Bringing Jobs Home?

There is a growing movement to repatriate manufacturing industries back from China. It isn’t just America that is doing it. Japan also has earmarked vast sums of money to bring their manufacturing back home. Aside from the notorious apparent lack of quality control in Chinese factories, the desire is to shorten the supply chain: produce the goods where they will be consumed.

I don’t see this as creating many new domestic jobs. I think it will be an impetus to automation. In the meantime, China will want to find new jobs for laid-off workers. This is a huge problem for the CCP who have to keep workers employed so that there is no Chinese version of the Arab Spring. China traditionally throws easy money into its economy so that companies can grow bigger and bigger, producing more and more. But this requires markets, so China largely reserves its domestic markets for its own production, while at the same time trying to infect other nations’ markets with its junk.  China covets markets. The CCP needs the markets because they need the jobs. Bringing production back to America and to Japan implies those countries satisfying their own consumptive demands and greatly reducing their dependence on China.

I hope Canada sees the wisdom of domestic production. I think it is a shame and a testimony to the short-sightedness of our leaders that we can’t even produce the protective gear needed for the current pandemic and are relying on China instead. The Canadian way is to pay people to stay home. Give a guy $2000 per month, and another $2000 monthly to his live-in girlfriend, and then be surprised that employers can’t find workers for $25 per hour. How stupid our policies sometimes are!

William Lane Craig is a Formidable Debater

On YouTube, there are numerous recordings of debates between Christians and atheists. The topic is not always whether God exists. I recently listened to one such debate over the issue of whether it is reasonable to be a Christian. It is found at https://www.youtube.com/watch?v=SdEvXK91B58. The proponent for the reasonableness of a Christian belief was William Lane Craig. Admittedly, he has a tendency to taint the outcome because he is that good of a debater. He knows what he believes and why he believes it, doing a commendable job of defending the hope that is in him, as I Peter 3:15 says. Nonetheless, his opponent was smart, articulate, and easy on the ears.

The debate was in the style of each person stating his case, followed by a rebuttal by each and then another rebuttal by each. After that, there was a conversation between the two of them --- a give and take that could have become a free-for-all, but which was undertaken with dignity and courtesy by both guys. Then came the question and answer session in which audience members posed questions, each question then being addressed by both debaters.

Throughout the initial comments and subsequent rebuttals, it seemed to me that the points were going to whoever had spoken last. Where the outcome tilted, in my opinion, was in the free exchange. Dr. Craig’s opponent lacked answers. My advice: skip through the debate to that part of it and then listen closely.

Finance versus Economics

There is a lot of confusion, it seems to me, over what the economy really is. A good working definition is the production and distribution of goods and services. Prosperity occurs when there is a high level of production and distribution of goods and services that people want. In a free market, the price system sends a clear signal as to what people want. When governments interfere, by quotas, or by subsidies, or even by point of sale taxes, prices can get distorted and send the wrong signal. I well remember my introduction to shopping behind the Iron Curtain many years ago. It was at a department store in Bratislava. There was a skimpy selection of basics, but an abundance of fur coats. Rows and rows of them. Without a free market pricing system to send out the signals, manufacturers had no reliable measure of the market. They didn’t know what to make.

A similar confusion appears in government response to the current economic downturn. In Canada, our governments are flooding the country with cash. Our problem is a sharp decrease in the production of goods and services; the distribution systems are still working more or less. Throwing cash at the problem isn’t going to resolve it. Although more energetic, this is the same tactic used about 11 years ago in response to the then collapsing financial and manufacturing industries. But back then, the problem was a balance sheet problem. It was liquidity. Part of it was rising current liabilities versus current assets. In other words, depleted and negative working capital. Another problem was that many assets had lost significant value: loans that had been made to debtors who became insolvent, real estate that had lost much of its value, and financial derivatives that had evaporated into money heaven. In short, equity had disappeared. Pumping cash into impaired balance sheets helped.

Today, the problem is primarily an income statement problem, not a balance sheet one.  Revenues are down because people aren’t working to produce and people aren’t buying. Giving those businesses money helps them stay in business a little longer, but is just an exercise in kicking the can down the road. People are not inclined to spend the money if they don’t have to. I think we will look back to 2020 and see that government largesse rapidly inflated the M1 money supply, but did not stem the declining velocity of money. And it is the velocity that is more important. I think we are seeing a financial fix being applied to an economic problem, and it will not work.