Wednesday, November 27, 2024
Who remembers? The answer is, “To stop the spread of Communism.” Because if Vietnam went Communist, so too would Cambodia, Laos, Burma, Malaysia – all of Southeast Asia. This theory was called “The Falling Domino Theory.” Remember?
Yeah. It didn’t happen.
Why?
Chris Miller in his book Chip Wars explains. The transistor was discovered or should we say invented at Bell Labs in the late 1950s. Japan and other nations in Asia were still recovering from WWII and China had been through a revolution in 1948. There was much turmoil and poverty. However, some saw or took opportunity. The U.S. decided to help Japan and other countries get back on their feet economically. Texas Instruments was looking for cheap labor. Taiwan, desperate for work, formed an alliance with Texas Instruments to produce chips. Japan and later Korea got in the chip making business. Singapore and Malaysia got into the fabrication and assembly of electronic components and products. The result of all this is an integrated production and assembly system that has employed thousands, millions even.
So why didn’t Communism take hold in South East Asia? The answer Miller suggests is that the people were working. They had jobs. They had money.
If Miller is correct, and I think he is, if you want to stop a revolution, put people to work. Huh? Who knew? One person who understood this was Henry Kissinger. He went to Latin America for President Nixon. His report said that if we don’t pour money into those countries to help them become economically viable then those people will come here. Guess what? Those people are coming here! Amazing.
So, the answer to the immigration question is not to seal the border, that’s head-in-the-sand thinking, You’re ignoring the problem. The answer is to figure out how to help those countries employ their people. By ignoring the problem for decades it has only gotten worse. Now, drug gangs and cartels are more embedded in those societies than ever. In some cases, they may even be running the country.
There are a few glimmers of hope. One is to get people to face the problem. It’s easy to sit and complain when the problem is not at your door. Greg Abbott has made tried to make that very clear in Texas. I don’t agree with his methods, but it does highlight the problem. Chef Jose Garces has invited Joe Rogan to accompany him to Ukraine. That should be interesting.
There’s a charter school in Washington State for teenage parents. They help the soon to be and the new parents graduate from high school. The school addresses real world problems these young people face. Problems like child care and baby supplies. Many clothing articles and baby equipment like strollers and cribs are donated. There’s a lactation center and diapers and other supplies. The school helps the students with transportation and with homelessness, which is a huge problem. Many young women when they become pregnant are either in foster homes or their parents kick them out.
How well has it worked? Of the kids that graduate, all have been accepted at colleges, and 95% of them go. That’s not to say everyone who is in the program makes it, because there are many problems to overcome, and some don’t overcome them. But, many do – with help.
So, here’s an idea. It seems to be working here in the U.S. and it’s shown to work in Southeast Asia. If you help people overcome their day to day struggles, if you give them work, if you educate them, they can function in society. That means they aren’t a drag or cost to society, but rather helping to make the world a better place.
Why do it? We have two choices:
one) we can blame the people and lecture them or complain on a podcast or whatever, You know, give ‘em the old “pull yourself up by the bootstraps” routine, or say, “they have to pay because they signed the usurious loan deal.” etc.
or
two) we can try and figure out what they need to be able to function on their own. And we can figure out how to employ people.
I say option two is not only better but cheaper.
If Trump invokes the tariffs he has said he will, then the cost of goods will go up, trade will stop, the economy will decline, and he’ll hold a press conference saying it’s not his fault. He has claimed, for instance, that this will give a huge boost to U.S. built cars. There’s a problem. Let’s just say that he puts a 40% or 60% tariff on all goods from Mexico and Canada. Let’s say Mexico retaliates and does the same.
Let’s say that a U.S. built car that costs $50,000 depends on parts from Mexico. Not only that but the parts are made in the U.S. then assembled in Mexico shipped back to the U.S. where they are put into large assemblies and then shipped back to Mexico, where they go through more assembly and shipped back to the U.S.
I am told that cars built in America depend on Canadian and Mexican parts, and that those parts may cross the border several times. So in reality, there is no such thing as a car built in the U.S.
So let’s say that the $50,000 car, “Built in America” depends on $10,000 worth of parts from Mexico. And that those parts are made in America shipped to Mexico where the Mexican government in retaliation to the Trump tariffs slaps a 40% tax on them. They now cost $14,000 and they get shipped back to the U.S. and receive a 40% U.S. tariff – $19,600. They go back to Mexico – $27,440, and cross the border again to the U.S. $38,416.
So the $50,000 “Made in the USA” with $10,000 worth of parts from Mexico now costs $38,416. Which means the sticker price of the car would be $50,000 – $10,000 + $38,416 or $78,416.
However, a $50,000 car built elsewhere and shipped to the U.S. and paying the 40% tariff would cost $70,000.
Hum. Buy America! Make America Great! Wait, I can get the foreign car cheaper than the U.S. built car?
Brilliant.
