>it's kind of satisfying to see these policies have the opposite of the intended effect
This policy is actually doing exactly what it is suppose to. It is preventing more auto manufacturers from moving operations to Mexico or Canada where labor and Exchange rates are more favorable.
GM, FORD, Toyota, Honda, Chrysler all had their eye on moving more production to Mexico, this new agreement probably stops that.
I don't think anyone thought an auto manufacturer in Mexico would pull up shop and move to the US, that wouldn't make sense.
Nothing is moving to Canada, there had been a pretty big exodus from Michigan and Ontario to Texas and Mexico after Nafta. They’re still closing plants in Ontario and moving them to Mexico.
16$ an hour is less than what they pay in Canada.
Source: I work for a supplier in the Automotive Capital of Canada. These comments are so egregiously false.
>16$ an hour is less than what they pay in Canada.
It's the equivalent of 16. USD. So around 22. CAD?
I agree, nothing is moving to Canada (comment was more aimed at Mexico)I guess since you work for a supplier you heard of FORD probably closing down their Oakville Assembly plant since they are not assigning any vehicle production to that plant after they stop making the Edge and the Lincoln equivalent.
They've also closed the Oshawa GM Plant, and they've reduced a shift at the FCA minivan plant. GM exited Windsor about 20 years ago. If anything the new agreement is aimed at re-balancing auto back to the US and Canada. We had a great automotive relationship in the past, it's mutually beneficial to both economies as there are strengths and weaknesses in the US industry and Canadian Industry. I'm interested to see what happens. I want to see Detroit as great as it was before NAFTA destroyed it.
Canada is one of the most affluent, stable, peaceful nations. For 2019 Canada's GDP per capita just barely missed surpassing Germany. They happen to be a prominent neighbor to the US, their primary cities are positioned next to the US border, and they are likely to get a lot wealthier in the coming decades. If the US gets credit for the bad, it also gets credit for the good (which is the part that critics universally evade at all costs).
In GDP per capita Mexico ranks in front of 120 other nations, including: China, Turkey, Brazil, Argentina, Thailand, and just behind Russia. US imports are 1/3 of their economy; we're running a $100 billion trade deficit with Mexico, which is to their benefit. As an American I'm happy that we're doing that, it's to our benefit that Mexico's economy advances. It has the 15th largest economy in the world and continues to gradually climb. That's despite the intense domestic chaos they've been dealing with there the past ~13 years. As a developing nation their long-term economic potential is immense.
GDP is completely useless as an indicator of anything important. Sell the same house 10 times and it will contribute to the GDP 10 times. However it is the same house. Nothing has changed. Nothing of value has been added.
Mexican workers get a dramatic quality of life improvement. US workers don't have to work for less than market value / cost of living prices. Tens of thousands of US people continue to get cheap cars. Sounds like a great deal.
Maybe not. If you raise wages in Mexico, the number who come to the US looking for jobs goes down. That may move the supply-vs-demand more in favor of labor in the US.
I'd love to see those Trump voters who have to start working for a Mexican owned pool cleaning company because of that. That would maybe lead to proper inclusion of those people into a 21st century society.
And a ton of Japanese cars are made in the US already, as well. My wife's Subaru, for example, is made in Indiana. That's part of the reason why we chose to buy a Subaru, in fact. A lot of "US" cars, in contrast, are not made in the US.
Some Mexican workers get a dramatic quality of life improvement. Others become unemployed as demand drops alongside the increased car price and as the "automate or not" formula gets tipped a little more against them.
Exporting working class jobs from a higher cost of living area to a lower cost of living area is on the whole a loss for the vast majority of people who are not wealthy and a gain for those who are wealthy. It’s a blatant wealth transfer from the masses to the wealthy few. So Americans get cheaper cars but no way to pay for them, and wealthy Americans get record levels of wealth.
Globalism is a sham and it’s surprising to still see someone parrot its hollow logic that only makes sense if you look at it in the short term and on a small scale instead of as a long term society-wide trend.
What about those who live in the lower cost of living area, who now gain access to new jobs? Isn't it a wealth transfer to them as well? And these people usually aren't wealthy (usually less wealthy than those in the US), so calling it a wealth transfer from the masses to the wealth few isn't fully accurate.
And a dollar goes much further in Mexico than it does in the US, so even if the net labour spending by companies goes down, more people will be able to have jobs. I think it's reasonable to believe that 2 people with jobs is better than one person than with a job, even if the 2 are in Mexico, and the one is in the US.
As an American I see it from an American perspective. So a job loss here is a loss of wealth here, no matter what country it gets transferred to. The globalist perspective is one that damages every single person in the West whose society relies on a healthy well-paid middle class, that is now well-gutted, and we’re seeing the horrible chaotic effects of it over the past 5 years. Every father who made $25/hr at a plant years ago now has a son who makes $9/hr at a Dollar General, and both father and son are happy to back the next Hitler or Putin so long as he promises to make their lives great again. The transfer of wealth from Western society to poor societies is demolishing all of us. The US is rapidly becoming like Putin’s Russia and Europe is still in danger of falling apart despite its stronger safety net. Globalism has made freedom and prosperity very precarious these days.
Well, nobody is "owed" a job. Markets transform and respond to pressures. When you operate in a saturated market like the US the only line item on the balance sheet that is easy to tackle is labor costs, not revenue or profit. Your customers aren't going to buy products from you because you gave a raise to your janitor instead of replacing them with a roomba (relax, its a joke :P). The China/Walmart economy is here to stay. For retail companies, the only growth markets that you can sell into are the developing world markets around the world. These are also the companies your retirement funds are invested in, unless you don't want your savings to grow. If every country turned protectionist, it will trigger a massive economic depression. I suppose we'd come out of it eventually, if global warming doesn't kill us first :)
I don't understand why some HNer is expected to have an answer for this because no part of US society does.
We've underfunded career counseling in public schools for generations. We don't have any healthy career retraining system like other OECD countries do. Unemployment systems in the USA are nearly useless when it comes to retraining employees -- they really just act as job boards. Most states don't seem capable of attracting different industries, so when a batch of jobs leave a region, those employees struggle to find a near replacement. We have massive mental health and addiction problems so companies spend a lot of effort to avoid hiring anyone who might raise these costs for the company.
US society doesn't actually care about employees who don't take care of themselves. It's time we stop pretending like we do and call a spade a spade.
> So what do you do for those that end up on the wrong side of the equation, especially those who have been there for a long time?
Tax the capitalists to reduce inequality and also fully fund better programs like healthcare, education? This funding is wages for workers and as a society we remain developed?
The only problem with all our systems is disproportionate gains at the top.
Everyone in western society is owed a good well-paying job so long as they’re also willing to work for it. It’s our birthright and expectation. You can believe that no one is owed that and that everyone can just work for pennies from Walmart as America and the Western world continues to go down in flames.
Well, that is certainly a major difference between our points of view. I'm not going to say that you're wrong. Global labor arbitrage is an expected byproduct of Capitalism. There is no easy fix for that. Economies will have to transform as the requirements of the workforce change. The trend is certainly towards more automation and off-shoring, and just like we don't expect people to be ditch-diggers anymore, maybe we won't expect them to do menial jobs too. And on top of that the current population of the world is simply not sustainable, doesn't matter where you live.
On the other hand, if factories in Mexico competing for that workforce now have to look at $16 per hour, the competitiveness of an LA or San Diego area textile and clothing factory just became very slim until US wage in that sector rise.
What do you think of the argument that foreign imports are just another kind of technology, allowing us to produce things cheaper with less labor? Surely it wouldn't be helpful for us to ban industrial bread machines so that more Americans have jobs as bakers.
I don't know about that. Being an autoworker no longer pays that well from what I understand. There are tiered levels of pay depending on how long ago you were hired, etc. It's not like the old days where you earned what the guy with 30 years of seniority earned per hour. Even the benefits are different with some folks who have been around for a couple of decades enjoy a different level of coverage or vacation, etc.
That's a lot more than other factory workers in Mexico and still more than some non-auto factory workers in the US. If the best factory workers in Mexico all go to the auto factories in droves, the factory base wage eventually goes up there. The competitive advantage for clothing, toys, and furniture factories there eventually diminishes.
> The competitive advantage for clothing, toys, and furniture factories there eventually diminishes.
Perhaps, but Mexico has a ton of advantages that lots of other countries don't. They have cheap labor and can source parts quickly and cheaply from the USA.
Mexico has low-friction trade agreements with something like 40 other countries. In an age where America's government is demanding to renegotiate trade deals and do them all outside the WTO and rejecting all 3+ lateral deals, Mexico's trade policy stability is still an advantage over the current US policies, even if they lose some wage benefits.
This policy is actually doing exactly what it is suppose to. It is preventing more auto manufacturers from moving operations to Mexico or Canada where labor and Exchange rates are more favorable.
GM, FORD, Toyota, Honda, Chrysler all had their eye on moving more production to Mexico, this new agreement probably stops that.
I don't think anyone thought an auto manufacturer in Mexico would pull up shop and move to the US, that wouldn't make sense.