Thursday, 30 June 2016

Trump and Hillary do not know what Free Trade is, and they hope you don't either.....


Thoughtful international trade practice or Tomming like any common demagogue to the poor union workers who have been sold out by mean old businesses?  What is this debate or discussion about?  Both of these horrid candidates are counting on what they sense is the stupidity and ignorance of the electorate.  

    Mr. Trump, and to all those who believe that Free Trade has anything to do with the movement of American companies to foreign operational venues, please consider these facts:

     (1)   The vast and overwhelming majority of jobs that have been lost in the Rust Belt's auto industry have been transferred to Confederate States.  Why?  Because there is a better labour environment in the South.   The people there have a better work ethic.  They might move a bit slower, but they take and give orders without the need for some sloth of a union thug "looking out for their interests".
     The tax structure for companies and wage earners in the South is much more favourable for the productive than in the North.   Before the nationalisation of General Motors and Chrysler the valiant union workers were being paid, with benefits and secondary costs paid by the company, something along the lines of 70.00 yankee dollars per hour to bolt bumpers on Oldsmobiles.

       (2)     We are told that "the big companies want to send all the jobs to Mexico".  We are told that the Mexican workers are paid "less than five dollars per day and have no protections and work in sweatshop conditions in the auto manufacturing plants".  We are told that "the Mexican workers have no labour unions to look out for the workers' interests.   And we are told that "...the Mexican workers have taken all the jobs Americans used to do in Flint and Detroit". 

     Once again, many if not most of the jobs lost in the Rust Belt went to the American South.  They did not "all go to Mexico" or even Red China.   Expansion of operations and other strategic considerations both by Mexican and American heavy industry essentially created a huge number of semi-skilled and skilled blue-collar jobs.   While this was going on, direct American automotive production workers numbers increased from 600,000 to 900,000 during the past six or seven years.
     Mexican autoworkers' numbers, for instance, have increased from around 40,000 before NAFTA to nearly 400,000 at this time.   They all have unions,  known as "white unions" (the kind the government and the socialist international people hate) that are established by the companies, and then run entirely by the workers.   Nothing made by human mind or hand is perfect, but the rank and file semi-skilled and skilled line worker in Mexico much prefers this "employee association".   Benefits have steadily increased, along with wages, to the point where the average wage and benefit package for a four-day, forty-hour week in an auto factory in Mexico is around 400 dollars per unheard of sum, even when adjusted for anything....even 10 years ago.

     The Texan working at the Toyota Factory in San Antonio makes considerably more, of course, which is interesting because this is a totally new industry for Texas....the ground-floor to exit-door production of a motor car or truck.   It looks like this for about 4,000 Toyota employees:

Toyota Motor Manufacturing, Texas Salaries in San Antonio, TX
                     Job Title
           Texas Salary
       Production Team Member - Hourly
San Antonio, TX Area
Team Leader - Hourly
San Antonio, TX Area
Engineering Specialist
San Antonio, TX Area
San Antonio, TX Area

     This wage structure in Texas places folks very high on the socio-economic totem pole.  While we have and 8.25 per cent sales tax, there is no corporate or personal income tax levied by the Republic of Texas against her citizens.  
     It should suffice to say that some of these vehicles are exported to Mexico, some have Mexican and Japanese parts, and most are marketed in the United States and Canada.   The movement of this production is aided substantially because there is only inventory and laden to be considered, and no thought has to be given to quotas, duties, tariffs, etc.   We have other facilities, such as a Ford assembly and finishing plant in Arlington and they ship everywhere, and they have a similar wage structure.
         One might also consider that very high end vehicles are shipped directly into Mexico by train and tractor/trailer rigs from the Northern States.  Vehicles such as the Escalade, various Lincolns, and the like used to carry a tariff of 300% of the MSRP sticker.   With NAFTA that tariff went by the wayside.

     Another thing that is certain....the movement of American manufacturing entities into Mexico and other such places "offshore" began long, long, long before the initial efforts to establish a free trade zone between Canada, Mexico, and the United States.   It was a long-time dream of various of the "California Republicans"such as a fellow by the name of Ronal Wilson Reagan, numerous Texans of various degrees of importance, and major agricultural operators throughout the American Southwest.

     Some companies from Japan, Europe, and the United States had been active in establish significant brick and mortar factory outlays even during the Depression, and then again during the post World War II period,  followed by another spurt in during the late 1960s through the early 1980s.  This was long before NAFTA (or the Tratado de Libre Comercio - TLC as the Mexicans call it).   Caterpillar, Ford Motor Company,  International Harvester, Zenith, John Deere, and many others had established wholly Mexicanised, independent operations in Mexico during those times.  McCormick and many others had been there forever.   American agricultural operators had been "doing" onions, tomatoes, okra, and mixed vegetables in several places deep in the interior of Mexico from the 1930s.  In the 1960s companies like the Green Giant and Bird's Eye among others began setting up advanced quick-freeze operations with the intent of selling both to the Mexican market and the United States and Canada.
     In to-day's terms we are looking at perhaps an outlay, in 2016 dollars, of what would have been around 1,000,000,000 (one billion) American Dollars.   All of that, plus the "twin-plant" operation starting in the late 1970s was already very much in place, and was having a profound effect on the Mexican economy as well as the American and Texian entities. By the time NAFTA had been approved, the build-up of cross border industrial and commercial activity was already "....gone 500 miles":


     Then come the pundits, observers, charlatans, demagogues, know-nothings and other assorted experts.   Plants were shutting down in the United States and moving to other places in the world.  Much of the reason was because the American corporate income tax was either the highest in the world or among the highest, and the higher it went, and the more shrill scavengers such as (Sir Edmund) Hillary and Father Obamaham would shriek about ".....make the rich pay their fair share, and the banks and corporations as well....", the faster capital was  frozen up or moved off-shore.
     American business faced headwinds in its own country that curtailed research and development, reinvestment, and other things such operational impediments that caused many businesses to simply re-establish in other parts of the world.   The Great Leveler who intends to teach Free Traders a lesson they will never forget brings his really hideous campaign caps from some place that labels its products with the phrase "Made in China" (aka - Red China).
     As we took note, his most recent project of "Making America Great Again" had to do with a place way, way over in Eastern America, called Scotland.   It is his way of bringing investment and "job development" back to America, we presume.

      Further, the problem with the border, and the building of The Wall is another ploy of demagoguery that places Mr. Trump in a peculiar position.   On the one hand he wants to control the border by preventing the insertion of illegal aliens over that border, and he proposes a military grade wall.  It cannot be done.   The loons from the Earth First Movement, and the Symbionese Ecology and Immigrant Rights Coalition, and the ACLU, and Occupy Every Street will all be out in force.   The Obsolete Press will rally the masses to the commons, the cities, and the fields to vandalise and blockade every effort to build the Wall in a place where a mommy Gila Monster once laid her eggs.
     Mr. Trump, as a consummate self-absorbed egomaniac, has done as Father Obamaham has done, when he pronounces with shouting intonements that "I will build the Wall and make the Mexicans pay for it.....the Mexican Government will pay for it....count on it."   In so promising, he is stating that he will rule by executive order, as would any king, and only the Great Beelzebub knows how he will cajole the "Mexican Government" to pay for such an undertaking.  If it were not so sad it would be laughable.

     Now in quick order.   Canada and Mexico both have a positive balance of trade with the United States of America.  Neither has a positive balance of trade with the Republic of Texas.   Why?  Because we are better, smarter, and just too cool to bake biscuits?  Not really.  Mexico and Canada's populations, combined, come up to half of what the population of the United States is.   They can sell more to us than we can sell to them because we have a bigger market.  
     We sell more heavy equipment to Mexico and Mexico sells a lot more agricultural stuff, such as avocadoes and mangoes and the like.   Most of Mexico has what we jokingly refer to as a 400 - day growing season.   Their harvests have been increasing markedly during the past twenty years.  About a fifth of their production is designed for export, and almost every pound they export the Gringos buy because of it fair price and high quality.   Mexican qualities even in manufactured things they produce have gone up due to the NAFTA.
      At times the Gringos sell eggs by the millions, flown in on UPS and/or FEDEX 747 air-freighters when Mexico's large supply can't quite keep up with domestic demand.   Sometimes Mexico exports natural gas and electricity to us in Texas, and then there are times when we sell natural gas and electricity to them.
     Common shoppers and tourists coming from Mexico buy tonnes of stuff along the border.  In McAllen, San Antonio, El Paso, Brownsville, and Laredo alone their purchases total up one side or the other of 5,000,000,000 (five billion) American Dollars per annum from Mexican cross-border, as well as deep interior Mexican touristic and business visitors.   This sum is not included in calculations by American analysts as part of the import / export mix.   The Mexican economics gurus tabulate hotel receipts of probable American clients to a degree....they do it by sample and projection....and that amount is also exempted from the amount of "cross border or American international tourism" income.

     The Mexicans export several thousand categories of products to the United States, much of it coming over the many bridges we have here in Texas.  They also import several thousand categories of goodies.   We do the same with them.  The trucks never cease....some heading north and others heading south laden with wants and needs of people and businesses on both sides of the frontier.    Much of this activity....the large majority actually....has occurred since the passage and implementation of NAFTA.   The graph below will give some general idea of how the selling and buying by each nation from the other has exploded in the time since NAFTA was implemented.      

1985 : U.S. trade in goods with Mexico 

NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding.

January 1985 1,135.4 1,303.3 -167.9 
February 1985 1,117.1 1,501.6 -384.5 
March 1985 1,260.9 1,698.2 -437.3 
April 1985 1,236.7 1,937.0 -700.3 
May 1985 863.3 1,327.5 -464.2 
June 1985 1,377.3 1,719.6 -342.3 
July 1985 820.3 1,708.0 -887.7 
August 1985 1,405.7 1,461.0 -55.3 
September 1985 1,015.7 1,479.4 -463.7 
October 1985 1,170.8 1,562.7 -391.9 
November 1985 1,214.1 1,647.1 -433.0 
December 1985 1,017.4 1,786.3 -768.9 
TOTAL 198513,634.719,131.7-5,497.0

2015 : U.S. trade in goods with Mexico 

NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding.

January 2015 19,100.7 22,256.0 -3,155.2 
February 2015 18,108.6 22,711.8 -4,603.2 
March 2015 19,835.7 25,648.4 -5,812.7 
April 2015 19,998.4 24,701.8 -4,703.4 
May 2015 19,606.6 24,482.9 -4,876.4 
June 2015 20,448.7 26,920.6 -6,471.9 
July 2015 21,074.3 24,784.2 -3,709.9 
August 2015 19,536.7 24,695.7 -5,159.0 
September 2015 19,486.1 25,330.3 -5,844.3 
October 2015 21,163.6 27,672.0 -6,508.4 
November 2015 18,869.0 24,050.2 -5,181.2 
December 2015 18,516.8 23,154.0 -4,637.2 
TOTAL 2015235,745.1296,407.9-60,662.8

     One can note that we are now doing in a month what we used to do in a year,  each way. The same case is roughly true with Canada - Mexico, and Canada - USA, and Mexico/Canada - Republic of Texas.   These figures, I believe, have been adjusted to constant 2015 dollars.

     We would like to point out that in terms of employment, one thing that is not counted here is the number of Americans and Texans who are employed legally in Mexico, directly and indirectly due to this movement of goods and services between the United States - Texas and Mexico.   That number is thought to be around 60,000 individuals.  The wages and benefits drawn from such employment and/or contractual services provided by individuals are not computed in these trade stats.  Conversely, the number far exceeds that of the number of Mexicans who are working directly or indirectly in the United States or Canada due to the NAFTA - TLC.

    While there are deficits, we have explained that the impact upon economic activity brought on by the increase of trade with Mexico and Canada has employed many times more Americans than those who have been displaced by the disparity between buy / sale numbers between the three nations.   The "displacement" of autoworkers jobs, for instance represents the shift from the labour union dominated North to the right-to-work States in the South.   The fact is that many, many more employment opportunities have been created by the increase in trade, due to the free trade policies brought by the Treaties than have been lost.

    To end up with this overview, we are in favour of strict immigration and naturalisation control, and enforcement of existing laws and established rules concerning such matters.  While we oppose, in general terms, the construction of a physical wall between Mexico and the United States  and Texas and/or Canada and the United States, we urge and support the establishment of a much more muscular interception and enforcement posture on the Frontiers.  In these days it is only rational and correct to avoid committing, essentially, National Suicide by the system we are now suffering.
     We also wish, urge, demand,  jump up and down shrieking and screaming, that "refugees" such as those dissolute broken up families and pseudo-families who arrive from Central America be intercepted and immediately turned around, at whatever expense to Central America.   At a minimum, 90% are arriving due to a carefully crafted plan engineered by marxist elements in the United States, many of  them associated with entities that once could be respected such as Catholic Charities (presently rotted out from the inside with Liberation Theology nutters) and within the structure of the Executive Branch of the United States government.  The simple notion that an all-powerful, chief-executive-officer sitting in the White House can deign to order a change in a law or the establishment of what is essentially a new law should send people to the barricades and cause the arrest and confinement of such a Peronista and/or Castroite inspired maniac.

     The Central Americans should and must be "turned around".  They are not "immigrants" or "migrants".   They are invaders and will quickly come under the control of Mara Salvatrucha (and similar) gangs and other criminal pursuits once they are ensconced in some shadowy corner in Peoria or big city barrio.   Likewise, we stoutly oppose, in the strongest terms the introduction of "refugees" from the Middle East save for those who are Christians, Jews, and others about whom there is clear and evident danger of their extinction.
      The Muslim cohort of the displaced people are certainly more characteristic of "colonists" than refugees.  While our experience with the Muslims in this country has been not terribly negative, it has become increasingly that which is found in Europe.....with whole large sections of major cities that are essentially "sovereign islands" where the culture, traditions, and expectations of the host country are not permitted.   It has been demonstrated over and over that, while the majority of Muslims in the United States are not disposed to violence, there remains a certainty of their approval of changing laws, conditions, and requirements that will permit the replacement by Sharia Law over the present English / American Common Law precepts we now enjoy.   It is also clear that there are large percentages of very militant Muslims ready and very disposed to murder and destroy, all infidels and heretics who will not sincerely convert to Islam.

     We are already heavily infiltrated with radical Ishmaelite terrorist moles, as well as Red Chinese moles and plants who have been inserted into this country for various reasons, none good.   We do not need more.   Every photo of the crowds at the gates that Obama says are just families, women and children, just like our own always seems to be made up of huge majorities of males aged 15 to 50 who are either cowards running from the obligation to defend their country / people, or they are plants from al Qaeda and ISIS who are hoping to blow the guts and brains out of Europeans and Americans and their children.

     There is no law or constitutional requirement that requires this Republic and its citizens to commit suicide.

    With the Mexicans and the Canadians we can argue, disagree, agree, and come to reasonable outcomes.   We do it daily, millions of times.   We work well together, and we have many, many more compatibilities than differences.   We must move wisely between the arguments and choose from the truths those arguments present, and discard the falsities.  To do otherwise is folly.

Enough for a while.   We prepare to return to our little mud-hut on the skirts of the Sierra Madre Oriental, somewhere deep in Nowhere, Rural Mexico.
El Gringo Viejo