Tuesday, October 12, 2010

Chinese Garlic . . .

A few weeks ago I went through my annual ritual of harvesting basil from my garden to make a year's worth of pesto sauce (basil + olive oil + garlic which I blend and freeze into cubes for later use).  This year my garlic did not do well, so I went to the local grocer for the garlic.

Surprisingly, in spite of all the garlic that is grown locally, the only garlic I could find came from . . . China!

Not having the time to shop the farm stands, I reluctantly purchased the Chinese garlic even though the possibility of contamination from poorly managed Chinese landfills crossed my mind.  Admittedly, it was good smelling garlic, and the price was right  . . .  but it got me thinking about the increasing prevalence of foreign-grown produce on local shelves . . . the inconvenience attached to finding locally grown produce . . . and the decimation of local agriculture.

Something is very very wrong when it is easier to purchase garlic grown 12,000 miles away than garlic grown 12 miles away.

Those thoughts led to thoughts about the decline in locally produced goods, such as men's suits from Joseph and Feiss, radios from General Electric, garden tools from Union Fork, and textiles from many now-closed plants.  In fact, I recently replaced my old broken Union hoe (made locally) with a new Union hoe (made in China).  It was upsetting.

"Free Trade" has been a mantra chanted by both political parties in recent decades.  Not having majored in economics, it is difficult to counter the statement in Wikipedia:
"[T]he broad consensus among members of the economics profession in the U.S. is that free trade is a large and unambiguous net gain for society."
"Consensus" is often a matter of perspective. I can accept the above statement if  "gain" is confined to getting products into the hands of consumers at the lowest possible cost, and "society" is global.

The reality, however,  is that "society" is not global. Different cultures place importance on different things, which is reflected in their countries' laws.  We have laws to protect the environment, and to protect workers, but other countries do not.  Our laws raise production costs here in relation to those elsewhere.  That causes production to move elsewhere.  While some Americans complain that other countries engage in unfair trade practices by subsidizing their agricultural production, subsidizing strategic industries such as steel production, or by manipulating their currencies, aren't we doing the reverse with our environmental and labor laws?  If we did away with our labor and environmental protections, would that not arguably be a subsidy?

To paraphrase a common saying, "Free Trade isn't Free."

The cost is to our culture and the things we consider important.  What we gain in a clean environment and decently paid workers, we lose in jobs and wealth. . . .

And ultimately lose in National Security.

It is simply amazing that national leaders seem clueless to the security implications of Free Trade.  With most of our manufacturing capacity -- and increasingly agricultural capacity -- exported offshore, what is left to protect us if we get into a war?  We survived and succeeded during WWI and WWII because we had peacetime manufacturing and agricultural capacity that could be converted to wartime use.  What is there to convert now?

Software engineers cannot feed or clothe us.

We are vulnerable and need to do something about it.


buzzer said...

This is central NY. We're landlocked and many of the fruits and vegetables in our grocers are not local. Most of it came in on a VERY long truck ride.

And people (not from here) wonder why food tastes so bad/bland here. (Aside from the fact that everyone waters down their red sauce.)

Anonymous said...

If u don't want Chinese produce, then stay out of WalChinaMart. No way will I buy produce imported from China. God only knows what they're doing to it as far as fertilizers, growing practices, etc.

Anonymous said...

Excellent post! I couldn't agree more. 12 miles vs. 12,000 miles is a travesty.

Dave said...

Two recent "Buy It Now" purchases on eBay arrived here within a week of ordering from Hong Kong. CAT5 "blue wire" to connect PC to router, 50 feet. Price $6.98, $1.95 shipping. Compare to Best Buy locally, $39.95 and five dollars gas for the trip to the store. Second, an RJ45 female/female plug, for extending a CAT5 cable. Price $0.99 from Hong Kong, Free Shipping. Best Buy price, $8.95. I'd say Best Buy is making a lot of money. Customer service is excellent, based on purchases from Hong Kong I've made going back a few years. They simply ship you a second item if you have any trouble and you don't have to ship back the original. I'd say there are folks in the Far East who know how to make money.
Almost every consumer item you can buy is made the Orient. I don't know why Walmart gets a bad name for selling the Chinese stuff every other retailer sells. America still out-manufactures everyone, I believe, but not at the low end.
I'm of the opinion we should let those who do things best and cheapest succeed. If we're worried about garlic grown in heavy metal contaminated soil (and we probably ought to be), the feds could gear up to test and otherwise ensure the food we're buying from the Orient is free of contaminants. The USDA did that for years.

Anonymous said...

I purchase my garlic at the Little Falls Garlic Festival each fall. I purchase enough to last through the winter. Locally grown, marketed and consumed. Also, the flavor is incredible.

Strikeslip said...

I've been to that festival -- It is fantastic.
Did you try the roasted garlic ice cream?

Anonymous said...

We should be accurate in our understanding of our economy. America is still the world's leading manufacturer. One can debate the future and trends but not misstate the current.

Strikeslip said...

Whether we are the worlds leading manufacturer or not is a matter of perspective and can be debated (measured in dollars, pounds of goods, or what?). The key here is whether or not we are self sufficient.

Look in your closet... Where do most of your Clothes come from? We know that we do not produce sufficient domestic oil to meet our needs. In New York State we would not have sufficient electricity if we did not import hydropower from Ontario and Quebec. Local agriculture has been replaced with that of California (which is vulnerable when the water gets turned off like it did this past year) and more and more foreign produce is on our shelves. The new Ford Mustang is only 65% US/Canada.

We are vulnerable.

Dave said...

A business seeks the cheapest methods to provide a product and maximum profits. That may mean importing energy or products or off-shoring labor. In a democracy, we recognize the right of businesses to do that, but for the good of all government should be curtailing excesses with as few laws as possible.

We could say the government has not done it's job, that we should close the borders on trade, but I can't think of a country that has done so and continued to be solvent.

Unfortunately (or fortunately, if you're a believer in world economics), we must face world competition and meet it with better solutions. Closing off markets is not a great solution. It's like trying to legislate oneself to wealth.

Regarding most manufactured consumer goods, I'm not sure we're all that vulnerable. For one thing, the future of consumer item manufacturing will be very small facilities producing one-of's (think Print On Demand publishing, where you ask for a book at the store and a machine spits one out per your request. With plastics, anything seems possible.) But as I drive through New York State and see mile after mile of wasted fallow land and crumbling dairy farms, I wonder what the hell we're doing distancing ourselves so far from our food supplies.

Anonymous said...

One can argue that it is not relevant that the US is the world's leading manufacture but if that arguement is made one should not use statements that most of our manufacturing capacity is moving off shore. Free trade is essential to the world and to our economy and has been for some time. We manufacture and will continue to manufacture what we can produce in higher quality and more unique products; those requiring skilled labor. Our ability to compete cannot depend on closed borders but on American ingenuity, entreprenaurial spirit and educating and training a competent work force. The world cannot be shrunken.

Strikeslip said...

Anonymous, I stand by my statement "With most of our manufacturing capacity -- and increasingly agricultural capacity -- exported offshore, what is left to protect us if we get into a war?" That is the point of the post.

Whether or not the US is still the world's leading manufacturer -- which is measured in terms of dollars -- confuses the issue. (Besides, in a few months that will not be true because China is about to overtake us).

Whether or not we can "compete" globally with our highly skilled and educated work force also confuses the issue.

My concern is not about "competition," but, rather "survival."

The products that people depend upon every day -- the ones (or their functional equivalents) that used to be made here -- are now made overseas. Most of that manufacturing capacity has been exported.

We may still be tops in production in terms of dollars because we produce "high-end" products like aircraft parts and weapons . . . but you can't wear aircraft parts and you can't eat weapons -- and the dollar value can be changed overnight in the currency market.

Having the best weapons is cold comfort if we are already naked and starving.

Anonymous said...

The whole point of trade and commerce is money, growth and proasperity. To suggest, in this day and age of intertwined global commerce that we will somehow be straved or frozen out is rather silly. Our market is robust, desirable and necessary to world production. Trade makes for more global security, not less which translates into more domestic security. Our economic future is in high end, technical innovation and manufacturing along with a better quality of the production of basics. Ever heard of Bill's Khaki's? The "survival" scare is but an over reaction to global commercial realities. The greatest danger of all to our security and well being is that of tarrif barriers including those of currency wars.

Strikeslip said...

Anonymous - you said "Trade makes for more global security, not less which translates into more domestic security" .

OK, I'll bite on that. How does mutual economic interdependence protect us against nuts like Mahmoud Ahmadinejad or Kim Jong-il?

Anonymous said...

A prosperous, interdependant world is a safer world while limiting the "nuts" and support of them. Limit does not mean eliminate. A strong military along with a strong,stable economy allows us to deter or strike them down when necessary. Our strong economy, kept strong by global commercial success and alliances is the foundation of a strong military. In today's world, America must be able to compete globally, not attempt to shut out which is a sure bet for failure and global chaos. Hitler, Stalin, world wars arose from economic upheavel in which tarriffs and currency devaluation produced. Again, it will be our ability to create new products and markets that will rescue our current malaise, not protectionism. As one very smart and successful manufacturer said, I paraphrase- My plant in China allows me to maintain and grow my 1,000 plus workforce in America. Purchase of lower priced goods at Walmart allows American families to eat and cloth theirn families at lower cost freeing money for other activities such as saving and education. And, by the way, I think Walmart employes a few people including thousands in our area. As they increase their stores throughout the world we "Americanize" , grow jobs in other countries while growing jobs and wealth here, including the wealth and investment produced by their stock price. Indium is expanding here. Does not one grasp the connection between their growing business by producing in China with greater growth here? BNY Mellon has and will continue to grow jobs in Oriskany and Syracuse. They continue to grow and expand in China, England, Tailand and India, etc., The more international trade they grow, the more transactions made here. The more transactions processed her = more jobs. As long as we compete with a strong, educated local workforce, they will stay and grow here. The examples are endless. the world is smaller; with technology it will continue to shrink. We must lead it, not run and hide from it.

Strikeslip said...

Thank you for your comment, Anonymous. I can see that we will not come to an agreement on this issue. :)

Perhaps I'm wrong, but the impression I get is that you think our economic future is more tied to the intellectual capital area rather than physical production area. The logical extension is that the thinkers will be here and the makers/doers will be everyplace else. The response is that the US has no corner on the market for thinking (e.g., where do many of our physicians come from?).

Your response contains many assumptions rather than substantive facts, one of which is that military intervention will allow us to deter or strike down the "nuts" when we have to.

We are currently dependent on foreign oil. What if a "nut" and its allies controls the availability of oil to us? Then what? Are you saying that America should attack other countries because they refuse to supply us with oil? Most Americans would recoil from that idea because self-sufficiency has always been an American core value.

China is sabre-rattling against our ally, Taiwan. Per the article, closer economic ties have NOT led to improved political ties between China and Taiwan. In fact, military tensions are worsening. That is anecdotal evidence contrary to your position, Anonymous. Furthermore, do we have any clout with China when it owns our debt and (with other countries within its sphere) clothes us? Where has "free trade" gotten us, Anonymous, when China can even purchase our own assets out from under us?

Only global governance would lead to the utopia that you envision, Anonymous, where everybody plays by the same rules. That would benefit multinational corporations because they will always be free to seek out the lowest cost areas for their production.

But your utopia for multi/transnationals would be hell for most Americans. Most of the world does not share our values. Most of the world does not have our freedoms. You need only look to the make-up of the UN to envision what the world would be like.

Anonymous said...

It is hard to agree when speaking two different languages minus an interpreter. First, does not intellectual capital create production? One cannot happen without the other. Keeping or expanding our production job base cannot be accomplished by walls. It can be asssited and promoted by lower taxes on business and investment, fewer regulation and sound currency. That being said low skilled jobs will not return to a large extent and that is not necessarily bad. An educated labor force building things better will always be "cheaper" than low wages. It is what and how we build that intellectual capitital achieves. Agri business is yet another example. Our growing farming techniques and mechanized equipment has made us the bread basket of the world. I was waiting for you to raise the energy issue. Agreement is easy. We must not only be self reliant but continiue to produce relatively cheap energy. Our intellectual capitial enables us to drill and develop oil and gas sources while our political system restricts our capacity. At the same time it is intellectual capitial that will ultimately create reasonable energy alternatives. That has already occured with nuclear power systems but again the politcal has prevented full development. All impact job development. Finally, the UN freference is a canard. No one seriously expects anything to develop as the UN. Only the brain washed school kids and feel good Obamaniacs think any thing positive of the UN. But, are you seriously argueing that China would be less dangerous without the business development taking place there? Utopia has nothing to do with the issue. Again, no one rationaly believes in utopian avchievement. Exporting American business and values is not utopian. It is a model that has brough peace and stability to a great part of the world for 65 + years. That does not mean we do not negotiate sensible,fair trade relationships. It does mean that we do not build trade walls.

Anonymous said...

Another question. Would we rather have countries investing here, which is what security purchases are,or elsewhere? The problem is not what China has bought but how we continue to expand the budget deficit.

Strikeslip said...

Anonymous, to me your post reflects unstated assumptions, so maybe we are speaking different languages.

Lets focus on something simple.

Anonymous said: "Keeping or expanding our production job base cannot be accomplished by walls. It can be asssited and promoted by lower taxes on business and investment, fewer regulation and sound currency."

OK, Anonymous, I agree with the last part of the statement above. Lower taxes and less regulation clearly makes us more competitive . . . But here is where I think you go wrong:

Our taxes and regulations reflect our cultural values -- the things we consider important (eg. minimum wage, environmental protection). The taxes and regulations impose costs upon producers who must make up for them by adding a premium to the prices they charge for their widgets above an beyond the cost of production and profit.

In a "walled" society, those costs would are passed on to the consumers who buy not only widgets, but also our values for a clean environment and decently paid workers.

When trade is totally free, it becomes possible for producers and consumers alike to avoid the premium associated with our values. The result is exactly what Ross Perot predicted: production is moved off shore taking the jobs with it. In addition, there is a transfer of wealth to the producing countries.

Under "Free Trade" we are left with a choice: do away with our values, or transfer our wealth to others.

The idea that we can somehow make up for this with "high end" products is wishful thinking -- as evidenced by (1) our trade deficit (i.e., it hasn't happened) and (2) the fact that other countries are also producing high-end products without our values-premium.

Anonymous said...

The level of taxation has nothing to do with cultural values. They may relate to a misinterpretation or misapplication of cultural values. Education is but one expample of many. Our cultural values appreciate it but our level of spending on it actually produces a negative effect. Check today's WSJ and note how tax policy based on "fear" of overseas profit in reality harms the economy here. It is American ingenuity and creativity that will continue to build our economy. If you are saying we have lost that edge, all the trade barriers in the world will not matter. Finally, I surrender to the discussion. It has become tedious. Make your last pitch and move on. But, please do better than Ross Perot.

Strikeslip said...

I'm sorry, anonymous, it is tedious for you to discuss this issue. I don't expect to change your or anyone else's mind that is closed. I was giving you the chance to change mine . . .or at least give me an insight that I did not have.

Anonymous said...

Protectionism is the eptitomy of the closed mind.Hayek warned against the central planning to interfere with the exchange of goods and services sixty years ago. He recognized the trade wars that contributed to the economic upheavel that led to world wars.

Strikeslip said...

Anonymous, I believe in free-market capitalism, but it cannot be applied blindly.

If our labor and environmental laws increase our cost of production to where it is forced to move offshore, what is to stop our jobs and wealth from going with it?

It's a simple question and I am searching for an answer.

Anonymous said...

You have answered your own question in a sense. We construct uneccessary and counter productive laws and policies that restrict our competitiveness therefore restricting true free trade. Amend or eliminate the self imposed barriers. We need global markets as they need ours. And, global competition should sharpen our production capacity. It is the self created barriers that restrict our competitive edge and drive jobs away. The list is long now highlighted by an absurd level of debt.

Strikeslip said...

We can agree there, anonymous.

But there certainly must be a baseline of laws that people can agree upon that are needed to keep our environment from being polluted and protect people who work.

Whatever baseline is chosen (unless we reduce our standards to those of our trading partners) it will result in some outflow of jobs and wealth.

How do we draw the line without shooting ourselves in the foot?

Anonymous said...

In a democracy that is for an enlightened citizenry electing enlightened representatives to figure out.

Strikeslip said...

Good answer.