Barack Obama and the Democratic Congress have declared war on Canada. The press is calling it a “trade war,” but aggression is aggression:
Ordered by Congress to “buy American” when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.
Outrage spread in Canada, with the Toronto Star last week bemoaning “a plague of protectionist measures in the U.S.” and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.
And this war isn’t just causing friction between nations — it’s doing damage within U.S. cities:
Take, for instance, Duferco Farrell Corp., a Swiss-Russian partnership that took over a previously bankrupt U.S. steel plant near Pittsburgh in the 1990s and employed 600 people there.
The new buy American provisions, the company said, are being so broadly interpreted that Duferco Farrell is on the verge of shutting down. Part of an increasingly global supply chain that seeks efficiencies by spreading production among multiple nations, it manufactures coils at its Pennsylvania plant using imported steel slabs that are generally not sold commercially in the United States. The partially foreign production process means the company’s coils do not fit the current definition of made in the USA — a designation that the stimulus law requires for thousands of public works projects across the nation.
In recent weeks, its largest client — a steel pipemaker located one mile down the road — notified Duferco Farrell that it would be canceling orders. Instead, the client is buying from companies with 100 percent U.S. production to meet the new stimulus regulations. Duferco has had to furlough 80 percent of its workforce.
“You need to tell me how inhibiting business between two companies located one mile apart is going to save American jobs,” said Bob Miller, Duferco Farrell’s executive vice president. “I’ve got 600 United Steel Workers out there who are going to lose their jobs because of this. And you tell me this is good for America?”
No, but Obama thinks it’s good for him. The thing to keep in mind here is that Obama is not like Adolf Hitler or Josef Stalin. He’s not trying to build an empire that he can rule for life. He’s incapable of even looking past the 2012 presidential election. His goal is to plunder the nation into as much chaos as he can get away with while providing quick-fix “solutions” that will enhance his immediate political power. He’s a short-termer like every U.S. president that came before him (except perhaps Franklin D. Roosevelt.)
This is what people never learn about “democracy” — when you separate political authority from private property, you end up with an oligarchy that always seeks instant gratification. There is no incentive for Obama, or any other elected president, to pursue prudent, long-term strategy. That’s a function of ownership and capital, not temporary political authority.
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By the same token, wouldn’t a CEO of a corporation do everything that he could to temporarily pump up the stock price (liquidating assets, engaging in businesses without any form of risk management, etc), and then leave the consequences of these policies to his successor?
Stock options do cause that conflict of interest, but most CEOs(AFAIK) tend to serve long enough to think midterm at least.
Your final three sentences are simply brilliant — crisp, clear and unambiguous.
I think we are witnessing the screeching and scraping created when two incompatible oligarchical structures are in prolonged “surface contact” during a stressful period of politically-driven transition toward different platforms of overall profitability.
Whether it is the viability of our famously “de-entrepreneurialized” industrial sectors, the viability of our fiat currency or the outright theft of public funds that have been fatuously redistributed among the very people who are in the crosshairs for tax increases, there are tectonic shifts underway that merit the kind of clear eye provided by the author of this posting.
Duncan, thank you for the complement. It’s hardly necessary, however.
Vake —
“By the same token, wouldn’t a CEO of a corporation do everything that he could to temporarily pump up the stock price (liquidating assets, engaging in businesses without any form of risk management, etc), and then leave the consequences of these policies to his successor?”
Sure, happens all the time. That’s a flaw of management, however, not ownership. Ultimately, it’s the responsibility of the shareholders to step in and hold management accountable. In a democracy, by contrast, the “shareholders” own nothing — they can’t sell their stake in a poorly performing company, and management can use violence to hold onto their positions.
And of course, to the extent the management of private firms can employ the state to entrench their own positions, that aggravates the problem.
No, because a CEO would get fired for doing such a thing. When people have money to lose because of stupid managerial decisions, they’ll boot out the managers. But when people have money to gain from bad government policies (e.g. GE and windmills) then you get tools like Obama in the House.
The structure of corporations is dictated by the state, and management is bureaucratic and insulated from risk. In a free market environment there would be many different structures for corporations, and we would expect Hayekian evolution towards models that aligned the management’s interest with that of customers and investors. Limited liability for investors might go hand-in-hand with unlimited liability for management, but we won’t know as long as we are under the current regime.
Wow! It’s Smoot-Hawley all over again!
He hit the world with protectionist measures and then they hit back!
Those who disregard history, as they say.
to vake/biotube:
short-termism can be traced by to monetary disorder. were it not for the bubbles created by the central money planning authority, share prices would doubtless be less volatile and so option packages less attractive. arguably, inflation lowers time horizons as well, compounding the problem.
what about the world’s biggest steel maker, mittal? they have mills in PA, do they count as ‘american’? this is pure idiocy, I can’t wait for the coming wave of inflation and mayhem.
I never cease to dislike Washington, in an industry nearly wiped out in the 1980s they get to sit right in the cross-hairs of the Obama Buy American, Smoot-Hawley policies that really increased the pain, length and destruction of the Great Depression.
When will Americans learn that there is MORE business outsourced from the US than insourced.
Canada is more dependent on foreign trade for its livelihood than practically any other developed country (relative to the size of its domestic market). You might classify it as more of an extra-large banana republic than an industrial nation.
Given these facts, you’d think there would be a lot more support for free trade in the Great White North, but if you listen to any Canuckian talk radio show you’ll likely hear 90% of the callers plus the host going off on ignorant rants about how one has to “buy Canadian” to insure future wealth. They’re horrified at the thought of trade barriers impeding north-to-south flows of goods but they seem to think that the best remedy for this is to apply the hair of the dog in the south-to-north direction.
The obvious solution is to invade Canada!
That would be a war you could win, and it would be good for the God called Economy, and you could outlaw those pesky french-speakers! And look how much bigger Americanada would look on world maps!
Then there would be only one American market, so no border problems.
Nuke Gray, We also need to invade Mexico. That way they can’t “steal our jobs.” Plus, we all know that the military spending will be good for the economy, just like the green jobs will also help the economy by making basic living expenses sky rocket. It’s the greatest plan ever thought by any person on the face of the earth that was blessed by God(because American’s are the chosen people by God).
Matt,
What would you call this massive land? If you go on to the natural border of the Panama Canal, taking up most of Central America, then something like Canamexicerica just springs from the tongue! Or maybe Canameca? That’ll make Cuba realise it picked the wrong side!
nuke,
“United states of america” would suffice.
Nuke, good funny, but let’s consider how well an invasion of Canada likely would go. Canada is larger and more populous than Iraq and America has been unsuccessful with that invasion. Also, consider that the very second American troops invade Canadian soil, America also automatically declares war against all other “Commonwealth” countries. There are quite a few of those, but I suppose that would make the map of “new America” a lot bigger — covering much of the world.
Wait a sec, isn’t that what the American government is already trying to do?
Ktibuk,
U.S.of A. is a title, not a real name! If you’re going to add to the country, why not add to the names? Or give yourself a real name. Columbinia, anyone?
Vanmind, thanks! your article gives me the new name- Newmerica!
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