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May 16, 2007

Why Americans Hate Economists; Cont'd

Dean Baker has a guess.  And so long as we're talking offshoring, remember that the practice exists as much as a threat as it does an action.  The specter of offshoring helps keep wages down, justifies cutbacks, forces longer hours, and all the rest.  Indeed, I was talking to a Chicago community activist the other day who was recounting the story of Brach candy company.  Brach was a commodity candy producer located in Chicago's Cook County.  It was eventually purchased by an oddball Swiss billionaire who instantly set about crushing the unions, forcing down wages, and all the rest.  For the first few years, he did this by threatening to move the company.  This worked until some Chicago community activists commissioned a study on where the company actually could be moved.  The study found that, at the time (this in the early-90s), no nations with cheap labor had the requisite talent base to run an advanced confectionary plant.  The study was passed on to the city of Chicago, and folks stopped listening to the threats.  But offshoring doesn't exist solely when jobs are actually flung across the world; it exists as a way to control labor domestically.

Postscript: Talent bases in other countries improved, of course, and in 2004, Brach moved to Mexico.

May 16, 2007 in Economics | Permalink

Comments

God damn foreigners, staying over there and taking our jobs

Posted by: henry hazlitt | May 16, 2007 12:35:10 PM

Does anyone actually hate economists? Out of all the evils in the world, wasting hate on an economist, or even the entire profession seems pretty lame to me.

Posted by: Dave Justus | May 16, 2007 12:38:07 PM

The post speaks to the cost of labor in this country but fails to mention the cost of sugar in the country (a main ingredient in candy) which is artificially raised due to tariffs.

Posted by: Ryan | May 16, 2007 12:46:44 PM

Ohhhh lord.

Posted by: DM | May 16, 2007 12:54:55 PM

The post speaks to the cost of labor in this country but fails to mention the cost of sugar in the country (a main ingredient in candy) which is artificially raised due to tariffs.

Good point, and one of the many reasons we're getting High Fructose Corn Syrup shoved down our throats in almost every product.

I'd be a bigger fan of globalism if it wasn't being used as a weapon against workers of every country. That is, I don't have a problem with people in Mexico or China having jobs. I do have a problem with people in the USA being threatened with offshoring as a way to keep salaries down, and then the offshoring occuring anyway because the new location allows the corporation to abuse its workers even more freely. The practice ends up hurting everyone except for the CEOs.

Posted by: Stephen | May 16, 2007 1:54:30 PM

US candy companies like Brach's and Tootsie are a good way to explain the economic effects of tariffs, as Stephen points out in his comment. Protecting Florida sugar growers has big consequences for Illinois candy companies.

Posted by: joejoejoe | May 16, 2007 2:01:58 PM

I agree, globalization should be used as a tool, not a weapon. The link below is to an interesting article about trade. Its been a while since I read it so I don't remember exactly whats in there but the information regarding the sugar industry really stuck out to me.

http://www.washtimes.com/commentary/20061025-092622-8524r.htm

Posted by: Ryan | May 16, 2007 2:11:30 PM

I had always heard that the American Sugar industry is powerful and focused on maintaining its advantages.
America's sugar is above the World Price.
I found this pro sugar lobby piece interesting maybe a little biased to the sugar lobby, but interesting.

http://www.sugaralliance.org/library/resourcedocs/WholesaleSugarPrices%203-07.pdf

There is one chart that compares Canada the US and Mexico in terms of cost of operation for candy manufacturers- look at the role of healthcare - ouch. The fact that taxes were lower in Canada surprised me too.

Posted by: Northern Observer | May 16, 2007 3:10:23 PM

This point is all well & good, but Dean Baker's entry, contra title had nothing to do with offshoring & of the three scenarios he submitted as example off shoring that Smauelson and his yet to be refuted citation don't take into account, none of them is offshoring.

Posted by: DRR | May 16, 2007 11:02:14 PM

Globalization has to be stopped. There's really no way to fix it. It's always been a tool of the rich to drain this countries and others of their wealth and resources and place that wealth and those resources in corporate pockets. There's no way to fix that, and corporations already have to much power.

Posted by: soullite | May 17, 2007 6:51:57 AM

"Ohhhh lord."

Given the context, DM, shouldn't it be "Ohhhh sweet lord"?

Posted by: Dan S. | May 17, 2007 9:42:27 AM

If you want to understand why most American's hate economists try this blog, check out The Big Picture Blog. I think it sums it up there pretty well.

People hate economists because they keep telling us we're full of it, that things are perfectly okay and there are no real problems in our society when it comes to economics.

But we know that's bullshit. We know that they're lying about inflation by leaving out half of what Americans buy. We know they're lying about unemployment, by ignoring structural unemployment, and counting people as employed who didn't start being counted as such until the mid 80's. We know that illegal immigration brings wages down, because more labor=lower wages. We know Economists are lying, and they sit there acting shocked and offended that we're calling them on it. That's why we hate them. They're self-serving liars who pretend reality is what they say it, and not what people see every day.

Posted by: soullite | May 17, 2007 10:30:57 AM

I heard a funny thing on CNN news today.

They say people will not be cutting back on summer driving even with higher gas prices.

Then they said that OPEC was not going to increase production in the face of higher demand.

Both fly in the face of the theory of pricing, from both sides.

I laughed. Others who heard didn't get the joke. The joke is economics.

It's not science. It's a religion.

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