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Sunday, January 14, 2018

Trump vs. Obama, or capitalism vs. communism

The announcement this week that Mazda and Toyota that they will invest $1.6 billion in a plant to make automobiles and SUVs in Alabama is the latest erasure of the Obama legacy of closing factories, and moving work to foreign soil.

The new plant will mean employment in Alabama until at least the middle of the century, creating 4,000 direct jobs and up to five times as many jobs for suppliers.

Obama's bailout of GM and Chrysler not only broke trade agreements against such subsidies, but failed to keep Detroit from going broke. On July 18, 2013, the city of Detroit filed for Chapter 9 protection in bankruptcy court -- a record $20 billion, five times the previous record $4 billion filing by Jefferson County, Alabama, in 2011.

Chrysler became an Italian company.

GM became a ward of the state that shed its Pontiac and Oldsmobile brands. Chrysler killed its Plymouth brand.

Too many brands in America? We have in the last generation added Lexus, Kia, and Hyundai to our lexicon of automobiles in America.

This is America, not Berniestan. We need 23 choices of deodorant.

We also need jobs. Obama did not do that. Instead of spending that $837 billion on dropping corporate tax rates for all, Obama picked and chose the winners.

This failed.

From the National Review on May 16, 2012:
A look at the accounting shows the trouble with contentions that much of the TARP money is getting paid back. The Obama administration compares the $50 billion in direct bailout funds with the price it will eventually be able to get for selling the GM stock it owns.
But that assumes that the stock price won’t reflect government subsidies, including GM’s exemption from paying $45 billion in taxes. By the Obama administration’s logic, if the stimulus grants to TARP recipients were simply large enough, all the TARP money could be paid.
Claims that GM paid back its TARP loan are true but misleading. President Obama clearly wants to create the impression that all the money given to the auto companies has been paid back. But the $6.7 billion loan to GM was just a tiny fraction of the money given to it. As TARP special inspector general Neil Barofsky explained, GM used “other TARP money” to pay off the loan
 So what about President Obama’s boast in a White House speech in late April that the bailout “saved probably a million jobs” and that “GM is now the number-one automaker again in the world”? The “million jobs” contention is quite a stretch. 
Before filing for bankruptcy in July 2009, GM had 91,000 employees in the United States. You can reach a 400,000 total by assuming that all of GM’s jobs, as well as all the jobs of its parts suppliers and car dealers, would have been lost. Last year, employment in the entire automotive industry in the U.S. (counting Ford, Toyota, and other companies and their suppliers, in addition to GM and Chrysler) was only 717,000.
Obama lied.

The press covered up for him.

Electing Donald Trump president changed the dynamic. We reversed our economic polarity.

Seventeen days before Trump's inauguration, NBC News reported:
Ford Motor Co. announced Tuesday it has scrubbed plans to build a new $1.6 billion assembly plant in Mexico, a project that had been spotlighted by then-candidate Donald Trump, especially after Ford said it would move small car production from the U.S. into that new factory.
But while the move is being hailed by some as a victory for the president-elect, a closer look at the announcement, made by senior Ford executives at a suburban Detroit assembly plant, did not actually reverse the central decision the automaker announced last April.
Small car production, such as the compact Focus model, will still move to Mexico, just into an existing Ford plant in Hermosillo.
This was Plan B.

Had America capitulated to Marxism and elected Hillary, those jobs were not coming back. Ford would have gone full-speed with its Mexican production move.

Three days later came this from Bloomberg:
Hyundai Motor Co. and affiliate Kia Motors Corp. said they will spend $3.1 billion in the U.S. in the next five years, joining other vehicle manufacturers in announcing investment plans amid threats from President-elect Donald Trump of higher levies on auto imports from Mexico.
The planned U.S. investment by South Korea’s two largest automakers is about 50 percent more than the $2.1 billion they spent in the previous five-year period, Hyundai Motor President Chung Jin-haeng told reporters in Seoul on Tuesday. The group is considering building a new factory in the U.S. and may produce Hyundai Motor’s upscale Genesis vehicles and a U.S.-specific SUV in the country, said the executive, who also oversees the strategic planning for Kia.
“We expect a boost in the U.S. economy and increased demand for various models as President-elect Trump follows through on his promise to create one million jobs in five years,” Chung said. “We will actively consider introducing new models that have increasing demand and profits.”
Yes, the car companies make cars overseas. They have for generations. That's to sell cars overseas.

But Mexico is not overseas. It is next door.

Fiat Chrysler also announced a major expansion.

The Washington Examiner reported today:
Fiat Chrysler will make Ram trucks in Michigan instead of Mexico beginning in 2020, and the company says this will mean 2,500 extra jobs at the plant in Warren, Detroit’s largest suburb.
While this isn’t the first bit of good economic news in the wake of big corporate tax cuts Republicans just passed, it’s the one that cheers us the most, because it best reflects the way lower corporate taxes work.
The key is not bigger profits but increased competitiveness.
Lower corporate taxes will lead to higher pay, but the barrage of year-end bonuses major employers announced led to an oversimplified understanding of the economics here. The simplistic story — that with lower tax rates, corporations will have more money, and they’ll pass along some of that money to workers — is a tale of "trickle-down" economics, which is a term of abuse used by the Left against free enterprise.
Companies are spending billions on bonuses, expanding benefits, and voluntarily raising minimum wages because they can keep 79 cents of every dollar they earn instead of only 65.

That piece in the Examiner ended:
Lower tax rates aren't the only reason to move a plant to Michigan. Better energy infrastructure, a more educated workforce, and a better legal system all weigh on that side of the scale. But reducing the tax rate from 35 percent to 21 percent weighs heavily, and in many cases, it will tip the balance in favor of America.
Oh it does.


Please enjoy my two books about the press and how it missed the rise of Donald Trump.

The first was "Trump the Press," which covered his nomination.

The second was "Trump the Establishment," which covered his election.

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As always, Make America Great Again.


  1. America - a non-sh!thole country MAGA

  2. "The Earth is 4.5 Billion years old. And YOU get to live during the Trump presidency!"

  3. My business friends tell me the unravelling of Obama's hate filled regulations has been Trumps greatest stimulous so far. Even the Cowardly Scion admitted this before his family pontiffs reminded him of his lowly place in their dividend distribution schema. He rushed to do penance by blaming Trump for nuke war mania and was forgiven. He won't stray into reality again.
    The myth that Obama's genius saved the world is already under heavy construction. Personally I don't think it will survive if Trump's vision is successful. I hope Don is right.

  4. South Korea knows where the butter on their bread comes from.

  5. How would you expect democrats to know about the dangers of moral hazards when they can't grasp the day one of Econ 101 concepts like incentive, utility, and opportunity costs.

  6. Ron in Ohio Sez:

    A very well researched and documented piece of work Mr. Surber. However, as a I am an Indiana native with many years working in and around Indianapolis and with my eldest son being a plant manager there, I still cannot erase one comment you made from 4 days ago about the latest Carrier layoffs.

    "That's 1,100 more jobs than zero." Any smart person, with any mathematical knowledge would have to agree with that hypothesis.

    BUT - From a compassionate standpoint, that is little comfort to the latest 215 laid-off Carrier workers and their families in the midst of this bitterly cold winter.

    The ball is squarely in Trump's court on this one, right now! I am anxious to see if he and Pence, now that they are not campaigning, will make Carrier live-up to their agreement of almost 2 years ago. I'm sure that Trump would not allow a broken agreement in his business world to go unpunished.