Pop quiz: If Mr. Obama accepts this recommendation, why will he have then have blood on his hands?
Tired Protectionism
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Imposing duties on imported tires will raise the cost of the tires and people will either delay or not purchase new tires. This will lead to more accidents due to tire failure for using tires longer than safe to do! Not only will the person who owns the car with the tires in question be in peril, so will be anyone who crosses his path be similarly in danger.
Anti-dumping duties is where the protectionist storm with errupt.
Right now I believe there are anti-dumping measures recently in place and/or threats on Chinese tires, Vietnamese fish, Korean polyester, Austrian Red Bull (an energy drink)and Indian shrimps. You guys are welcome to complete this list if I've forgotten any.
Is it because the next-cheapest country from which to import tires is run by a murderous regime?
It can't be because it will murder a possible resurgence in American auto manufacturing: the Detroit bailouts already took care of that.
Posted by: Bob D | Jul 1, 2009 10:20:03 AM
The reliability of Chinese products is questionable at best, realistically considerable as junk, and deadly at worst.
It would be the same as staying with their old tires, just without the additional costs of buying unsafe goods.
Posted by: Arthor Bearing | Jul 1, 2009 10:42:04 AM
You mean a murderous Third World regime when you refer to China.
If [politician] accepts this recommendation, why will he have then have blood on his hands?
Because they favored China too much.
Bob D has it right. I'll add this: since the tires in question are the cheaper ones, the hardest hit will be the poor.
I completely disagree with sethstorm. If the Chinese products in question were so bad, why are they out-competing the "good" US products? Basically, what is happening is unions, which are anti-competitive special interests, don't want to compete. See the article below.
http://www.reuters.com/article/politicsNews/idUSTRE55H50G20090618?feedType=RSS&feedName=politicsNews&rpc=22&sp=true
Quote: "The union said some 5,100 U.S. workers have lost jobs because of low-price Chinese tire imports, and another 3,000 jobs were at risk this year. The imports increased 215 percent in volume from 2004 to 2008, hitting 46 million tires worth $1.7 billion in 2008, the union said."
Sounds like the Chinese are out-competing the US companies. But instead of tightening their belts, rolling up their sleeves and offering lower prices to their customers, they are lobbying to hold captive people that want cheap tires. Maybe they need to be better? Maybe cheaper? Or maybe even close down? Who knows? The market is a process and we can't know what is the best way and best producer is unless it is left to be revealed by the market.
The end result of this protectionist stupidity is more economic stagnation as other countries will reciprocate in response to one country's idiotic trade policies. All this does is hold people hostage to politically connected industries. I agree with dave smith, the hardest hit will be the poor.
And in regards to sethstorm's remark: "You mean a murderous Third World regime when you refer to China." I say look in the mirror. China is a murderous regime? Contrast China to the US, which tortures people and is fighting three illegal and unjust trillion dollar wars in Iraq, Afghanistan and Pakistan. Last I checked, China doesn't regularly deploy its military in multiple countries thousands of miles away. China is far from perfect, but to act as if the US somehow a model of goodwill and peace is disingenuous.
Can someone explain why steelworkers are behind the complaints and not tire workers?
I'll also point out that I was pleased to see two dissenting opinions until I got to their reasoning: "This is an industry in which the trend toward gradual downsizing appears likely to continue regardless of the commission's action today". D- gentlemen. See me after class.
Answer to pop quiz:
Bob D was only partially right. The real reason Obama has blood on his hands is because he sacrifices a lamb everyday at noon.
To those like sethstorm that claim Chinese tires are so dangerous, I would offer two questions.
First, what reliable, referenced data do you have showing Chinese-made tires to be inferior to those made in the United States or elsewhere?
Second, if such data exists, why not publicize that data and let people decide for themselves whether the potential savings from cheaper tires are worth the potential risk from less-safe tires?
I'd prefer letting each person judge for himself what is an acceptable cost/risk relationship rather than having the government — which is subject to pressure (and campaign cash) from unions, corporations, etc. — decide for us all?
"First, what reliable, referenced data do you have showing Chinese-made tires to be inferior to those made in the United States or elsewhere?"
Who needs data when you have broad-brush stereotypes?
Not only will people use tires for much longer than is recommended, as Bob D suggests, but people may also look to buying used tires, which can also be unsafe.
Less competition, less incentives to improve tire safety.
Wow they're really making it appealing for me to stop not owning a vehicle. Soon I'll be able to stick it to taxpayers AND the poor? Fantastic
Obama will have blood on his hands because people will still utilize the same budget for tire replacements. They will instead increase the time between replacement, and as a result his actions will have caused more accidents and deaths to have occurred.
Oh, just realized Bob D beat me to it (h/t)
Then for bonus points I'll say that the blood may also come from the workers in China being forced into lower-paying jobs with harsher conditions as a result of decreased sales and companies closing. Additionally if there are counter-tariff actions that will increase the prices of goods, it will likely end up on commodities which will hit the poor particularly hard.
As an aside, last night I actually heard someone on TV argue that the worst part of our consumerist society is that we have so many choices of things to buy *facepalm*
Steelworkers would complain because the tires use steel belts in their construction: steel-belted radials. Tires manufactured here would be more likely to use US steel, especially if imported Chinese steel is hit with a tariff. However, tires manufactured in China and then shipped here could contain as much Chinese steel as anyone could wish for and there'd be no hit for that steel content. So they have to target the end product.
Odd that they're going after tires, though, instead of arguing for more steel-based construction or something like that. But I guess tires are a more even, consistent market. Skyscrapers don't wear out after 80,000 miles.
Quote from the referrenced article:
"This is an industry in which the trend toward gradual downsizing appears likely to continue regardless of the commission's action today," the two dissenters said in a statement. But they joined the majority in urging that the Obama administration provide aid to displaced tire workers under the U.S. Trade Adjustment Assistance program."
See there, gents, nothing to worry about. Even the dissenting members recognize that the trend in the tire industry is to downsize; so, in effect sometime in the near future tires will be so downsized that they cease to exist as a practical means of running an automobile on. My Honda will not get very good gas mileage on 5" tires, but what the hell, it beats walking.
Look on the bright side though, by the time tires become so downsized that they can't even fit on an auto axle, Obama and his administration will have the price of gas so high, you won't be able to crank your engine, much less drive somewhere.
Oh well,
and the beat goes on. Just looked at the Foreign Policy Magazine and there is the announcement that China is considering banning the import of American Chicken.
Trade war, lock and load!
Could it be Chicken blood that he'll have on his hands? Since China may block imports of U.S. chicken.
http://online.wsj.com/article/SB124640941047877333.html
quote from the article:
"Trade tension between China and the U.S. heightened earlier this week when the U.S. International Trade Commission recommended imposing punitive duties of as much as 55% on low-cost Chinese tire imports because they are disrupting the U.S. market, in a move that could sharply increase costs for consumers. GITI Tire, China's largest tire manufacturer, has called the move "decidedly protectionist" and said it would take its case to President Barack Obama."
Don – nice title (maybe obvious, but still good).
It's scary how such stupid people get in such influential positions.
It's infuriating that my hard-earned money is stolen and used to pay these stupid people.
"First, what reliable, referenced data do you have showing Chinese-made tires to be inferior to those made in the United States or elsewhere?"
I don't have data showing inferiority. Neither do I have data showing equivalency. Given the extremely poor quality control for Chinese manufacturing that has caused the deaths of people (due to contaminated warfarin and herbal products), the food poisoning deaths of hundreds of animals, and the presence of high levels of poisons in toddlers' toys, I'd say that we should be far more concerned about the quality of Chinese goods. An unravelled t-shirt isn't a big deal; an unravelled radial tire is.
I'm all for free trade except with enemies. China repeatedly has shown that it is playing a long game for power and conquest in Taiwan, South Asia, Southeast Asia, Indonesia, the Philippines, and Australia (which is expanding its navy due to the Chinese threat). By buying and holding massive amounts of treasuries, China has an economic club to hold over our head if we try to intervene in future conquests. Will we help Taiwan tomorrow if China invades, or will we worry about the adverse financial effects if China dumps our treasuries? The fact that we did not come down hard on China after the deaths of our pets and then our citizens shows how weak-willed (and weak-minded) we are. We are following the adage of buying the rope that we'll be hung with.
Dr. T, what would happen to CHINA (financially) if they tried to "DUMP our treasuries"?
Someone probably already said this in the comments, but, regarding the question "why will Obama have blood on his hands":
By doing away with all that pesky competition, the U.S. etc. manufacturers will have less incentive to provide a cheaper and safer product. Tires have evolved significantly since they were first employed; tread, materials, methods of sealing, re=enforcing devises and other innovations simply would not have been introduced if producers had no incentive to use their resources developing new and better products.
Sam Wilson: The United Rubberworkers Union merged with the United Steelworkers Union sometime in the 1990's.
Since all but two (Goodyear and Cooper Tires) tire manufacturers are foreign owned, it is one group of foreign competitors trying to keep a second group of foreign competitors out of the U.S. at the expense of U.S. consumers. Or, since Cooper is only in the replacement market, this mainly helps one company.
Favorite quote from article: "In our opinion, these tariff levels would remedy the market disruption that we have found to exist."
Sounds to me like the market is working just fine. Weaker companies are being driven out by more efficient competitors.
Also, I find it funny that we have a panel on "trade" that is recommending trade restrictions…only in government would you ever see something like this…
"Also, I find it funny that we have a panel on "trade" that is recommending trade restrictions…only in government would you ever see something like this…"
-HG
Idiots! Every last one of them…
If Chinese tires are so inferior, then the domestically-produced tires have a competitive advantage. Let them use that.
When I talk about free trade, and in this case specifically, imported tires, I'm not saying that I personally want to buy one product or another. I'm saying it is my choice. I'm willing to pay extra for better tires; someone else might have a different set of comparisons and values. Who am I to impose my values on someone else?
If cheaper tires are coming in from China, then other companies need to decide how to respond to the competitive pressure. That's where innovation occurs. Protect certain companies or industry sectors from competition and watch innovation disappear.
Congratulations to Bob D for getting it right, right at the start.
And, of course, it goes beyond that, as trade war inexorably leads to shooting war.
"Protectionsim and autarky…not only lower productivity…but…create international conflicts…for which no peaceful solution can be found. It was easy to prevent unarmed men and commodoities from crossing the borders; it is much more difficult to prevent armies from trying it."
Mises
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The Tweel.
Dr.T;
"I'm all for free trade except with enemies."
Peace is a natural effect of trade.
-Charles de Montesquieu
Dr. T,
After the conclusion of the Civil War, Abe was quoted as saying, "There is no force on Earth powerful enough to drink from the Ohio River without our permission."
I wonder, is there a "force on Earth powerful enough to cause our collapse by using Treasuries, if we choose not to honor those Treasuries?"
In other words if China or any other country attempted a hostile takeover of the USA, we still have the baddest military on the planet, should we choose to use it.
Some might say that it is thinking like that that got us in trouble in the first place; maybe so, but it is thinking like that that can also save our ass for a second try.
"This will lead to more accidents due to tire failure for using tires longer than safe to do!" – Bob D.
Protectionism aside. Obama wouldn't have blood on his hands in this case as every car owner has a duty to everyone else NOT to drive an unsound car. If a driver does deliberately drive a car, has a blowout, hit and kills some pedestrians then he is fully liable, period.
Posted by: J Cortez | Jul 1, 2009 12:01:11 PM
Interesting that such sentiment is used ("hold people captive") to give legitimacy to such country and their practices.
But as Gil had pointed out, Obama will not have blood on his hands (at least not due to this incident).
If Chinese tires are so inferior, then…
…you flood the market with them until they are the only choice. Quality goes down, and so does choice.
This is protectionism plain and simple.
Tires are a capital intensive business .. The reality is that the factories that have closed in the USA are a result of many factors.
They are typically very old.
The factories that 'closed' were mostly in 2004 – 2006 long before the current reported surge.
If the Unions (who are mostly concerned about their own interest, not their members) were more interested in working with the companies that provide their jobs to make them more competitive rather that pushing riduculous work rules are other "non paycheck" benefits down the throats of their employers then they could stand up and fight in the market for their jobs.
Unfortunately, the Chinese have a much longer term view of the value of capital and US companies cannot get access at anywhere close to the same cost of said capital as the Chinese..
But we do pay out Billions of dollars in bonuses to the suspender toting geniuses residing in Wall St. Now that is a good use of capital … NOT!!
"…you flood the market with them until they are the only choice. Quality goes down, and so does choice."
-SS
Seems simple enough… Now, give an example where that has EVER happened.
Dr. T, what would happen to CHINA (financially) if they tried to "DUMP our treasuries"?
Posted by: MWG
China would take a massive loss. But, don't you think they have been preparing for that? I believe China would readily risk twenty billion dollars to conquer Taiwan free of US intervention or to snag the Spratley islands from the Philippines and get access to the oil.
I wonder, is there a "force on Earth powerful enough to cause our collapse by using Treasuries, if we choose not to honor those Treasuries?"
In other words if China or any other country attempted a hostile takeover of the USA, we still have the baddest military on the planet, should we choose to use it.
Posted by: vidyohs
My point is that with our already weakened economy with its 11 trillion dollar debt, the threat of an economic attack might deter us from intervening when China starts grabbing territory. We'd still have our military and could intervene, but would Obama do so? Does he care enough for Taiwan or the Philippines to risk an economic showdown with China?
I believe Obama will find it difficult to resist pandering to the unions. That in turn will allow the Chinese an opportunity to provide Mr. Obama with an object lesson regarding economics and free trade.
Right now GM is selling a lot of cars in China and anticipate increasing that substantially over the next few years. What happens if the Chinese change the rules of the game to punish the US and GM?
Now we have the prospect of GM losing money in China as well as the US, which hurts the union guys and the taxpayers.
The symmetry is beautiful in a slow motion train wreck sort of way.
"I believe China would readily risk twenty billion…"
-Dr. T
China holds about $1.4 trillion in US debt. It would cost them a hell of a lot more than $22 billion.
Dr T,
I understand what you're saying and to a point you have a point (ouch), but let me try again.
If you come to me and say, look you owe me money, now pay up.
And, I say back to you, GTF off of my lawn and don't come around again or I'll take this loaded 45 in my hand and blow your head off.
What is the status of the debt?
Then you say to me, okay, I'll just make trouble for you in your neighborhood.
And, I say back to you, okay here is my reply. I aim and pull the trigger.
What's the status of the threat?
Yes dealing with the threat in this fashion is not going to win one any popularity contests, but as the last resort it keeps one operating while the threat is removed.
Yeah, it may mean other threats will arise but all those who threaten you remember that you did pull the trigger. That's an eye opener, yes?
Risky business threatening those who will go the distance.
Abe is still correct, the Chinese can't drink from the Ohio river unless they contribute to Obama's next presidential campaign.
I get it now, America should just import things and everything will improve somehow. Sorry to be so slow but how are lousy Chinese tires going to save lives in the USA. Here is an example of the great well made Chinese tires. According to a letter FTS sent to the National Highway Traffic Safety Administration, the Hangzhou tires at issue were sold under at least four brand names — Westlake, Compass, Telluride and YKS — in these sizes: LT235/75R-15; LT225/75R-16; LT235/85R-16; LT245/75R-16; LT265/75R-16; and LT3X10.5-15. These were recalled after 2 years because China did not inform us that the company deliberately did not add a gum strip and the tires fell apart. It appears that most of the posters here either work in education or government and have no idea what the hell is going on as far as our trade deficit and loss of decent paying jobs. I guess if you look hard enough, you can find some fancy theory as to how everything will work out while the USA goes down the drain.
HERE IS HOW I WOULD END THE DEPRESSION IN AMERICA OVER NIGHT?
I want give you something to think about.
It is really a funny thing that the all the Highly Industrial Countries are all affected by this Financial Problem. All of these Industrial countries have one common thread that runs though all of those affected countries. However, the only difference is the degree of the Financial Problem in each country.
All the Industrial Countries of the World have been sending all their highest paid Jobs off shore to China in search of the lowest wages.
This has been going on for 15 years, every since all other Industrial Countries of the World followed America in to joining the WTO and canceling all their Import Tariffs.
America over the years has proven to be the best country in the whole world for creating new jobs, that’s why America was the wealthiest Country in the world till we joined NAFTA and the WTO in 1992 and 1993 respectfully.
Here is the problem; as fast as America creates new Jobs the Politicians advocate sending all of these higher paying Jobs off shore to Mexico, India or China in the name of Free Trade faster than America can create them.
That’s why China a third world country 15 years ago is getting much richer on the backs of American workers and America is going Bankrupt, it’s that simple.
What is the America Politicians Thinking? They are either being bought off by the Big International Bankers, International Manufacturing Companies or just plain stupid. I got a feeling it is not the latter.
I’ll bet Americans will have a change of heart about Free Trade when they have lost everything and are standing in the Soup line with their children.
The final analysis is that American Workers ends up working at Wal-Mart as a check-out or at MacDonald’s flipping homburgs and China grows much wealthier and militarily stronger every year.
If that’s not enough the Politicians all refuse to build a concrete wall on our southern border to stop the Drug Pushers, Illegal Aliens and Terrorist from entering our Country Illegally.
What the hell type of Politicians do we have in Washington D.C.?
They are allowing more Cheap Illegal Drugs to flood our country through our southern border and drug pushers killing each other on our streets. Then all these Illegal drugs are allowed to flood our streets to addict all of our young children.
These Illegal Aliens who can’t speak English or don not even have elementary school education are causing the deterioration of our Wages standards in America and taking advantage of Free Medical Services.
In the end our children will have minority status in our great country.
What would you think of your Father and Grand-Father had they left you in such a position?
Then at some point in our future you can bet one of those terrorist will walk a weapon-of-Mass-Destruction across our southern border and kill a million or more Americans.
The Question is not if this will happen? But when it will happen?
The bottom line is that the whole world wants America to stay in NAFTA and WTO because they all want some of those High paying America JOBS that our politicians are moving off shore to the cheapest wage country.
Everyone keeps saying; Harry why are you preaching Protectionism, that is what, caused the Great Depression back in 1930s.
I say to you; “That’s Absolute Bull S-H-I-T.”
You know when they tell a lie often enough it will in time become the truth.
They all say that because they either didn’t check the history of American Free Trade or they are benefiting in someway from NAFTA or WTO.
Yes, America did pull out of some International Trade Agreements by passing Smoot-Hawley Tariff Act passed into law on June 17, 1930. That’s exactly what I am suggesting we do right now.
The truth is it had absolutely nothing to do with causing The Great Depression.
Read this you will know exact how Smoot-Hawley Tariff Act, affected THE GREAT DEPRESSION:
Earlier today I visited the National Bureau of Economic Research’s Macro history Database. I clicked on Chapter 7 and then looked at the value of U.S. imports and the value of U.S. exports for each of the 120 months during the 1930s.
Turns out that for only 18 of the 120 months of that dreary decade did the United States run a trade deficit (that is, imported more, value-wise, than it exported). For each of the remaining 102 months of the decade of the 1930s the U.S. ran a trade surplus.
On an annual basis, the only year of the decade of the 1930s that the U.S. ran a trade deficit was 1936; in each of the other nine years the U.S. ran a trade surplus.
So, you see during the Great Depression American Trade Deficits was exactly the opposite in 1930s as they are right now.
This is nothing more than a 5th Grade mathematic problem.
America must pull out of NAFTA and the WTO to Survive. Here are the International Trade Balances for the year 2006. YOU FIGURE IT OUT FOR YOURSELF….
In 2006 America Exported $1,440 Billion Dollars worth of Jobs.
In 2006 America Imported $2,200 Billion Dollars worth of Jobs.
In 2006 America Imported $386 Billion Dollars of Crude Oil.
If America just stopped exporting everything in 2006 we would have LOST $ 1,440
Billion Dollars in Jobs.
America Imported ( $2,200 minus $386 (Oil Imports for 2006) = $1,814 Billion Dollars.
If America just stopped Importing all Manufactured Goods in 2006 we would have GAINED $ 1,814 Billion Dollars in Jobs.
The Question is: Would give up $1,440 Billion Dollars every year if you were guaranteed to receive $1,814 Billion Dollars in return?
That would be a Net Total Increase of $ 374 Billion Dollars of new Jobs created every year in America. These newly created JOBS would cost America absolutely nothing.
That is assuming America did not Export one penny worth of goods during 2006.
What’s the best way our politicians can create NEWS JOBS in America?
“STOP GIVING THEM TO CHINA”.
Look at all this bailout money our politicians are borrowing from China to Bailout all of their CFR buddies, the International Banksters and the Wall Street Gansters.
This is laughable and will only make things worse in the end. These bailouts will be a yearly advent and America will go farther and farther in debt to China.
The day America Pulls Out of NAFTA and the WTO, you will see all of our problems solved over night. All those International Manufactures will bust their A-S-S to bring back all those jobs they sent to China. Remember America has the Biggest and the wealthiest consumer Market in the whole world.
I am sure America will get a lot of flack for doing this. But, America must do this to SURVIVE or be totally destroyed.
Thank You, For the info.