I picked up my new Raleigh bicycle from Tim’s Bike Shop recently, who put it together after I bought it on eBay for $176. They did a super job!
Raleigh, that’s an American bicycle, right?
Well, no, not anymore. Raleigh bikes are made in Canada now. The instructions are in English and French.
First they pay a Canadian high school grad a solid, healthy, living entry wage, and then provide a manufacturing career ladder. Then put money into research, design, the latest manufacturing processes and marketing. They can do this as the corporate income tax in Canada is 15 percent. I guess that’s a trick they learned from the Germans, whose corporate tax rate is 15.83 percent. Both countries sell stuff all over the world as fast as they can make it. Even to the Chinese.
Then they truck it across the NAFTA border to Minnesota to some guy who sells it on eBay. I’m sure Raleigh still makes a profit. I am also sure all the profit from sales in Canada will stay in Canada to be invested and create new enduring economic activity in Canada rather than return it to the USA to face double taxation. Fifteen percent vs. 50 percent tax, no contest.
So the Canadians, directly due to the changes they made to adapt to the flat world of the Web, are picking our pockets of the wages and virtually all of the profits from another original true blue American product. The Canadians made these changes in the 1990s so they have a lot of practice doing these things. All the smart guys, and there are more of them every day all over the planet, do this too. Now, the USA has to ship Audis made in Tennessee by rail to Mexico to ship them overseas. The Mexicans take a cut, only fair since they have the trade agreements with foreign markets. Volkswagen will not add Audi production in Tennessee from now on — they’re going to manufacture in Canada and Mexico.
Free trade and NAFTA are not the problem. The USA certainly has the same right to sell in Canada. It’s just that we have nothing to sell to Canada or anyone else. Will our track record of innovation save us? Baloney! With the web now everyone can learn, reverse engineer, copy or steal what we know. We simply can’t compete. The Germans can, the Canadians can, some say the French can. Many countries have adapted their economies and policies to the flat world. Say, wasn’t it an American journalist, Tom Friedman, who told us all about the flat world ?
We need big structural changes to adapt tax, trade, fiscal, monetary and regulatory policy to the modern, Web-connected, flat world. President Obama and Hillary Clinton have ignored this real world for six years, preferring to buy votes with re-distribution promises and identity politics.
I hope the Republicans can straighten this out.
Robert R. Rohrberg
Everett
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