Made in America

(I have sent this to the editor)
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President Donald Trump claims that imported autos pose a threat to national security. With a theme of “build them here,” the President has threatened to impose tariffs—as much as 25%—on imports.

Until two months ago, President Trump would have applauded me, despite my brown-skinned alien looks, because I owned vehicles that were made in America. For 14 years, I owned a Saturn Vue, which served me really well. Without a single breakdown over the nearly 310,000 miles I drove, my Saturn Vue was truly a testament to American manufacturing.

The Vue was not my first Saturn. I bought it after trading in my 11-year-old Saturn station wagon. Few ardent Trump supporters will be able to match my 25 continuous years of owning "Made-in-America" vehicles.

However, when it came time to retiring my rapidly aging Vue, I did not have an option to buy another Saturn—they are not manufactured anymore. Saturn was one of the companies that folded after the Great Recession that lasted from December 2007 to June 2009.

The Great Recession dramatically restructured the automobile industry, and General Motors ended the sales of Saturn vehicles in 2009. I, like other fiercely loyal Saturn owners, was thoroughly disheartened with GM’s decision. But, businesses dying is not anything new--it is consistent with the creative destruction that is a hallmark of the modern economic system. How many even remember Pan Am, which once dominated the skies? It is now one of the thousands of companies along with Saturn that lay buried deep in the economic graveyard.

The new car that I bought two months ago has 40% of its parts from Mexico with another 25% coming from Japan. The US and Canada also supplied parts for this car, which was assembled in Mexico. Altogether, my new Japanese car is more multinational than Japanese. In fact, if we were to go with the country that supplied the most components, and given where it was assembled, I could easily claim that I am now driving around in a Mexican car. Muy bueno!

The multinational aspect of cars is a modern manufacturing marvel. Alonso De Gortari, a scholar at Harvard University, reminds us in a recent essay of his that “the structure of world trade has changed radically over the last couple of decades with international supply chains spreading production processes across national borders.” Gortari adds that the integration of automobile production “across the three NAFTA countries is viewed as one of the most important international supply chains in North America and the world.”

Whether it is cars or smartphones or even the humble banana, we lead marvelous multinational lives irrespective of the country in which we live, through our daily economic activities. iPhones are “American” only because the company that designed it is headquartered in California. The phones are assembled in China, with components sourced from many countries around the world. And, of course, many of the employees working for Apple being immigrants to the US makes even the designing of the phone a multinational activity.

During my early years in India, the government had strict controls on the foreign goods that could be imported, which choked the national economy. After those import restrictions were removed in the early 1990s, India’s economic growth took off. Like India, the entire world has clearly understood the benefits of international trade and, yet, we in the US want to impose tariffs on imports?

As consumers, we buy goods based on our tastes and bank balance. Thus, for instance, even though apples are grown in plenty here in the US, bananas are the most widely consumed fruit here in the country. Bananas are imported from countries like Guatemala, Costa Rica, and Ecuador. We are not traitors just because we eat Guatemalan bananas instead of home-grown Honeycrisps, right?

Our lives are incredibly luxurious because of the widespread multinational economic interactions. At the same time, our behavior in the marketplace is not any kind of a litmus test on the loyalty to a country. As the owner of an imported car, I am no less an American than the American that I was as a Saturn Vue owner. I wish the President would convey to Americans that imported cars are not any threat to national security—and neither is my brown-skin nor my strange accent, even though I, too, am not “Made in America”!

Let's go, people!

I went to graduate school because I thought that I would find answers to the pressing questions of development.  Within a couple of years, I realized that plenty of highly capable thinkers had already thought up everything that I was worried about.  If everything had already been discussed, then what the hell?

I started understanding that addressing the human condition was not really about finding technical solutions.  Instead, it came down to the power of persuasion and, ultimately, politics.  I would no longer be fooled by fancy-shmancy data-driven models.

Which is also when I seriously started thinking about persuading others through easy to understand approaches.  One of the big topics then was free trade, and NAFTA in this part of the world.  I did not oppose free trade, especially after my experiences in the socialist India.  But, my logic told me that freely moving goods and capital alone merely provides advantages to those who are better-off.  I wanted free movement of people also. 

I went to talk about this with one of the professors.  He disagreed with me.  He gave me the same old textbook argument of how the movement of capital will counter and complement the controls on movement of labor.  I was not convinced.  I wrote an essay and sent that to Economic and Political Weekly.  Of course it was not published--I bet that it was one horribly written essay, stylistically and content-wise.

Over the years, I have been more convinced than ever that globalization ought to include freer, if not completely free, movement of labor.  Yes, I know that this exactly what the fascist thug campaigned against and for which he was rewarded with 63 million votes.  But, hey, the fascist can and will bullshit and lie.  But, the truth cannot be simply tweeted away.

One of the best contemporary thinkers on the distributional aspects of globalization, Branko Milanovic, whom I have quoted before, writes this:

income gaps are unlikely to be eliminated. Which, in turn, shows the importance of migration.  If a borderless cosmopolitan world is to be achieved (an objective with which I agree but see enormous political difficulties in reaching it), migration is absolutely essential. But as economic migration faces increasing obstacles in rich countries (and, it has to be added, not solely because of xenophobia but for economic reasons as well), the ideal of a world “without injustice of birth” recedes.

Yes, the injustice of birth.  Click here if you need a refresher on that.

Milanovic concludes:

I am very sympathetic to the borderless world but to believe that it can be achieved through trade alone, and without significant migration, is unrealistic. And once we say “migration”, we immediately open the Pandora’s box that the most recent elections in Europe and the United States have shown is a reality, not an imagination. Thus, our new “intellectual revolution” should be rather to address the issue of migration and citizenship than free trade. Free trade alone cannot solve world’s problems.

We need to think about migration and citizenship in new ways.  And we need to be able to think about that while dealing with the fascist thug's tweets and rants channeling his narrow and nativist takes on migration and citizenship.  Eventually, in the long run, truth will prevail.  But then, we need to also keep in mind that wonderful line: In the long run we are all dead.

The Reagan-Thatcher revolution comes to an end. Long live the revolution!

One of the Seinfeld episodes was about the Bizarro World in which Elaine finds herself.  Up is down, and left is right.  It is chaos, until "normalcy" returns.

While Seinfeld was inventing scenarios, we are living in a Bizarro World.  Consider the following from a recent speech:

“We must remain committed to developing free trade and investment.”
No one will emerge as a winner in a trade war,”

And, to put it more poetically:

“Pursuing protectionism is like locking oneself in a dark room,” he said. “Wind and rain may be kept outside, but so is light and air.”

That person, the champion of free trade and openness?  China's president, Xi Jinping.

Yes, China's president "positioned himself as a defender of globalization and free trade."  Xi also said:

Countries, he said, “should view their own interests in their broader context and refrain from pursuing their own interests at the expense of others.”

Up is down, left is right.

But, that alone does not make this a Bizarro World, unless the previously staunch defenders of free trade have also flipped, right?  They have.

The GOP's standard-bearer, the president-elect, campaigned on the very ideas of protectionism and putting America first.  Remember?  The Republican Party has been merrily going along with this bizarro approach.  Imagine that!  The Republicans have lost faith in the market!  The same Republicans who complain that Democrats are socialists.  The same Republicans who cheered on the criticisms that Obama is a communist.  Welcome to the bizarro world, in which now the president of a "communist" country is the defender of free trade and openness, while the leader of the "free world" wants to tax imports and close the borders!

Chinese trade experts with government ties have already hinted that if the Trump administration imposes barriers to Chinese goods, they are ready to retaliate through steps like switching aircraft contracts from Boeing to Airbus, diverting food import contracts to rival countries like Brazil and possibly making it more difficult for Apple to sell iPhones in China.

Head-spinning?  Get used to it; after all, the demagogue has not even been sworn in yet!

As Global Times, a nationalistic Chinese newspaper controlled by the Communist Party, put it in an editorial this month: “There are flowers in front of the China Commerce Ministry gate, but sticks as well, hidden behind the door. Both are waiting for the Americans.”

The demagogue does not care for flowers, as his tweets and his entire campaign showed us.  Unlike the wimpy Obama and the Democrats, the Chinese will bring their guns to the fight.