The Hypocrisy of Helping the Poor?

Do you think this author has his point?

Somehow I think he points out the problem but does not have a good suggestion on how to solve the problem.

http://mobile.nytimes.com/2015/10/04/opinion/sunday/the-hypocrisy-of-helping-the-poor.html

He seems to think “globalization is the search of new plantation.” The large, well-known Anerican companies enrich the people in China, India, etc. while impoverish most American poor.

Toward the end of this somewhat controversial article, he said that, ironically, some foreign manufacturing corporations like Mercedez, BMW, Kia, Hyundai, etc., may come to America to “rescue the poor” (while benefiting these corporations at the same time of course) in the Deep South of our country.

Please just concentrate on the discussion of our social woes and possible solutions, rather than on issues that are considered as being too political.

Hmm…there may be not many CCers who live in the Deep South like the Delta now so few here know what it is like there. But I met one coworker who grew up near there and swore that he would never want to go back and live in the rust belt area again.

Individuals may have altruism but corporations only have greed.

What is the reason that some companies like Mercedez, BMW, Kia, Hyundai still think it is profitable to have their manufacturing facilities in our rust belt but many other American (and foreign) companies think it does not make business sense to have their factories here? Does our “financial system” (or our investment community) only support the companies with a higher profit margin , but not some other foreign, second-tier companies? Maybe the latter are only capable of running their business with a lower profit margin?

Actually, in recent years, I heard many manufacturing companies in China may soon consider to move to another “plantation”, because China is no longer cheap enough. So the corporation is the problem because it always pursues the highest profit margin (as a corporation should do – it is “for profit”, not a charity, after all.) But we know an overly socialist country could have a problem too.

Do you agree at this (regarding: what force lifts 600 millions people in China out of poverty despite all the corruptions there):

Perhaps it’s because until only a year ago, high oil prices made it less attractive to transport bulky cargo. In contrast to bulky automobiles, Apple’s products (Apple is mentioned in @mcat 's NYT article link) are very high value + very volumetrically compact = very cost effective to ship.

In addition to offshoring its manufacturing jobs, Apple also offshores its tax liabilities:
http://www.dallasnews.com/business/technology/headlines/20130520-apple-avoids-billions-in-taxes.ece

It never ceases to amaze me how the kumabaya crowd that vilifies other industries, so slavishly embraces Apple.

Good observation on automobiles being bulky and Apple’s products being cost effective to ship.

Do you think this will work to some extent (even though not perfectly)?

Suppose that a company, no matter where it is located, sells N dollars of products to a country. That company needs to pay a certain percentage of N dollars to this country as its privilege of selling its products into the market in this country.

I think it is a slight variation of the plain old “customs tax.” But the small difference is that both the companies in the country (either the HQ only or all parts of the company) and the companies outside of the countries will all have to pay this tax. The tax is used to benefit all the people in this country. Do not buy into the businessmen’s argument that this will create the “trade war” or “the economic pie will become smaller.”

I heard that, in the past 50 years or so, many countries trickily used this manuvre (even an unfair variation of it) to make their countries economically competitive quite quickly, within a few decades. The first example was Japan. And then many countries copied its strategy. They used their domestic consumer market to protect and boost their homegrown industry, especially when the industry was still in its infancy stage. The US might be one of the few countries which does not use its consumer market as a leverage to benefit its own industry and indirectly benefits its people. We open up our market for all others to “share” – the pie will be larger as some may claim. It may be indeed true that the pie is larger – but the pie is mostly eaten by the few on the top who owns the capital.

I am not sure whether this will work. But the goal is to balance these two goals: 1) The pie will be larger. 2) Not only the few at the top eat the most of the pie. But I do not know how to achieve both goals. I intuitively believe maybe compromise may be the key. That is, neither pursuing the largest pie, nor trying to distribute the pie evenly to EVERY one (but try to distribute it to a higher percentage of people, not just the few on the top.)

Of course, that means that their domestic consumers were subsidizing those of the domestic businesses whose products would have been uncompetitive (in price and/or quality) versus foreign competitors.

Consider how people who need Daraprim are subsidizing the protected-from-foreign-competition domestic monopoly provider of it.

mcat2, the deep South is not the same thing as the Rust Belt. The Rust Belt is an economic region that encompasses Illinois, Indiana, Michigan, and Ohio and Pennsylvania.

The off-shore auto companies are here courtesy of President Ronald Reagan. Remember, the Japanese firms were whooping the beejeezus in sales, out of GM, Ford and Chrysler by the mid-1980s. Reagan agreed to caps on imports. What was little noticed is that the caps constituted numbers HIGHER than the Japanese had been heretofore selling in the U.S.

Don’t know if the caps for imports are still in place, but yes, the Germans and the Japanese realized that opening plants in low cost U.S. states was good for the bottom line. And you can thank the politicians in Alabama for upping the stakes by giving away the store to attract international auto companies.

Hypocrisy is the wrong word, but I’m not sure what the right word is. (BTW, the link took me to an account login page but I’ve read the piece by noted travel writer Paul Theroux.)

It’s a definite social good that China, India, Brazil, Indonesia, etc. have become better off, just as its a definite social evil that so much of the Arab world (and beyond, all the way to Afghanistan) has disintegrated. I think that’s unarguable.

And it’s unarguable that change has cost. I think Theroux is bemoaning the cost of change and our indifference to it. That we are indifferent to the cost is not only undeniable but part of the argument made for change: that it costs but the eventual good outweighs the cost.

Have to note it’s an irony that many free trade agreement supporters, notably of Nafta, were Democrats and opponents were Republicans and one effect has been to hollow out Democratic state union employment thus enabling Republican gains.

But I also think it’s natural to overlook problems closer to you. All countries tend to do this and I doubt we’re worse. It’s easier to simplify issues to something like “x is bad”, removing the complications we know exist for issues in our own neighborhoods, states and country.

Theroux’s piece focuses on the costs here of raising wealth in the rest of the world. He can’t talk about the solution because one argument made in favor of Nafta, etc. is that there is no solution: low cost countries and the globalization of the supply chain have made it easier to shift jobs elsewhere.

But another aspect comes from the two places where I’ve spent most of my life. I grew up just outside Detroit and my family was deeply connected to the city itself. The auto industry was partially decimated by overseas competition, meaning actual imported cars, but what then happened was that jobs went to other parts of the US: as the Japanese, etc. companies expanded into US production, they located where they got tax breaks, utility cost abatements, etc. (and, yes, somewhat lower wages but that is overstated because the UAW negotiated tiers of wages). Intra-US competition has done more to kill Detroit than competition from Asia.

I live now in Boston. The mills of NE were the great industrial plants of the 19thC. They left, first moving south and then overseas. A big reason for the move south, which began in the 1880’s, wasn’t labor cost but proximity to workers and markets. Have to note as well that most of the mills by far were essentially commodity weavers: smaller mills that produced specialty products (higher quality niche fabrics, etc.) remained in the NE (and the South) until the 1960’s-70’s. It’s interesting to note that Italy has retained a fabric cluster by focusing on niche fabrics. People now might argue that NE is, a hundred plus years later, better off for losing the mills - which are now, where standing, converted into office parks, housing, even museums - but it took decades of loss and poverty. And just as importantly: the mill towns themselves were poor back then, back when they produced so much; the capital and the bosses were located in Boston and NYC and some other richer places with the workers filling Lowell and Lawrence.

We are completely unwilling to stop preying on our neighboring states. One of my nephews makes his living arranging for facilities to move to where they can get the best deal. We talk a lot as a nation about competition among the states. There is a cost to that.

The article mistakes corporate fiduciary responsibility with personal social responsibility. Tim Cook as CEO of Apple, has the fiduciary responsibility to be the steward of shareholder value.

Because he happens to come from the state of Alabama doesn’t mean he’s morally bound for the rest of his life to give benefit to Alabama.

Great points, Lergnom. Lowell isn’t all the way back but the rise of UMass-Lowell has definitely helped. Of course, the tech boom brought prosperity to Greater Boston generally.

@mcat2 I grew up in the rust belt…when it really was because of all the steel mills, many of which have closed. Most of my family loves there still. I find YOUR comment more offensive than anything written in the article, especially since you don’t know the difference between the rust belt and Deep South…and have never lived in either place.

You know…both places have their strengths and weaknesses in terms of being a good place to live for everyone. The only places on the planet are NOT the east and west coasts.

Companies like BMW, Mercedes, Porsche are moving (or have already moved) headquarters to Atlanta (and Kia has a big plant in GA) because they are offering great incentives and it is a fabulous place to live. Very affordable, good climate, etc. Weren’t you just yesterday whining about your inability to afford to buy a house where you live? That’s not a problem in many of the areas of the south, including metropolitan areas. So please stop talking out of both sides of your mouth. Those comments about the “deep south” are insulting. Ever visited Chattanooga, Charlotte, Jacksonville, Atlanta, Charleston (well when Charleston isn’t being flooded-- so sorry Charleston)? They are charming. Your biases are showing.

Mcat owns a house in the south, perhaps Texas, IIRC.

Right @DrGoogle

So mcat2 has the option of moving right back into that house…or selling it and moving elsewhere when he retires. There are many, many folks who are not as fortunate as he is.

Wow, you guys are really hammering @mcat. If I recall correctly, he is not native to the US and probably isn’t so familiar w geographic nicknames.

To be honest, I’ve heard of the rust belt but could exactly tell what states are involved. Same with the Deep South except maybe Alabama where I’ve travelled for work related. Other than Austin in Texas and Huntsville Alabama are the two places I’m familiar. I’ve been to Pennsylvania but not aware it’s a rust belt. I know definitely Michigan is in the rust belt and that’s it.

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