Thursday, September 15, 2016

Trump Slams Ford

Once again demonstrating that he has no understanding of the concept of comparative advantage, Donald Trump slammed Ford Motor Company for announcing that it would move all its small-car production to Mexico.

He said the announcement was horrible.

"We shouldn't allow it to happen," Trump said during a speech in Michigan.

"They'll make their cars, they'll employ thousands and thousands of people not from this country and they'll sell the cars right through our border. No tax, no nothing, and we'll have nothing but more unemployment in Flint and in Michigan," he said in the speech in Flint.

-RW

20 comments:

  1. Trump slams the Fed:

    "If it was a choice between the right decision and a political decision... The Fed would choose the political decision"

    "The Fed has become very political... beyond anything I would have thought possible..."

    I'm definitely not a Trump supporter but he's shining a light on the Fed in a way no other candidate, other than Ron Paul, obviously, ever has. I hope he keeps it up.

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    1. Me too. Despite his many faults, he is exposing the rot at the core of the DC/Wall St nexus!

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  2. Mr Chris Whalen predicted a shift to protectionism and away from "free trade" in a speech at the Mises Circle in 2010. Never thought it would be Trump leading the way!

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  3. I don't think comparative advantage is the issue. There is nothing inherent about Mexico that somehow makes it more efficient to assemble cars there, as opposed to something like growing bananas in Honduras rather than Pennsylvania. The workers are simply willing to work for less money because they are used to a lower standard of living. I don't think Ricardo was thinking about this when discussing wine and cloth in Portugal and England.

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    1. In an iron-fisted oligarchy redress against monopolies and comparative advantage is a myth. Either RW is a fool to keep towing this line or he benefits like everyone in the circle.

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    2. Re: Ben Kennedy,

      --- I don't think comparative advantage is the issue. ---

      It is always the issue. The Law of Comparative Advantage is as unbreakable as the Law of Gravity.

      --- There is nothing inherent about Mexico that somehow makes it more efficient to assemble cars there ---

      Clearly, Ford DOESN'T think like you do, and it is their money (and not yours) on the line, so...

      --- The workers are simply willing to work for less money because they are used to a lower standard of living. ---

      That's so quaint! You still think that a higher standard of living means having money to buy more expensive things!

      --- I don't think Ricardo was thinking about this when discussing wine and cloth in Portugal and England. ---

      Yes, he was. The economically ignorant prefer to think otherwise.

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    3. Tax policy and regulations make it more profitable to manufacture in Mexico.

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    4. Mexican workers choosing to work for less than our gov. mandated wage? In Michigan, that would be $8.50/hr. If that is the case, wouldn't this be exactly what I mentioned in a previous post about comparative advantage in that it is artificially created in some cases either by government or in this case, I assume, unions. I'm sure there are people in the US willing to work these jobs with out all the bullshit red tape Uncle Scam provides.

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    5. @Ben,
      so when are you going to start your own automobile manufacturing facility since you clearly think your better at maximizing profit than Ford? Although... they have been doing this since 1903, so I have my doubts

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    6. If comparative advantage means only "it is cheaper to do elsewhere", then it is a pointless concept. Suppose country B mandated slave labor to be used in manufacturing, allowing produces like Ford to manufacture cars for even less money than in Mexico. So what? You could say that there is comparative advantage in "being willing to enslave people". But this stretches the concept into absurdity.

      The insight behind comparative advantage is that less talented people can still find a niche in a global market. That's it. Everything else is better described as rent seeking.

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    7. Re: Ben Kennedy,

      --- If comparative advantage means only "it is cheaper to do elsewhere", then it is a pointless concept. ---

      It is related to productivity and opportunity cost. The reason why YOU don't have to make your own gawdamned shirts from scratch is comparative advantage.

      No matter how much you try, Bob, your arguments against free trade are based either on fallacy, misconception or just plain ignorance of economics.

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    8. I never argued against free trade.

      I never said Ford shouldn't move to Mexico.

      If you scroll up, you'll see that I'm objecting to using a term in a way that I think renders the term useless

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  4. The U.S. doesn't need no stinkin manufacturing base.
    Americans can all become bloggers or immigration resettlement counselors.
    Prosperity !
    Liberty !

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    1. Until the tax policy and regulatory hurdles inside the United States are radically changed, manufacturing will continue to move overseas.

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    2. Mrs K,

      That is not the main driver, K. Comparative Advantage means it would still make economic sense to have certain goods manufactured somewhere else. Things are not as simple as you think.

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  5. So long as third world countries remain poor, poor workers are going to lower wages around the world. Poor countries remain poor because they do not have secure property rights which includes enforcement of long term contracts.

    Further, how many cars and at what price should be built? Thanks to the Fed, we have no idea.

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    1. Not to worry! Trump will tell us! Or we'll be fired!

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  6. Correct me if I'm wrong but Ford was the only of the big three auto makers that didn't take the auto bailout in 2008 right? Perhaps Trump would attack the UAW or the minimum wage as typically unions (which he has expressed his love for in the past) are apart of the reason these manufacturing jobs leave.

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  7. Actually, Robert, it is YOU who does not understand Comparative Advantage (this isn't to say Trump does either, but his gut instinct is right in this case).

    Comparative Advantage doesn't add up when demand curves are not stackable, as proved in 1953 by Gorman.

    Are you actually going to get current on economic thought or stay stuck in Ricardo's highly flawed, WRONG, 18th century model. CA, like much of libertarian economic thought today, is simply axiomatic. It was never subject to rigorous analysis.

    You could do worse than read chapter 7 of Vox Day's "Cuckservative

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    1. are you saying you think Trump has a natural ability to magically digest Gorman, demand curves and Ricardo? That is gut instinct will work similarly while in office?

      From wikipedia on Gorman: "This means that we can calculate an income-consumption curve of an entire society just by summing the curves of the consumers. "

      uh, no you can't.

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