Reuters story

In an era not only of record US government defecits, but also record trade defecits, college-aged Americans are not aware of the geographical origins of the brands they buy.

And we're not just talking about American brands that have been bought out by foreign companies (e.g. Ben & Jerry's ice cream, Smith & Wesson, both of which have in the past been owned by British conglomerates - they may still be for all I know). No, we're talking about foreign brands like Korea's LG, Germany's Adidas, and Denmark's Lego, all of which this survey found were thought of as American companies.

And it works both ways - high technology businesses such as cellular phones are attributed to Japan, when the two global market leaders are Nokia (from Finland) and Motorola. Motorola is, of course, as American as... Coca Cola. (Anyone who thought I was going to say "apple pie" there is also falling into the misattribution trap - apple pies, while they may well be an American staple, were almost certainly not an American invention . )

Questions for debate:

• Does it matter that few Americans know or care about the origins of the products they buy? Why, or why not
• What implications are there for the origins of the trade defecit?
• Looking forwards, what are the implications for, say, 20 years hence, when America's century-long status as the world's sole economic superpower will (likely or not - please feel free to discuss) recede to being one of three powerhouses, along with China and India?

You can't be the supposed capitalist powerhouse of the world where people can 'make it' according to the American dream of free market capitalism, then abandon that principle when there is competition. Americans should buy the best products for the best price. It shouldn't matter where it was built. If Americans' buy American' over buying quality, they are subsedising below-standard industries that will collapse in the long run.

One of the biggest patriotic 'buy-American' campaigns was mounted by the US car manufacturers in the 1970s, when japanese and German imports were wiping them out. They tried to replace actua quality with desperate flag-waving. Many people DID respond by 'buying American', which as a result meant the US car companies could delay making actual changes or improvements, and thus fell further behind.


If the US wants to keep its commercial lead, then make better products. If other countries surpass the US, then according to the very principles that made the US what it is today, those uncompetitive US companies need to change or die out. There is no better way to ENSURE that the US will eventually LOSE that battle then by asking people to sunsedise below-standard manufacture because it is 'made in the USA".

Does it matter that few Americans know or care about the origins of the products they buy? Why, or why not
good question! The problem is, with the exception of LG, the brands you've identified have been major players in America for 2 generations now, and they've never made a big deal about their origins, at least here in the American market. LG, on the other hand, is an excellent example of the phenomena you've identified.

I think Americans are probably more comfortable with globalization than virtually anybody else. For the vast majority who care about the matter, "Made In America" is more important than whether or not the company is an American company.

What implications are there for the origins of the trade defecit?
For the origins? Not much. The vast bulk of the trade deficit is with China and oil.

Looking forwards, what are the implications for, say, 20 years hence, when America's century-long status as the world's sole economic superpower will (likely or not - please feel free to discuss) recede to being one of three powerhouses, along with China and India?
Century long status? Our status as "sole economic superpower" dates from the end of WW2 to the rise of Japan, Inc. However, that is a secondary issue to the crux of the question regarding China and India. China's ascent is likely to be gutted by demographics and the strangling effect of their Communist nee Mandarin system. Their political system can only allow a certain limit of liberalization, and its probable that it will reach those limits before China transitions to one of the "three powerhouses." They will probably manage to make it to G9 status. India is a more interesting case. Will they or won't they manage to make the leap? If they can, the time frame is likely to be longer than 20 years, more like 30-40. For the Indians, the greatest challenges are going to be their social systems and the level of tribal/religious diversity (i.e. conflict). Islamofascism is another monkey with a wrench. Will they manage to join the G Club?

I find myself in rare agreement with Vermillion on this one. As China, India and others economies grow, I think market forces will tend to even things out. There is a middle class beginning to emerge in China and when those workers start wanting to buy the wide screen televisiions they make, these low "third world" wages we keep hearing about aren't going to stay low very long. It's the nature of the beast. We might even see a migration of industry back iinto the US from overseas as we have in the case of some of the Japanese car manufacturers.

Interesting sidenote: Toyota was given access to NASCAR and allowed to enter their cars in the three major raciing circuits. This is significant because until now, NASCAR has only allowed American made cars in its races. In a real twist of irony though it turns out that the ONLY model of car in NASCAR that is actually made in the US is, you guessed it, The Toyota Camry. The Ford Fusion, Chevy Monte Carlo, and Dodge Charger/Avenger are all made in Canada.


Aquilla

•
No. Americans look for quality and value and the companies able to deliver these get the business and should. That said we should not put up with “dumping” or other unfair trade practices.
•
China is a good part of the trade deficit and much of this is due to big US companies like GE manufacturing all their electronic products there. Even the Japanese use China these days. China needs to allow its currency too “float” – or be set by world currency marketrs. They currently do not do this and I, for one, am in favor of sanctions to force the issue. There ia a Bill in Congress to do this now.

We should have no problem sharing the stage with China and India. As they get richer they will be bigger customers for our goods and their labor costs will increase (as Japan’s did). We need to keep the technology lead and to do this we need to improve our education system and attract the best and brightest from the worlds talent pool rather than accept tens of millions of uneducated illegal aliens.

Well... honestly, you're pretty spot on.

Historically, the US has kept it's economic superpower status by remaining a leader in the "curve" of technology. This was evident with industrialization, the technology age, etc. Maybe not THE leader, but surely A leader with the resources to produce on a global scale. Good examples might be Ford, Zenith, and Microsoft (in chronological order). Many inventions that people take for granted (or as necessity) in the world came from US inventors (or manufacturers).

One thing to be said, however, is that most of the "Buy American" jazz is gone. People are fed up w/ the UAW and know that Honda and Toyota have US plants.

That being said, India and China may find themselves in the same boat rowing. Frankly, I'd be very surprised if that happens in 20 years (considering market conditions, resources, education, etc), but definitely could happen inside of 50. That means that many of us may live to see the economic tides turn (or at least change). I realize that many people are concerned about these changes, but figure that as of today the US still produces about 1/3 of the world's GDP. All of these notions are speculative really.

What does it hurt? Nothing I'd suppose. Hopefully all will benefit from better products at better prices. Hopefully was the operative word in that sentence.

(DON'T WORRY FLAG WAIVERS... we'll still have the most powerful military. India and China are beyond decades behind.... )

Absolutely agree...

BUT...

How about answering the first two questions? Honda and Toyota may be recognised as foreign brands, but what about the three foreign brands I cited that most American college-age people wrongly think are American?

Does this speak well of their perceptions of them, or ill?

Also, what does it say for the technological leadership you and others (rightly, IMO) set great store by that an American company which can rightly claim to be at the technological cutting edge - Motorola - is assumed to be Japanese? It seems that American consumers (or at least a big segment of them) can only conceive of mass market consumer electronics being any good if they are foreign.

(Not uniquely American - in the 1980s, a large high-street electronics chain in the UK began branding their made-in-Britain hi-fis and TV sets with a Japanese-sounding name for that very reason - British consumers believed the best stuff came from Japan.)

The problem with outsourcing production is skills go with it--design, engineering, production technology, patents, etc. In certain types business with high barriers to entry, when these are gone to another nation, they are likely gone for good....

For a country to be truly strong (and not just a playground filled with happy consumers), it needs a solid balance of payments and should not have too much externally-held debt; should have strong capital markets and stable currency; should have a strong (but not overly high-cost) military; should have secured long-term sources of natural resources; should have systems to develop new skilled workers and entrepeneurs; and should keep and secure its intellectual property.

As people are both producers and consumers, you should not peversely neglect one role to the detriment of the other. Indeed, I am willing to reduce my consumption joy to enhance my productivity, and indeed our nation should do this, too. Our govt should focus on making US-sourced business competitive globally and should punish nations and overseas businesses who damage our economy, even if it hurts our short-term supply of cheap consumer goods. Our govt also needs to balance more carefully its deficit spending and money creation to help stop the downward drift of the currency against foreign issues. These are traditonal goals, and they are no less true today than in the past.

It is critical that we foster the long-term strength of the nation, and not stay drunk onr cheap TVs and low-cost underwear....

Honda and Toyota have been showing American companies how to do it right (in America) – but GM, Ford etc. are too stupid and mismanaged to get it. Most Toyota and Honda cars sold here are assembled here and many parts are made here. So how can they do it right and the American companies cannot?


Many companies design decent products here and have them manufactured in China, Malaysia etc. Nearly all electronic products are build elsewhere. We will never be competitive with foreign labor unless and until we have robots do the complete assembly.

Motorola designs here but everything is built overseas. Most other US consumer electronics companies were put out of business decades ago. GE is the exception. All their consumer electronics is foreign built.

The biggest part of our trade deficit with China is US designed products built there. And there is nothing wrong with this.

China needs to let its currency float.

Ted, you are mistaken. First, GE is not a "consumer electronics company", they are much, much more. More importantly, off the top of my head I was able to come up with the following US consumer electronics companies:

Harmon Kardon
Bose
Apple (iPod)
Microsoft (XBox)

While it is certainly true that the Asian manufacturers dominate the world's consumer electronics, there remain other players, both here and in Europe. Some of the production remains both here, and in Europe as well, albeit not a whole lot of the mass market level products.

Frankly, I think it would be interesting to get a sense of how much folks know about both the origins of many brands, as well as their current ownership.

One good example, actually twisted is a better word, is

Radio Corporation of America, aka RCA. Look it up, see what a tortuous path it has taken.

Finally, there are examples of companies and/or brands thought to be foreign that are, in fact, American. Heck, Bose and Harmon-Cardon are possible examples, and of course the classic is Haagen-Daaz Ice Cream.

Right. Sorry I meant the consumer electronics portion of GE – the foplks that make the clock radios etc.


And the other companies you mention including Apple design here and mostly manufacture in Asia. (not sure about Bose).

I cannot remember the last time I looked ay a piece of electronic gear (mass market) and read “made in USA’ - can you?



I am familiar with them and deal with the military group in Camden NJ – they were GE then RCA – now L-3.

But you can still see the RCA tower with “Nipper” at the top!

That doesn't tell the whole story Bikerdad. I have a 60 gb iPod in my hand right this minute. Apple may be an American company, but it clearly states on the back of the iPod, "assembled in China."

I also have a Bose microphone that says "made in Japan."

I also have a Bose Accoustic Wave Music System. It was made in the United States, but the remote control for this unit was made in Mexico.

I also have a 5 CD changer for the Accoustic Wave unit. It was made in China and the remote for the changer was made in China.

Fair point, Bikerdad.

I confess I've never heard of Harmon Kardon. I'd have to Google them to know what they do or make.

Apple and Microsoft I'm pretty sure are American brands, no problem.

But I honestly didn't know Bose were an American brand. I'd have bracketed them with the likes of Bang & Olufsen as Scandinavian myself.

Hey, I never said that geographic ignorance of brand identities was uniquely American!

I just think it's interesting that there seems to be a disconnect in discussions of why the world's largest consumer economy has the world's largest trading deficit which make no mention of the fact that American consumers are, at root, fairly ignorant and fairly blasé about what they are buying.

Reminds me of the "reasons" people give for their hacking, phlegm-filled cough that have nothing to do with them smoking 40 filterless cigarettes each and every day.

Clever analogy.

I confess ignorance about where most brands come from. I know legos are Danish because I looked into Danish products during the cartoon fiasco (to support Denmark), otherwise I would have thought is was an American company. But, what does "American company" mean these days? Or UK, for that matter? Americans have outsourced so much that EDS, for example (an American company started by Ross Perot) has a much larger overseas workforce than American. Their base of operations in Plano, Texas...filled and booming twelve short years ago...looks almost like a ghost town today. I think one building is occupied out of thirty*. If I buy a Dell computer made overseas, am I really investing in America? If I buy a pair of Dr Martens made in China, am I supporting the UK?

I'm ignorant of the economics behind this, but it seems to me if the production facilities are overseas, we are still importing those "American products" we buy. Am I wrong?

*I should add, this was last I heard. The buildings might be leased out to other companies now.

Julian brings up an interesting point......



If I go out and purchase an "American" car, say a Ford Fusion that is actually built in Canada, does that add to our trade deficit with Canada? Even though the profits from that sale go to the Ford Motor Company? Anyone know how that sort of stuff is calculated?


Aquilla

Just a brief correction... the Industrial revolution occurred first in Britain (by several decades)... the difference was the ascent of the U.S. steel industry, as fueled by massive coal and iron reserves in the mid 19th century.



If I remember correctly tThe trade deficit is tracked on the basis of currency movement. The US dollars leave the country when vehicles from Canadian plants are purchased for U.S. dealerships; and end up in the coffers of Ford Canada Inc. That company's profits move up the chain and do end up back in the U.S., but at that point the money has been diluted to the point that the amount returning is negligible. Profits have an almost impercetible impact on economic activity when compared to trade or investment, so that money (even if it is included in the calculation) is insignificant.

Of course, that all assumes that Ford turns a profit...

Actually it makes little difference to consumers, who want a good product, at the best price. Certainly the millions buying foreign cars and Japanese electronics know they are “foreign” and I bet most consumers don’t know that companies like Toyota sand Honda actually assemble most of the cars sold here – in the US (with non union labor). The parts assembled come from all over including US companies.

Add to this that there are thousands of “invisible” things form industrial tools to airplane wings that are made offshore and you get a picture of the world economy.

The bad part about the deficit with China is that it should be smaller and would be if China allowed it currency to float uinstead of being set by the government.


“Why should I care what the Chinese currency is worth?
By keeping the yuan artificially low in value, China is effectively giving U.S. consumers a discount on all Chinese exports. Why? Let's say a Chinese factory can make a profit selling DVD players for 800 yuan. That means they can then sell it to someone in the United States for $100. If the yuan were allowed to appreciate in value, that 800 yuan DVD player might suddenly cost, say, $115. If an American factory makes a similar player for $110, then that change in the value of the yuan can make the difference between business success and failure for the U.S. manufacturer.
So, by keeping its currency undervalued, China is discounting its own exports. That's good for U.S. consumers, who get to buy cheaper clothes and electronics and other items. But it's horrible for many U.S. manufacturers who find they can't compete with low Chinese prices. Some U.S. manufacturers, though, have adapted by buying many component parts at a lower cost from China. The ability of a manufacturer to adapt depends on the company and the product -- and even on the level of globalization in that industry. “


http://www.npr.org/templates/story/story.php?storyId=5353313