So we\’re complaining about our economy…

OK, so this is a bit late coming, and I haven’t really been able to think this through as well as I should, so I hope some other people will think through it with me. The problem: Our trade deficit is up.

The solution is to devalue the dollar. Supposedly.Americans crave cheap, foreign-made products. Multinational corporations crave cheaply made products from third-world countries that they can mark up astronomically because of the brand recognition and achieve monstrous profits that they can report to their shareholders every quarter.

To that end, the United States has encouraged outsourcing and granted most-favored nation trading status to totalitarian regimes such as China who are willing to create favorable conditions for this way of doing business.

And now the United States is complaining about continually breaking its own records for trade deficits.

The current administration is responding by devaluing the dollar. That’s a classic idea. By devaluing your currency, you make your own goods less expensive abroad and you make foreign goods more expensive inside your own borders.

But I see at least two problems with that policy. The ruthless Chinese tie the value of their currency to the U.S. Dollar. So devaluing the dollar does absolutely nothing to help our trade deficit with China. Chinese goods continue to cost the same amount of money here, and the price of U.S. goods in China remains the same.

The price of a BMW or Mercedes automobile goes up, but the people who are willing to spend $60,000 on a car are probably also willing to spend $65,000. It only increases the monthly payment by about $80. It might make the price of a Cadillac look a little bit better, but there are plenty of people who believe the BMW is the better car and will pay the extra money. Meanwhile, Europeans will continue to not buy U.S. cars, because Europeans just aren’t very fond of them.

The second problem is that the United States just doesn’t produce all that much anymore. Consumer electronics are almost exclusively made in China, with the main exception being some high-end consumer electronics still produced in South Korea or Taiwan. Toys are almost exclusively made in China. Some large items such as appliances are made here because they are too expensive to ship overseas, but that cuts both ways.

Buying American helps. But we didn’t do that 20 years ago when we still made stuff here. Now it just might be too late.

Part of me also thinks that we need to quit complaining. Look at these plans for a bungalow house from 1912. This house cost $900 to build–assuming one paid someone else to do it. You provided the land. Adjusted for inflation, that would be about $17,000 today. Our grandparents were raised in houses like this. By comparison, my house is a mansion.

Today, without blinking, we’ll pay that much for a car.

Just two or three miles away from me, houses fitting the modern idea of a proper size for raising a family are being built. They’re about twice the size of mine and they sell for about $400,000. Houses like those from 1912, no longer suitable for storing our lawnmowers, are claimed under eminent domain and razed to make room for big-box stores to sell more foreign-made goods. I’m not sure what becomes of the people who by their own choice were still living in them.

Republicans like to blame high taxes for what they call the decline of the traditional American family, where only one parent had to work. Democrats ask what was so great about that, and blame the modern struggle to make ends meet on low wages or discrimination.

But if we lived within our means, we’d be able to afford to buy U.S.-made goods from stores owned by our neighbors, who are far less likely to abuse eminent domain and deprive people of their property rights.

This is a mess of our own making. The government may have encouraged it somewhat, but the government didn’t make it and the government can’t fix it. That job belongs to us.

Assuming it isn’t too late, that is.

You still think outsourcing is a good idea?

Don’t be fooled by the topic I put this in: This has potential implications for any area of manufacturing.

Lionel, the most famous U.S. maker of toy trains and model railroads, has been found guilty of industrial espionage and ordered to pay $40 million to competitor MTH Electric Trains.

What happened? Well, both Lionel and MTH outsource their production. As it turned out, some work that was done for MTH ended up in Lionel designs as well.I really don’t think anyone has a good grasp of what happened, but the story I heard is that a contractor who worked for MTH’s subcontractor designing locomotives moonlighted for Lionel’s subcontractor, and that he reused some work that he did on an MTH design on a Lionel design. MTH claims Lionel knew about this. Lionel claims it did not.

Regardless of who you believe, somebody was wronged. R&D work for one company ended up benefiting its competitor, and now that mistake is costing lots of money.

As a consumer, I’m disappointed because I’ve been led to believe that Lionel and MTH do their own designs and outsource production to Korea and China. Evidently they outsource some of their lucrative R&D as well.

Apologists for both companies have said that Korean companies tend to be related by blood or marriage and that workers routinely move from company to company, taking trade secrets with them and using them. That’s the corporate culture. U.S. corporate culture, of course, is exactly the opposite. We demand that you somehow forget all of your proprietary trade secrets when you change employers. Or at least don’t use them in your new job.

The products involved in this case aren’t the $20 locomotives you see at Hobby Lobby or Toys ‘R Us either. We’re talking premium products that sell for five figures here. I’ve seen them in person–they’re definitely impressive looking. But they’re playthings for people who make six figures per year, minimum. I like O gauge Lionel stuff an awful lot. But I don’t expect to ever own one. They cost more than I’m willing to pay for a computer.

I suspect that with those kinds of profit margins, they could have afforded to build them in Michigan or New Jersey, where Lionel understands how its workers work and its workers understand how its employer works. That’s the scenario if you assume Lionel is innocent. If you assume Lionel is guilty, well, that scenario makes industrial espionage much more unlikely. It’s always best not to allow yourself to be tempted to do something wrong–it’s easier to avoid temptation than it is to resist it.

And if they’d had to raise the price of a $1,400 locomotive by another $100, I doubt too many people would have screamed. Especially if the words “Proudly made in USA” were prominently featured on the package.

There’s some question whether there’s even room in a $100 million hobby for both Lionel and MTH. When your industry is worth $100 million as a whole, and you have to share that pie with four or five competitors, you can’t really afford a $40 million jury award, can you?

Saving a few bucks in labor and R&D may have just cost Lionel its life.

Happy New Year!

The way the ‘Net oughta be. I finally broke down and bought a VCR yesterday. It’s hard to do video work without one, and you want to give people drafts on VHS. When it comes to consumer video, there are two companies I trust: Hitachi and Hitachi. So I went looking for a Hitachi VCR. Their low-end model, a no-frills stereo 4-head model, ran $70 at Circuit City. I ordered it online, along with 5 tapes. Total cost: 80 bucks. For “delivery,” you’ve got two options: delivery, or local pickup. I did local pickup at the store five miles from where I live. You avoid the extended warranty pitch and trying to convince someone in the store to help you, and you just walk into the store, hand the paperwork to customer service, sign for it, then go pick it up. Suddenly consumer electronics shopping is like Chinese or pizza take-out. I love it.
The VCR’s not much to look at and the $149 models are more rugged-looking and have more metal in them, but this model is made in Korea so it ought to be OK, and the playback’s great on my 17-year-old Commodore 1702 (relabeled JVC) composite monitor. For what I’ll be asking it to do, it’s fine. In my stash of Amiga cables I found an RCA y-adapter that mixes two audio outputs, which I used to connect to the monitor’s mono input.

Desktop Linux. Here are my current recommendations for people trying to replace Windows with Linux.

Web browser: Galeon. Very lightweight. Fabulous tabbed interface. I hate browsing in Windows now.
Minimalist browser: Dillo. Well under a meg in size, and if it’ll render a site, it’ll render it faster than anything else you’ll find.
FTP client: GFTP. Graphical FTP client, saves hosts and username/password combinations for you.
PDF viewer: XPDF. Smaller and faster than Acrobat Reader, though that’s available for Linux too.
Mail client/PIM: Evolution. What Outlook should have been.
Lightweight mail client: Sylpheed. Super-fast and small, reasonably featured.
File manager: Nautilus. Gorgeous and easy to use, though slow on old PCs. Since I use the command line 90% of the time, it’s fine.
Graphics viewer: GTK-See. A convincing clone of ACDSee. Easy-to-use graphics viewer with a great interface.
News reader: Pan. Automatically threads subject headers for you, and it’ll automatically decode and display uuencoded picture attachments as part of the body. Invaluable for browsing the graphics newsgroups.
File compression/decompression: I use the command-line tools. If you want something like WinZip, there’s a program out there called LnxZip. It’s available in RPM or source form; I couldn’t find a Debian package for it.
Desktop publishing: Yes, desktop publishing on Linux! Scribus isn’t as powerful as QuarkXPress, but it gives a powerful enough subset of what QuarkXPress 3.x offered that I think I would be able to duplicate everything I did in my magazine design class way back when, in 1996. It’s more than powerful enough already to serve a small business’ DTP needs. Keep a close eye on this one. I’ll be using it to meet my professional DTP needs at work, because I’m already convinced I can do more with it than with Microsoft Publisher, and more quickly.
Window manager: IceWM. Fast, lightweight, integrates nicely with GNOME, Windows-like interface.
Office suite: Tough call. KOffice is absolutely good enough for casual use. StarOffice 6/OpenOffice looks to be good enough for professional use when released next year. WordPerfect Office 2000 is more than adequate for professional use if you’re looking for a commercial package.

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