Saturday, June 14, 2014

A hypothetical question about a 2nd-World Country

As I've stated below numerous times, I'm swamped at work.  We are busy, busy, busy.  We are so far behind that we occasionally look behind ourselves and think that we're in first place. 
I haven't had much time to write lately. 
However, after reading libertarian-ish stuff about economics, globalization, free trade, and economic development for the last ten years, I can see how my work stuff and my political stuff sometimes intersect quite nicely.  Theories and reality sometimes do come together! 

What follows is an email that I got from my friend and co-worker Darrell (one of our salesmen/project managers) about some display fixtures we're doing for grocery stores in Panama. 
A Fort Worth TX company is doing display fixtures for stores near the Panama Canal.   
(As an FYI, there is a suburb of Panama City called San Francisco, not to be confused with Nancy Pelosi's fiefdom in California.)
Please enjoy Darrell's underlining, exclamation points!!, emoticons :)  and bold text.  Darrell types like he speaks.  Read his email, and I'll try to make my points later...

Greetings from Panama! It is after 2100 hours on Friday night and Edgar and I are getting ready for a good night’s rest here in the hotel.  A very brief report as we get ready to hit the hay and hit it hard again tomorrow.  

1.       The first container arrived today at 0900 at the San Francisco store – and it worked out perfectly that it was the La Cresta (what we thought would be the first store) container with all that we needed for the first install. The stores are not – as we were led to think – anywhere near ready to be open. We will have everything set up in all of the stores before they are ready to earn dollar one!

2.       The Solid Surfaces were ALL intact and unbroken. Kudos to the Jamie and the other guys at Infiniti (under the direction of Dan and Angel) for an excellent packaging job!


3.       The fixtures were completely intact and undamaged with the exception of one pretty big scratch (might have been done by one of the workers while cutting the foam and wrap away) on the a metal cabinet and one little bend in one of the pieces on the Checkout Counter. Extreme Kudos to one Clinton for his assistance in leading me in the packaging of all of the fixtures. It was excellence in every way possible! It is  very difficult to explain how significant Clint’s contribution was to this project!

4.       It is extremely “primitive” here in Panama City with no forklift and not even an available pallet jack to use in unloading the containers. Edgar and I worked and supervised a group of young men workers in unloading it “piece of piece by piece of piece.” It took 22 minutes to load by Mikey at Metal Shipping (In Texas) – and 2 hours and 15 minutes to unload (In Panama) – basically by hand. I have a short video of Edgar wringing out his shirt at the mid-point of the process that is priceless. He is now asleep already and snoring loudly. J

5.       Oh – the most important part…The clients ABSOLUTLEY LOVE the look of the fixtures. We are really close to getting the commitment on the next 6 of their stores. And (censored) was talking us up today about the prospects of the remodeling the rest of the 40+ (censored, not any of your damn business) stores in Panama and the 32 stores in Costa Rica. And – in the interest of a true long-term partnership with the parent company – remodeling a few dozen (censored) pharmacies and even more of (censored again; you're on a need-to-know basis) in Central America.

6.       It will be a long few days here – but the prospects are bright!

7.       Lastly, I have copied but a fraction of the Marco and Infiniti people that have contributed to this effort…and there were 19 names in either the To: or the CC: lines above (when I first tried to send this last night)!  And THAT is source of great pride for me. It should be to you all, also.  I am filled with gratitude for your help in this true TEAM effort.

Darrell (Last Name Censored)
Project Manager
The Marco Company

Ok, let's begin the economic and political and Libertarian analysis of each bullet-point in this email....

1) Shipping Containers.  These ugly metal boxes are so significant to our lives, so vital to the global economy, and so wonderful for trade, but most of us have little or no idea how much they have enriched our existence.  Prior to the invention of containers, manufacturers and shippers had to "break bulk" every time a shipment moved from truck to boat to rail to truck.  Theft was rampant.  20% losses were common. 
Back in the late 1950's a genius entrepreneur named Malcom McLean invented a metal box that could travel by truck, rail, or boat.  (Think about how many nations have different standards for their roads, their truckbeds, their railcars, and their harbors, and you'll understand the magnitude of his task.  Mr. McLean really, really, really wanted this system to work.) 
Unless you are a Luddite, a Nationalist, or a racist of some sort, you understand that Free Trade is the greatest economic concept ever devised.   Politicians rant against Free Trade, corporate lobbyists try to protect their industries from it, and government munchkins love being photographed rushing to the aid of those whose lives have been disrupted by globalization.  This makes as much sense as rushing to the aid of Blockbuster employees whose lives have been disrupted by Netflix. 
Thank you, Mr. McLean for increasing global trade by inventing the shipping container.  Because of this glorious metal box, one million people per month are leaving poverty in China alone!     

2) "The Solid Surfaces were all intact and unbroken..."  The unions hated McLean's shipping containers.  They hated the concept.  They still wanted to unload each container onto a boat when it entered each harbor, and then reload it when it went onto the rail.  And then unload the container and reload it when it went from the rail to a truck.  I swear to God, that's what they wanted to do.  You can read stories about it here.
But it's hard for The Teamsters and union dockworkers to steal from your shipment when the factory in China (or Fort Worth) puts a seal on the door and all container movement comes to a shrieking halt if the seal is broken. 
Thank you again, Mr. McLean, for inventing a shipping device that allows the Free Market to function smoothly.  Readers, unless you're in Asia, the device you're using to read this rant arrived in your nation via Shipping Container. 

3)  I'm not going to go off into who is at fault for the damage (that probably happened in the store, caused by store employees, and not by us). 
But had the display fixtures in question needed repair, the nation of Panama would've allowed Darrell to do the work. 
Contrast Panama's approach with that of The Peoples' Republic Of Canada, where a foreigner can't even carry his toolbox across the Canadian border because the Canadian government is afraid that doing so will destroy Canadian jobs.  Seriously.  Texans can't carry their own toolboxes into Canada without special permits, or paperwork explaining that it's for "warranty repair". 
Making foreign labor illegal is as harmful to your well-being as making foreign products illegal.
If you disagree, spend a few minutes questioning why we've had an embargo with Cuba since the JFK era. 

4) Point number 4 is interesting.  A guy named David Mason and I once loaded a 53-foot Wal-Mart trailer in 18 minutes.  There were about 25 skids and 30 boxes, and we did it in 18 minutes.  I repeat, and I might want this included in my obituary, we loaded that trailer in 18 minutes.  Mikey got this shipment done in 22 minutes.  And it took more than two hours to unload in Panama because they don't have forklifts!

So here's the economics question....  Which process "saved or created" the most jobs?  Loading in 22 minutes or unloading for two hours without a forklift or a pallet jack? 

Well, working without the modern tools created the most work and the most jobs.  But creating jobs is not the purpose of work.  The purpose of jobs is to produce something.  Something that people want.  Here's a famous Milton Friedman anecdote that might make the point more clearly....

The story goes that Milton Friedman was once taken to see a massive government project somewhere in Asia. Thousands of workers using shovels were building a canal. Friedman was puzzled. Why weren’t there any excavators or any mechanized earth-moving equipment? A government official explained that using shovels created more jobs. Friedman’s response: “Then why not use spoons instead of shovels?”
That story came to mind last week when President Obama linked technology to job losses. “There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers,” he said. “You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.”
The president calls this a structural issue—we usually call it progress.

The writer goes on to dissect a few more paragraphs of Barackaganda.  Hit the link up top to read it all, and for a more thorough explanation of the difference between jobs and production.   250 years ago, 98% of us were farmers.  That's what it took to keep us alive.  Anybody want to turn back the clock? 

5)  Regarding how much the customer loves the displays, and how we've got the potential to do a lot more stores for (censored) in Panama and Costa Rica, and elsewhere in Latin America....
I was born in 1961, on a farm between Merigold and Drew Mississippi.  If you had told me as a teenager that U.S. companies would be exporting fruitstands, bakery racks, and other display fixtures into Latin America, I would've said that you were insane. 
Don't they have trees for wood in Panama?  Don't they have metal shops in Costa Rica?  They produce lots of oil in South America, so they make their own plastic? 
Yeah, they have all the raw materials down there, but they also have a choice....
Leave them alone, and they choose to buy their freakin' fruitstands from a U.S. company.  Could they make 'em cheaper in Latin America? 
But Latin America is best at growing bananas and fruit and cattle.  West Fort Worth is best at making display fixtures.  It's called "comparative advantage", and with the exception of Ron Paul, I don't think any major American politician has ever understood it.
We really would be better off if without laws stating that Olympic and Army and Navy uniforms have to be made in the USA.  For the love of God, let everyone, everywhere, do what they're best at doing.  

6)  "It will be a long few days here - but the prospects are bright!"  Compare that sentence to the current Keynesian mess that our political system encourages. 
Presidents want the economy to improve now, so they mortgage our children's' future. 
Keynesian economists want to create full employment now, so they borrow from the next generation.
Going through a recession?  Create a "stimulus", using borrowed money via loans cosigned by infants. 

But in the private sector, Darrell works hard now so that in the future we might have brighter prospects. 

7)  Darrell makes a slight mistake in that last bullet-point.  He thanked everybody for the "team" effort. 
Most of us had little or no idea of the bigger picture.  Some of us were making metal brackets, some were cutting laminated sheets, others were painting parts. 
Very few people involved in the project were aware of the big picture.  The teamwork in the process was a matter of passing each part along to the next stage, in shops located miles apart. 
If one master craftsman had tried to do it all, it would've taken years to finish.  Nobody is good enough in all areas to do something like this. 

This guy has a good explanation of why that is the case:

In the first chapter of  “The Wealth of Nations”, Adam Smith, explains the optimum organization of a pin factory. Traditional pin makers could produce only a few dozen pins a day. However, when organized in a factory with each worker performing a limited operation, they could produce tens of thousands a day. This was the reason why Smith favored division of labor.

Karl Marx believed that this "Division Of Labor" would create a "loss of self" in workers.  Karl Marx was usually full of crap. 

So here's a hypothetical question about Panama....
Are Panamanians better off or worse off because of buying display fixtures from Fort Worth, Texas?

That's all I have to say about this email. 
It's been a long, long day.