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View Diary: of Wall Street and of Bain (20 comments)

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  •  It was well before the Reagan years that the trade (6+ / 0-)

    deficit had begun to swing towards an imbalance.

    As I wrote here the trade deficit had begun in the early 60's as the world moved towards things like 'free trade'. Governments saw free trade as the tool that would spur massive economic growth and saw any tariffs or duties on exports and imports as a way to punish nations that would not comply.

    Starting slowly as the free trade mantra caught on like wildfire we began to see manufacturing jobs slowly bleed off. Even under Reagan this was a slow peeling compared to the late 90's when things like NAFTA were signed into law.

    Also, Ford also understood the second and their tier of manufacturing. His business focus was not just on the car itself or the paying of the worker to purchase said car. He understood very well that in order to build that car you need steel made from workers who are also paid enough to purchase your car, machinists making all manner of parts also paid enough to purchase your car, etc.. He understood that around his industrial footprint was a plethora of tertiary industrial items.

    However the advance of globalization has made it so that the corporate state no longer operates in a single state. What loyalty does a multinational corporation have to a nation state? See Ford had stake in keeping steel production local and close, had stake in keeping all manner of tertiary industrial items related to building autos close to his, so tariffs and duties were set to even the playing field.

    When you eliminate that loyalty, see what we get in the form of trade imbalances.

    Excellent post Ken, I always enjoy your thoughts.

    --Enlighten the people, generally, and tyranny and oppressions of body and mind will vanish like spirits at the dawn of day. - Thomas Jefferson--

    by idbecrazyif on Fri May 25, 2012 at 06:18:31 AM PDT

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