a communist country, on how to promote socialism for its workers.  It’s quite comical and ironic.  That’s beside the point.  It’s also funny that Apple’s Chinese buddies are now blocking the sale of Ipads in China due to trademark infringement.  Both of these issues may or may not hurt Apple.

As an American patriot, however, I say, “who cares?”  If Apple learns a lesson that doing business in China is bad for business, then all the better for us.  As American consumers, what business is it of ours how Chinese workers are treated by Apple?  They have chosen to work for Apple and are free to leave anytime if the conditions are not acceptable to them.  They are not Apple’s slaves.  As American consumers, we should say no to Apple’s so-called “designed in California, assembled in China” bullshit.  (They shouldn’t even use the phrase “assembled in China”, as if the parts are made in the US and the Chinese workers are simply slapping them together like Legos.)  The parts are made in China, for the most part, as well.  We should boycott Apple’s products (as I have done) because money talks louder than anything else.  If Apple loses money by not producing in the US, then it will produce in the US, bottom line.

So don’t be the first one on your block to run out and buy the next Iphone 8 or Macbook SuperDuper Pro.  Who cares?  You may already have an Iphone (I have an older model).  So hold on to it longer and don’t upgrade so quickly.  Drag your feet on getting that new Apple computer if you really need one.  Don’t, whatever you do, buy Apple products as gifts.  You can give anything you want as a gift.  It just doesn’t help our economy to buy more of their stuff.  The less you spend on Apple’s products and the more you spend on domestically produced goods, the better it is for our economy.  So buy that piece of custom furniture (I did, from Naturaltique in Culver City), buy that American-made car, buy that American made clothing, buy the new air conditioner or furnace you need and put off buying that Apple gadget.

 

The MadeinUSABlog Take on Occupy Wall Street

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As someone concerned about the success of the US economy, I have been doing a lot of thinking about my response to some of the opinions and demands put forth by demonstrators from Occupy Wall Street and related movements.  In some ways, I agree with them, but not in the way that they would think, however philosophically, we are on opposite sides of the spectrum.

The Occupy Wall Street movement is diverse and has no clear objective or political platform at this time.  However, common Occupy themes could be summarized as follows:

  1. Disgust with big banks and corporation getting bailouts while average Americans have continued to see erosion in employment and income.
  2. Disgust with inherent “unfairness” over the fact that the richest have more than they used to and that there is a growing income disparity between the richest and the poorest.
  3. A desire that the government “do something” to redistribute wealth from the richest to the poorest and regulate banks more so that the problems in 1 and 2 become less severe.

However, let’s break down what the problems are leading up to our current economic stagnation:

  1. Ongoing outsourcing of jobs, especially in manufacturing, seeking lower labor costs, development costs, and easier regulatory climate.  This leads to a shrinking jobs base and lower income in the population.  The growing trade deficit that also results shrinks Americans’ total assets and leads to growing public and private debt.
  2. Housing bubble.  Spurred by cheap lending and fiat currency and government policies aimed to make housing “affordable for everyone” caused housing prices to soar artificially.  Buying and selling houses even became a good investment business.  Of course, anyone who was honest with themselves knew that it would not last.  It was the government through Fannie Mae and Freddy Mac that pushed out and guaranteed all those loans beyond what private enterprise was willing to do on its own.  That created such a huge inflationary bubble that it was a giant explosion when it burst.  It wasn’t the banks that started it, it was our government.

Then came the bank bailouts and an even further lowering of the federal reserve interest rate.  It was hoped that this government intervention in the market would finally be useful.  What it did instead was give cheap money to banks who then turned around and invested it in stocks, created a second stock bubble.  Then stocks crashed again when the Greece news hit.

As you can see, government intervention only creates unforseen problems.  It may make a few people wealthy by riding on the misfortunes of others, but it rarely increases overall wealth and economic production.  Rather, it usually has a negative effect on overall production and tends to drive industry overseas.  The richest get richer when they are the first to spend money they receive when cheap money is allowed by the Federal Reserve.  They then buy stock, houses and other things and drive up prices for the rest of us.  This is an invisible tax on the middle class and the poor.  Then when these bubbles pop, the ones who lose the most are the poor and middle class.  Is this what OWS wants more of?

I would side with Ron Paul in stopping ALL government mucking in the markets, whether it be the Fed and too big to fail banks, the minimum wage, entitlement programs, and most workplace regulations.  Let freedom reign.  Let fit companies survive and poor performers dwindle away.  Let’s make America the most attractive place for businesses to relocate to.  (By the way, you may be surprised to learn that it was Medicare that caused the cost of medicine to skyrocket by providing unlimited payment and separating the medical consumer from the payor).

Rather than rehashing the failed social democrat/progressive policies of the New Deal, the Fair Deal, the War on Poverty and the Great Society, let’s resume the ideals of freedom and liberty that made this country great in the first place.  Let’s stop bailing out banks and stop printing money that helps only bankers.  Let’s banish workplace regulations and allow workers and employers to freely engage with each other without the government sticking its nose in it.  Let’s let those who are inclined work as hard as they want for as much money as they can get people to voluntarily pay them.

Occupy Wall Street – you should occupy the Fed and the Department of Labor!

 

China’s Low-Price Manufacturing A Plan for Monopoly

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China seems to practice dumping of under-priced goods to purposely drive it’s international competitors out of business then follow this up by doubling and tripling prices.  Case in point: rare earth minerals.  Currently China produces 95-99% of the world’s rare earth minerals which are used in high-tech devices.  This is essentially a monopoly.  Prices have gone through the roof and China has been restricting supply to foreign competitors.  At the same time, it is waving the carrot of access to its rare earth supply if foreign companies locate their production in China (so that China can then appropriate their intellectual property and production capital as well).

However, China only has 1/3 of the world’s rare earth supply.  In the 80′s the US supplied a major share but mines were driven out of business by low-priced minerals that flooded the market from China.  Now that China has squeezed the supply and raised prices manifold, these same mines are in the process of reopening, but the damage to our industry has already been done (just look at our economy these days).  Of course China will surely repeat the process once international rare earth production gears up.

Another example is with fluorescent lighting.  Cheap Chinese fluorescent lights flooded US markets in the last 2 decades.  They drove domestic manufacturing out of business.  (Remember how getting energy-efficient was supposed to be good for the US economy, according to Obama?  Well, it just sent money to China.)  Now that they have done so, they have jacked up prices by double, and that’s just the beginning.  I know this from personal experience in buying fluorescent lighting for my business.

So when you buy Chinese goods for their low-price, just remember what you are doing.  You are destroying domestic competition in favor of Chinese goods dumped on our shores at below-cost prices.  As soon as they have driven your countrymen out of business, you will be paying more than you were before the Chinese.  Just think about that the next time you decide that all that matters is price.  Economics and trade are more complicated than that.

Why More Stimulus Will Not Help Unemployment

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Ahead of the much-anticipated Obama “Jobs Speech,” I wanted to share some thoughts in the vein of the Madeinusablog. We have had stimulus after stimulus and tax cut after tax credit yet the unemployment rate has hardly budged, and possibly gotten worse. QE1 and QE2 only seemed to help banks and temporarily inflated stock prices but seem to have done nothing else. The classical Keynsian economic thinking goes that during an economic recession, it’s a good idea to empty the government coffers and take on some debt to stimulate economic growth through public works. In turn, these public works improve infrastructure and future productivity, thereby paying for themselves in the long run. In the short-run, these stimulus measures cause job-creation that cascades into additional supporting jobs and other jobs through increased consumer spending power.
However, in the modern US economy, this is where the equation breaks down. In the past, those extra consumer dollars then enriched the US economy. More consumer dollars meant more jobs at Ford and Honeywell. More jobs at Maytag and Hewlett Packard. More jobs at Fieldcrest and Hanes. More jobs at Gillette and Proctor and Gamble. What about now? Instead of translating all the extra demand into extra production (jobs) in the US, those dollars are being spent on products produced with foreign labor. Not only are consumers spending their money too often on foreign companies’ products, by buying Toyota cars and Lenovo computers, but American manufacturers are outsourcing every chance they get to same on production costs and stay competitive. So all those extra dollars borrowed for tax breaks to corporations and consumers just don’t help. Even infrastructure projects too often use imported materials, especially in building products. So all this net outflow of cash only compounds the problem by not leading to net increase in hiring while at the same time increasing the long term tax burden by increasing the national debt and its attendant interest payments.
So what would be my solution? Not more “stimulus” as has been proposed so far. My approach would be a radical departure from current proposals:
1. Make it financially attractive for manufacturers to locate their factories in the US to hire here rather than abroad
a. radically scale back consumer liability risk
b. radically scale back worker’s comp (a rampantly-abused program)
c. impose trade tariffs on imports that have an unfair advantage over us in environmental regulations and other labor practices
d. eliminate the minimum wage
2. Impose tariffs on countries that employ unfair trade practices
a. tariffs on China for its economic espionage and other unfair practices
b. tariffs on OPEC oil due to its monopoly-type trade practices to artificially restrict supply
3. Promote “made in USA” on a national scale
a. require country of origin label on every product description/label, both online and in stores
b. national campaign to promote buying american-made goods
c. minimum made-in-usa percentages for supplies bought for state and federal government contracts.
You may argue with me about the “fairness” of reducing worker and consumer protections, but it would put American manufacturing on more of an even footing with our Pacific Rim and Latin American competitors. I welcome feedback on this!

Email Chain Letter on Buying American

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Thought you’d all enjoy this:

Well over 50 yrs ago I knew a lady who would not buy Christmas gifts if
they were made in China. Her daughter will recognize her in the
following.

Did y’all see Diane Sawyer’s special report? They removed ALL items from
a typical, middle class family’s home that were not made in the USA .

There was hardly anything left besides the kitchen sink. Literally.
During the special they showed truckloads of items – USA made – being
brought in to replace everything and talked about how to find these
items and the difference in price etc..

It was interesting that Diane said if every American spent just $64 more
than normal on USA made items this year, it would create something like
200,000 new jobs!

I WAS BUYING FOOD THE OTHER DAY AT WALMART and ON THE LABEL OF SOME
PRODUCTS IT SAID ‘FROM CHINA ‘

FOR EXAMPLE THE “OUR FAMILY” BRAND OF THE MANDARIN ORANGES SAYS RIGHT ON
THE CAN ‘FROM CHINA ‘

I WAS SHOCKED SO FOR A FEW MORE CENTS I BOUGHT THE LIBERTY GOLD BRAND OR
THE DOLE SINCE IT’S FROM CALIF.

Are we Americans as dumb as we appear — or — is it that we just do
not think. The Chinese, knowingly and intentionally, export inferior and
even toxic products and dangerous toys and goods to be sold in American
markets.

70% of Americans believe that the trading privileges afforded to the
Chinese should be suspended.

Why do you need the government to suspend trading privileges? DO IT
YOURSELF, AMERICA !!

Simply look on the bottom of every product you buy, and if it says ‘Made
in China ‘ or ‘PRC’ (and that now includes Hong Kong ), simply choose
another product, or none at all. You will be amazed at how dependent you
are on Chinese products, and you will be equally amazed at what you can
do without.

Who needs plastic eggs to celebrate Easter? If you must have eggs, use
real ones and benefit some American farmer. Easter is just an example.
The point is do not wait for the government to act. Just go ahead and
assume control on your own.

THINK ABOUT THIS: If 200 million Americans each refuse to buy just $20
of Chinese goods, that’s a billion dollar trade imbalance resolved in
our favor…fast!!

Most of the people who have been reading about this matter are planning
on implementing this on Aug. 1st and continue it until Sept. 1st. That
is only one month of trading losses, but it will hit the Chinese for
1/12th of the total, or 8%, of their American exports. Then they might
have to ask themselves if the benefits of their arrogance and
lawlessness were worth it.

Remember, August 1st to Sept. 1st !!!!!! START NOW.

Send this to everybody you know. Let’s show them that we are Americans
and NOBODY can take us for granted.

If we can’t live without cheap Chinese goods for one month out of our
lives, WE DESERVE WHAT WE GET!

Pass it on, America …