Wednesday Quick Hits

Plenty of great links to share today (the last day of my 34th year on the planet), so let's get right to it.

• The Economist reports on how increasing labor costs in China are once again changing the globalization dynamic - in many cases, back in US manufacturers' favor: "'Sometime around 2015, manufacturers will be indifferent between locating in America or China for production for consumption in America,' says [BCG's] Sirkin. That calculation assumes that wage growth will continue at around 17% a year in China but remain relatively slow in America, and that productivity growth will continue on current trends in both countries. It also assumes a modest appreciation of the yuan against the dollar.... Companies are thinking in more sophisticated ways about their supply chains.  Bosses no longer assume that they should always make things in the country with the lowest wages.  Increasingly, it makes sense to make things in a variety of places, including America."  The whole article is definitely worth a read.  (h/t Mark Perry)

• The WSJ's Mark Gongloff throws some cold water on the "China is dumping US Treasury debt" hysteria.

• Heritage's Bryan Riley makes a great catch:   "People who believe the United States no longer manufactures anything need to check out the newest Consumer Reports “Best Cars” list. The magazine recently selected the top cars for 2011 in 10 categories. Five 'best models' are made in the USA, three in Japan, one in Canada, and one in Mexico. Four of the made-in-the-USA models carry foreign nameplates; by contrast, the one Chevy on the list is made in Mexico."

• Cato's Dan Griswold provides clear and concise arguments for allowing Mexican trucks to travel on US roads.

• AEI's Michael Auslin provides a roadmap for expanding US-India trade and explains why it should be a point of emphasis.

• A must-read story in USA Today shows that US visa restrictions may be driving companies out of Silicon Valley and the United States entirely: "Silicon Valley may be the cradle for tech start-ups, but some foreign-born executives, engineers and scientists are leaving because of better opportunities back home, strict immigration laws here and California's steep cost of living."  I totally get the need for us to secure our borders and staunchly police illegal immigration, but the United States is suffering (and will suffer a lot more in the future) because of our government's inability to develop and implement policies to efficiently and lawfully keep super-smart foreign entrepreneurs and workers here.  Our lack of such policies is, ahem, bordering on the insane. (Sorry, I couldn't resist.) 

• The White House has surprisingly announced that it won't move pending FTAs with Colombia, Panama and South Korea unless the House GOP ties it to the now-expired Trade Adjustment Assistance program.  IBD dismantles the administration's political motivations, while Cafe Hayek's Don Boudreaux eviscerates TAA's shoddy economic foundations.  (More on this issue to come.) 

• Logistics improvements in China would mean huge gains for consumers and exporters, further proof that trade facilitation efforts can dramatically improve global trade when market access negotiations break down: "Logistics costs as a percentage of GDP are around 21%, compared with 10% in the U.S. and 13% in India.... [T]he country has a fragmented system, high tariffs for road transport and multiple providers piling on fees.... A Chinese government investigation found that two-thirds of the retail price of vegetables represents logistics costs. And even though costs are high, service is often poor.  Local logistics providers are famously slow and unreliable. Assuring end-to-end delivery of products across provincial boundaries is a real challenge."  Unfortunately, things appear to be getting worse instead of better:

• Looks like we're seeing a serious bubble in US farmland, yet American agriculture subsidies keep, ahem, plowing ahead. (Sorry, I couldn't resist... again)

• Good news: US exports surge to a new record high.  Less-good-news: as the graphic below makes clear (courtesy of Mark Perry), US exports are still below their pre-recession trendline.

That's all for today.  Enjoy!

Monday Quick Hits

Lots of interesting links over the last few days, so let's get right to 'em:

• Lifelong Democrat laments his party's anti-innovation agenda.

• WSJ's Strassel: why the GOP needs to take on the government's misguided "green energy" movement.

• AEI's Nick Schulz on why a revised American immigration policy must be a central feature of its future competitiveness policy.

• Korean negotiators to their US counterparts: "Hey, if you guys want to re-open the KORUS FTA for autos and beef, then we'd like to re-visit some of your most important/untouchable issues."

• Not all Dems are against free trade and American competitiveness; unfortunately, this important Dem isn't, you know, an elected official anymore.

• Don Boudreaux quickly explains the illogic of mercantilism.

• Russ Roberts so wants to explain the problems with Ben Bernanke's recent China criticisms that he's willing to give away part of his new book for free.

Now, if you'll excuse me, I need to get back to my intense turkey-ingestion training regimen.

Awesome: The Daily Show on Unions, Hypocrisy and Competitiveness

Once again the folks at The Daily Show convey in one 5-minute skit what I couldn't do in 30 blogposts:

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
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I'll again be the stick-in-the-mud and mention that this great skit, while certainly hilarious, also provides several fine examples of things that I've been trying to explain here for a while now:

• Most obviously, unions are self-interested organizations that, contrary to their statements about "greed" or "fairness" or "sticking up for the common worker," are readily willing to jettison their alleged principles when they don't benefit the union.  We've recently seen this union hypocrisy on the trade front, as the United Steelworkers loudly complained about Chinese "green energy" subsidies while conveniently forgetting to mention the billions than Uncle Sam has sent their way.

• Perhaps more interestingly, however, is that when push comes to shove, unions are rational employers that respond to market realities rather than vague concepts like "fairness."  This fact is made clear by the frank admissions of the UFCW's (rather unwitting) leader, Mike Gittings, about why they have hired temporary, non-union workers (and have given them part-time hours and no benefits) to protest Wal-Mart (starting at about 3:55): "Our union members are working.... We don't have union members that are able to go down there on a daily basis.... The alternative to the way that we do it would be to not do it...  We're doing the best we can with our limited resources..."  In short, the UFCW, as an employer without magically unlimited resources, is responding to market realities about its labor needs and costs, and if it adopted a "fairer" approach, simply wouldn't be able to hire ANYONE and thus would have to get out of the protesting business altogether.

• And thus brings us to our last lesson: the result of non-market demands on American employers erodes their global competitiveness and leads to their (a) going out of business in the face of foreign competition; or (b) offshoring of their labor force or hiring of illegal, off-book workers.  Don't believe me that a zany comedy show like TDS is providing this final lesson?  Well, check out correspondent Aasif Mandvi's "solution" to getting the "protesters" he needs at the right (non-government-mandated) price: picking up illegals to do the job.  In fact, Stewart rather coyly introduces the whole skit with an aside about "The American labor movement, sometimes criticized for driving jobs overseas with some outdated demands...."  Pretty clever, eh?  Yet labor unions don't recognize these obvious economic realities and instead choose to blame free trade for offshoring and job losses rather than look in the mirror.  And unfortunately, that's no laughing matter.

Considering that the union's behavior here - treating its own employees far more shabbily than the businesses it routinely demonizes - is hardly an isolated occurrence, these three lessons are broadly applicable.  So hopefully the millions of youngsters who watch The Daily Show instead of the real news absorbed the message.  

I'm not holding my breath, but a guy can dream.