Why trade matters

I'm only part way through and I stopped to commend you on your talk.

Good performance.

Mild mannered podcast host by day, energetic lecture circuit speaker by night. This is just a phenomenal talk, Russ. The questions are quite interesting. If they are representative of what (I assume) bankers think, we are really in for a fight. Offshoring? What should kids study? As if the answer would be "math" or "engineering".

It used to just be liberal trendy to worry about offshoring. Now the mentality seems to have taken hold in common sense. People need you out on the circuit challenging what they take for granted Russ.

I loved the tie.

My favorite line was "become more like Nepal."

Pastor Russ!

Ok, I got over the Red Sox thing and finished it.

That was excellent!!

Dr. Roberts,
That was a superb presentation to the folks at Zions Bank. Thanks for the reference to the textile industry. As an economic refugee from that industry, I should say that your numbers on productivity and machine assignments may be a little bit off. My first job in the industry was in a towel mill with fly shuttle looms that operated at about 70 picks per minute for a 40 inch wide machine (a 'pick' being one traverse of the shuttle across the warp). Two years later the machines were replaced with 120 inch wide machines operating at 210 picks per minute. Not only were the machines faster, but because of improved electronics, the fabric was of higher quality, required fewer operator interventions, ran at higher efficiency, etc. The operators could tend about 20 machines vs 10 on the older weaving machines. So, productivity per operator was about 20 – 30 times greater. The skills of the weaver did need to be upgraded and they became more of a problem solver and scheduler rather than a roving set of hands and strong back.

The more recent numbers for speed on a 190 cm wide loom for simple fabrics (which comprise about 80% of fabrics made) is around 1100 picks per minute with one machine doing close to 4000 ppm. Interestingly, the 4000 ppm machine is much quieter than a slower machine because it required a significant technological rethinking of the weaving process.

The challenge that I witnessed around 1995 – 2000 was that many countries used state resources to support their country's textile industry as the industry was seen as the first rung on the industrial ladder. The governments essentially paid for the equipment, which as you rightly stated, did not care whether it was in USA, Honduras or China (although having seen some installations in Central America, I think those machines would have somehow smiled if moved to a US facility). As the industry became more capital intensive, the cost equation moved from one which was dominated by raw materials cost and labor cost to one that was driven by raw materials cost and deprecitation costs. It did not matter whether Bobby in Kannapolis, NC made $18/hour and Ramesh in Southeast Asia made $1/hour because labor is now such a low component. The problem was that Ramesh's company did not have to account and pay for depreciation. And that is not free trade, unfortunately. There were a great number of dedicated and capable leaders and employees that lost their livelihoods because of this situation.

I remain committed to free trade, but this experience will never sit smoothly for me. It is something where trade negotiators need to hammer at in the efforts to at least keep the playing field level. The competition is good for the consumer, but the producers need to be playing by the same set of rules.

Again, a great talk and I appreciate your making it available to us. I will keep your admonitions regarding skills for our kids in mind – already got the reading thing covered as we agree it is the most fundamental skill.

As for what kids should be learning, that's obvious: lobbying (or "advocacy" in PC-speak). In the future, it's a skill they're really going to need, because he who lobbies last, finishes last.

Kebko,
That is a pretty accurate comment as to the split personality that people have/had about the textile industry. Modernized plants were pretty nice places to work – they were clean, well-lit, safe and air conditioned (some dyeing operations were still without a/c and my first real job was in a dye house where summertime temps were well above 100F). I was in some pre-modernized plants and they were pretty dismal.

All this textile talk is making me pick up a faint smell of cotton.

Interesting speech. I've seen you several times. You're better with an adversary. This group stood as a surrogate, which worked for you..

I think you and Newt would make a good match in a traditional format …

Nice jab about your three books. Everyone of them is well done even though I am a bigger fan of your first two.