Month: September 2022

I don’t want to come off sexist, but I will say it anyway. There are some elements of this book that read like a romance novel. It could be that this becomes important later, but it does seem a little dramatic and over the top. This chapter gets into that aspect quite deeply. That is all I am going to say about that.

It is human nature to feel vindicated having success when there were so many doubters. Dabny and Henry are riding high and begin having an affair and end up going go on vacation to Wisconsin. Meanwhile, Jim is low and I don’t think that he really knows why. I think that it is because situations are not really going his way and he knows that he is wrong. These are not really what I want to go into this week.

The real money in this chapter is a conversation between Mr. Mowen on Amalgamated Switch and Signal Company and an unnamed worker. Mr Mowen observed Quinn Ball Bearing Co. moving to Colorado from his office. There is some discussion of the Equalization of Opportunity bill and how they don’t agree with it and then there is this quote.

“I don’t see it. It is a backward, primitive, unenlightened place. They don’t even have a modern government. It’s the worst government in any state. The laziest. It does nothing – except keeping law courts and a police department. It doesn’t do anything for the people. It doesn’t help anybody. I don’t see why all of the best companies want to run there.” – Unnamed worker.

And there is your economics lesson for all time. Money goes where it is treated well. And where the money goes, so do the jobs and consequently so does the wealth. Have you ever observed an un-incorporated area growing rapidly? Who moves there and why is this happening? It is the upwardly mobile moving to a lower cost area. Housing costs and taxes drive the migration.

By the same token, so does industry. I did a job in China back in 2009. This was making epoxy resins for carbon fiber layups (primarily building aerospace parts). The plant operators were Chemical Engineers with Master’s degrees and English almost as good as mine. The company was paying them about $20,000/year. Part of the reason this was being done in China is because the US equivalent would be paying operators $50,000/yr plus benefits, so say $75,000.

Of course not everything is perfect. For instance, a local pipe fitter was hired for the installation. When they finished, all of the piping sloped backward. This caused problems with the line contamination and dosing. So, the pipefitters had to redo the entire installation. That being said, it still cost less than doing it right in the first place.

Businesses are not stupid. If an advantage can be obtained by shifting operations for a better long term outlook then they will do so. It is the same reason the “Anti-Inflation Act of 2022” is going to fail. The government is pretending that putting price controls on pharmaceuticals is somehow going to reduce inflation. How will these companies respond? Move operations to a cheaper location i.e. China, distribute costs to non-listed products or cease production all together. I ask you, is this win-win or even lose-win?

In a free market, if consumers can’t afford an item, then it doesn’t get purchased. When something doesn’t get purchased, it eventually doesn’t get made. If I was pricing something, I would try to keep it at a razors edge of profit and market toleration of cost. Let us not fool ourselves, we do not have a free market. It is highly likely that the drug companies were in on the creation of the list of drugs where these price controls are instituted in the first place. For all I know, the maximum allowed price may be above the current cost and this could all be a sham.

End Your Programming Routine: The quote by the unknown worker resonates something that is so fundamentally wrong with today’s society. The greater society believes the government needs to do something about gun violence, climate change, social justice, inflation or Covid, None of these things drove the Pilgrims to come to America. None of those things are even thought of in the Constitution. My point being, we the people have absolved our self-responsibility and now believe it is the job of the government. Now, if we just elect the right people…