Replies to post #92783 on Biotech Values

[zipjet]

CAT recently suggested it would transfer jobs into the US:

It seems to me that the best hope for rebuilding employment in this country is manufacturing (unless we are going to embark on another round of financial reflation - a path we have started down). We have as a national policy exported manufacturing jobs in the name and under the cover of having a strong dollar. We are now letting the dollar decline and that is a necessary though insufficient precondition to rebuilding our manufacturing capability.

CAT is pointing out correctly, that the cost of producing in the US is an important factor in shifting production back to the US. Forcing up US costs for CAT (or any other US producer) would necessarily change the calculus of whether to produce in the US or abroad, unfavorably to US employment. There are limits to devaluations benefits and if pushed to far US devaluations will result in competitive currency devaluations around the world. In that context, maintaining low costs of production are even more important than the effect of devaluations. CAT is right to raise the point.

Despite this, it seems we are about to engage in a grand experiment that will dramatically raise the share of our GDP devoted to health care - costs that in some fashion MUST burden production - that will necessarily work against raising employment in the US. I know we are being told this is not true. We are assured that we are looking at savings of $1.3T despite providing another 30M people with health care. Simpletons may believe that. But it is an accounting word game. If private citizens did this, we would call it fraud and throw them in jail.

Should Obama's grand health care plan pass, it will have financial repercussions greater than our population will accept. If so, it will be reversed more quickly than it was adopted.

It seems to me that when we provide more money for a given good or service it drives up prices. The impact of medical insurance on the cost of medical care and the impact of large loans to students for education illustrate my point. Obama's will to bend the cost curve will not stop rising costs of health care when set against 30M more people seeking care backed by the governments checkbook.

My apology to any who find these comments too intemperate.

ij

PS - Admittedly, these are my opinions.

[jbog]

Cat as of recently had 13 new factories (within 10yrs) in china and is building 3 more. I believe 65% to 70% of it's 100k employees work off-shore.

I'm sure they treat the costs of Japan and U.S. as being the same, so they are probably buying peace with the unions.

MMM is now starting to move massive amounts of its production overseas.

[OakesCS]

CAT

the healthcare bill wasn't a factor in CAT moving the production facility back to the US. Had more to do with quality assurance and transportation costs.
cso