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tv   [untitled]    September 7, 2012 10:30pm-11:00pm EDT

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he was products are exported to more than sixty countries across the globe you're on the entrepreneur of the year award for consumer products in the entrepreneur of the year institute is also a member the world president's organization and the author of the book buying america back allen joins me now from our los angeles studio alan welcome that you were having me thanks for joining us tonight is is buying america back a political issue or is this something that transcends democratic republican left right politics. well actually it's everybody in the country is in it's even people don't vote or even here visiting what it is is a cultural problem we have the united states and let me read history surrender stands have shot here. most of the world tries to buy their own stuff to help build their own economy and we did from the time of the revolution up through the end of world war two and then what happened at the end of the war because of the terrible devastation caused in europe and japan and in china at the time because of the war
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a lot of people were starving there that evolved out and so we did the marshall plan and we had the rebuilding of japan and then americans were encouraged to buy foreign goods to help them out and so while these other countries always had this policy of buy domestic stuff and especially after the war because they were trying to rebuild their economies. we switched over to this al twisted thing of sending money in and rebuilding things actually trying to buy foreign goods and i remember as a kid i was told by my mother you know i'm a dad you know that they're starving in japan and china and germany and all that try to buy german type of japanese stuff or whatever and so what happened is that we got in this habit of buying foreign goods that most countries don't and then sixty years later we've forgotten why we're doing this you know and now it's just ok to fund the buy foreign goods all these other countries don't act like that they try to buy their own stuff unless there's a real reason that they need to buy something made elsewhere and because of that our manufacturing has gone from thirty percent down to temper sat you know over the years of our employment and these other countries are like you know driven is
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twenty percent japan seventeen even france is thirteen percent in it we're ten you know so we could get at least up to france's level of manufacturing just this is mainly a cultural problem we have now of just wanting to buy these foreign goods when other people in these other countries don't try to buy all these foreign goods i don't south korea they when. it was a park was the dictator who took over in the in the sixty's and at that time the annual income. the aneurism per capita income was like around six hundred dollars a year and their major exports were fish and human air and he just said he said we're going to we're going to start manufacturing an export in like crazy and people who were smoking foreign cigarettes were singled out on the streets for being shamed you know the news programs and things like this so there was this sense this is very rapid very and very quickly south korea you know industrialized doing that but. is that is that the city that does best demand right i think it
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yeah because there was demand for domestically made products. and also what happens is that shields you from foreign competition because if people want to buy a japanese car in your japan they won't be seen dead driving an american car for example you have to worry about pricing yourself against american cars because they're going you know they're going to buy when you're brands and all these countries start with an economic base of their own market and then whatever they sell overseas that's all extra if i think you give it away because they're making enough money at home to show a profit and so it puts manufacturers in those countries that you know like us that don't have the preference of the hugest advantage because you know the other countries actually give it away at cost and if there's to be a business because they're making money with the domestic market and so we need to get back to where we were before the end of the second world war where we had that domestic preference that you know all other countries pretty much have and we had you know up to that point and during the period that we're building our economy and because we need to build our economy now we're in the same position that korea was
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japan was and germany was after the war you know where we need to boost at least five percent maybe ten percent you know end of employment but we also we also had from from the george washington a ministration through the eisenhower administration we had tariffs on imported goods that averaged in the latter half of the nineteenth century in the first half of the twentieth century average around thirty two percent those tariffs are now averaging less than two percent and they've they you know steadily collapsed from the largely from the nixon administration to today the huge collapse during the clinton ministration with nafta gatt the deputy oh. isn't there a structural element there that has to do with that open discouragement and and you have all these other countries that are there that have tariffs and they don't call them tariffs they call them you know reverse vats but they are functionally terrace . for example in china you know there's a vat and most countries have of that it's not reimbursed and so yes you do have it
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in structural taxes because they collect it basically as a national sales tax when you bring it into the country make a. there's about twenty percent in the range fifteen twenty percent which is functional tax that that right which is frankly a tariff and americans don't seem to be willing to have a b. eighty here you know so what happens is we go on and on with this and puts that a competitive disadvantage as far as how much. much cheaper goods are here because a lot of their taxes are collected differently and in ours or net it's after everything but beyond that the other thing is domestic preference because what will happen is if you go to for example france and the girl she sells the french frags french flags on that approximate france and nine out of the top ten cars sold in france are made in france and in fact number eight is the only important middle it's the that the most regular five hundred i think and so they don't have to worry about you know even with all their problems and they have high social costs there and they're not really good at manufacturing but they know they will they want to
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be seen driving a french car and so it's like our parents did they want to drive an american car but and so a lot of it isn't isn't just the tech tariffs it actually is the mystic preference you know is that we like organic food people pay more they want to get it sure but in that in that context and i'm not disagreeing with you at all but it seems to me that a lot of that actually comes out of government policy in south korea as i said there was actually a government policy for three decades of shaming people for buying south korean goods in japan for years this was you know brilliantly chronicled in the book the rise of japan back about twenty years ago or so by a fellow by the name last name of wealth there again a government. program of basically shaming people who didn't buy japanese goods in france you know if i don't know what the law is right now but i know when i was living in europe fifteen twenty years ago it was it was illegal in france to not
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have you had to have a certain threshold of french language programming on television. you know when they were debating whether to teach other languages than french in their schools i mean there was a real kind of xeno phobic sense that was actually part of law much of the french law so are you suggesting that we should be promoting a kind of jingoistic nationalistic and i'm not saying those as you know i think that these things actually in some ways help nations but you know. encouraging that our government should be encouraging americans to buy american goods or do you think that this is something that just comes out of the people themselves. well two things the bully pulpit you know that is i think it was teddy roosevelt said it was the presidency so it just you couldn't regulate you could stand up there and tell you we need to do this in fact j.f.k. famously said you know what we need to be on the moon ten years and america fell behind it and i think the next president you know or even this president should be
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out there saying we need to rebuild american manufacturing the first thing you can do is try to buy things that are good for economy now one of the things i point out in my book which is though is that times have changed things are made many countries so we need the country of origin labels to get percentages of content by country not not just you know made this place or that place but the other thing is that when you buy imports some countries buy a lot from us what builds our export market so for example korea seventy percent but china is twenty five percent so if you buy a thousand dollar television from china only two hundred fifty dollars coming back if you buy korea seven hundred eighty dollars coming back and that's a five hundred dollars shift in in our export market because when you give the koreans money they've spent a lot of it buying american goods that the chinese don't and so in fact it's it's worse than that because you'd like to get it to canada they have a ninety percent trade ratio and actually it's only ninety because we buy a lot of oil it's actually a surplus of manufacturing so if you give the canadians money they're going to
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spend it here so it really doesn't help very much when you don't buy a canadian product and buy an american product instead but helps a lot when you don't buy chinese products or some other country it's very low trade ratio with us so that's why i want to do that later this is why your suggested would have the percentages yeah you're suggesting that that trade ratio the you just identified should actually be part of the labeling of products sold united states. yes actually that will be introduced in january a new bill. in the energy and commerce committee in congress that you know that i don't know what congressman that helps sponsor and it will they'll have percentage of content by country and the trade ratio of the nationality of the manufacturers that will be like food when you buy something it will have all this. information so you when you use a consumer know where the money's going and where the stuff came from and i believe you have a right to know that it effects your column e. it also is an indication of quality for sample of you know japanese the tonics or german steel and if you know that's probably a better product also you may not want to send money to some country that's burning
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down rain forests you know to grow cotton or having child labor camps and so as consumers we would have that power then to pick where we're money goes and there's a huge domestic economy ten trillion dollars of consumer spending and you can control a lot of those on the world by helping businesses or are not buying things and other countries that do the things that we support. it sounds you know very practical and idealistic and yet we can't get congress to say let's label genetically modified foods when you've got over ninety percent of americans who want that label and every other developed country in the world requires isn't isn't this i mean you identify yourself as a republican isn't this going to be slapped down by the republicans is another big government program. well fortunately i'm a republican sometimes it takes nixon to go to china as they say yeah and up with that i've met with a lot of the republican leadership and they all know we need to do something about
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jobs and the sometimes your budget before you start blaming republicans republicans do occasionally good things in fact republican star the e.p.a. you know and so all sort of. practical. and is actually with under the cabinet but. what will happen is that republicans have a way of doing things which usually with balls and the ability markets and i don't know if you know but we buy a new car this is small index that tells you how much it's aleuts and i invented that index and got it put on cars and i republican you i mean you would think that i'm the guy you know and then but that was it in it opposition of what they were going to do which was they're going to have right sharing and they're going to have these mandatory limits which were going down every year and for some type of cars it was impractical because they you for example had a family that needed a giant car with you know seven seats where you'd be basically penalize you know versus this small family would and that became social engineering and i was i guess
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that's what i wanted to do was created a competition among the manufacturers to have the index and actually work very well they weren't in point nine nine anymore just under the limit they started going to point by point two point seven and the car companies wanted to avoid being the very limit is like having one star in the crash test that's what you need leave so a car here but no one wants to buy a car one star on the crash tests they all are competing with each other to get five stars and so when you get markets like that going which is what i want to at the label where this has some american continent more american content or it's from countries that buy more from us suddenly what'll happen is manufacturers will be changing their purchasing to have some more american parts in it or they'll switch the factory to factory that. this isn't a country that buys more from us or even these countries that don't buy much they're going to start seeing their sales fall and they're going to go we better buy something american to get a ratio up and. how markets work you know and when you don't have that information always always bad things start to happen yeah why is it said that it's a brilliant argument more more conversations with great minds were alan u.k.
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right after this but. my. prime. counting on the.
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wealthy british style is not. the time to explain. markets why not. come to. find out what's really happening to the global economy with mike stronger for a no holds barred look at the global financial headlines tune in to kaiser report. says.
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back to our conversations of the great minds of the alan u.k. alan is an entrepreneur the founder of underwater kinetics holds over fifty patents his products are exported to more than sixty countries across the globe he's also the author of the book buying america back let's get back to it allan where were did this first come to you what what what inspired you to come up with this idea and write this book. well through things we had done the label thing on cars twenty years ago so. that you know i did it and got went on to other things you know this is kind of a little thing in my past and so i knew about labeling and actually how to get it done and one of the few people that actually experience on that and i was at home
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depot and i was buying a shovel and i try to buy american products and usually because i'm trying to help united states but also these you last longer and there was this shovel and had tools still made in the usa and the american flags and all that and so i was so anyway i go to the checkout stand and my wife who's got better eyesight than me still she she looks at her turns over in tiny print in the back it said made china ok and so and i couldn't read it and then my reading glasses and so i realized you know like the only reason they put tools to maybe was saying flags on there's a try to get the impression that this is main ice age was actually chinese that is that it's a trademark for the team so that was actually a name for the tools i mean usa it actually was a division of true temper which is a public company so we're got a public company with the lawyers decided we could sell more shovels they didn't do it on one of the names they do on you know they've created this new name just to give people impressions mean united states even those made china so that was so
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it's random it was actually wanted by americans was a brand name is what they did and so what's happening is now is companies are gaming consumers even if you want to buy american stuff where they're playing games with the labeling and by the way that's not legal in any other country you can't have implied it's made united states and make it a trademark in germany you know that actually would be a criminal prosecution for consumer fraud. and i have a division in germany you know and they have very strict consumer laws there and the other thing that happens is that when you look at the laws we have because they were made during that period we're trying to buy imports it's seventy five percent content or replace of glass and if you can transformation so what could happen into that because it's you can buy all the parts of china assemble it here paint it now is transformed now you can relate all this they. it's made us say even though all the parts came from china ninety or eighty ninety percent the money is going to china from that purchase and so when you have a leveling system like we have right now that is not in complete if you actually did mislead you know it leaves us helpless where we have no power as consumers and
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i believe you have a right to know where the stuff came from where your money's going because if you want to spend your money to help this economy or have a better chance of getting a better product you know you know where it's made or its components are made and that's the reformer i want to make were by cars and i know how much the polluter how much the gas mileage is on the food how many calories it's got but you also know when you buy something you know where how much of the money is going where you know and that's the law that i want to start pressing for next year this could be going to the committees it's interesting i remember when i was a kid my my dad was in the japanese occupation forces after world war two he joined the army at the end of the war they didn't know the war was ending but that's when he and but by the time he got out of boot camp the war was over and he was shipped off to japan for for two years to guard the bases or whatever he did so and he told me how there were and this might be a bit an apocryphal story i don't know if it's actually true but in fact i think it
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probably is an apocryphal story that japan had created a city they renamed a city. usa spelled usa and they would and they would export a lot of their goods through that city so they could print made in on them and strip them of the united states that's true actually happened and this was in the one nine hundred fifty s. and nine hundred sixty s. when there was still a strong american sentiment the united states and i remember you know i grew up in michigan and i remember the one nine hundred seventy s. when toyota first you know disastrously introduced a car and then they came back in the marketplace it wasn't toyota i'm sorry it was whoever it was in india it may well have been to got to the dots and yeah yeah. you're right and then they can then they came back you know about five years later with a decent car that actually worked and and and i remember you know people bashing the sides of cars keen cars i mean you know in michigan it was a it was a b.f.d. if you were if you saw somebody driving
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a foreign car it you know it was like fair game. how have we gone from that you know and i you know i was born in fifty one i grew up you know through that era i don't have any recollection of anybody telling me to buy japanese goods because the japanese were starving. i do remember you know the nationalism ball way through the seventy's and then it just kind of faded away in the eighty's the scenes with you know when reagan came into power. and i've seen nothing of it since then how. can you address that can you talk to that a little bit of that cultural change in america will this two things ok and is the lesson organic times and what happened. and what happened was that you know we had didn't have a manufacturing problem then so we took it all for granted in the meantime these countries were on this help and program to build their manufacturing and actually to beat the united states and so while we're sitting here being fat dumb and happy
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you know and very comfortable and things have always been comfortable and we've never seen it not comfortable with these other countries had just seen it they were actually in disastrously uncomfortable with it and they were rebuilding out of it like with our great depression and so they were highly motivated as a nation to build their economies and be you know the american business and you know we were sitting there going to place only going along we had these good numbers and then what happened is the manufacturers when they found out they could just important people didn't care you know they could actually life was easier not to have to go through all the work of building a factory making the stuff you just buy somebody in and mark it up and sometimes it's better margin so what would happen is that you could either. drop the prices and have a little higher in about of sales or you just take extra profit margins and all the c.e.o.'s what happens is that there's a c.e.o. responsibility is to make maximum profit for the shareholders and that's not a bad thing if you have a fire for one k. you want the best performing stock but what happens now is that your motivation is
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to have highest the highest profits which you just talked about you your bonuses and stock options are all based on that and as long as the consumers will buy it anyway no matter where it's made the automatic decision they should make is to make it overseas now when there's nationalism what happens it's a different deal whereby if you start making overseas your sales are going to drop ok and so suddenly saw an easy decision were just shipped overseas make it now it's like well we're losing market share to other company and maybe we ought not to do this in fact actually we can take market share by getting a plant back here and that's what this is consumer demand that drives all. consumer apathy is what created the unemployment problem we have right now consumer you know preference and demanding this stuff not just slight preference organic food you walk in they don't have it you are going to buy it ok then some of the staff to start offering because it will be not a choice of making more margarine not a big no sale versus a sale because you can't sell this guy something different it takes that kind of dedication to move these markets like you have that kind of food wal-mart still
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target food now was it has lower prices as people come in they were going to buy their stuff at all so if they want to get that person's money for food they have is now offering the things they would actually buy and that's an excellent point however in prior to the reagan eighty's it was a crime to compensate a c.e.o. was stuck and in fact the c.e.o.'s like george romney i mean his interest was not in maximizing value for his shareholders his interest was in building a stable company that produced a good product and that was a good citizen of the community you know when when when there was a community favorite lost totally well it has been and i think i think because of this myth of shareholder value which is a whole nother conversation but if you combine that you know what you just described with the other big change that reagan made which was in eighty two when he stopped in force in the sherman antitrust act and so we had these mergers and acquisition mania you know the michael milken and all this stuff and what happened was thousands hundreds of thousands of small domestic manufacturers became
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thousands of large multinational companies based in the united states and at that point those multinational companies it seems to me have a whole lot less interest in being american promoting american building in america and it wouldn't be a reasonable argument to say that that was one of the largest contributing factors to how we got into this mess and the maybe one of the things we should be doing in addition to label in our products is breaking up some of these large companies these giant monopolies. well the answer to spy piece of what you're what we need is have a national space race type you know resolve that we're going to build manufacturing you know from ten percent of women right now to fifteen at least twenty in the whatever it takes ok and so it's buying domestic stuff it's kids being told by their parents you know that that you should learn how to be a machinist or technician of some kind of whatever and work in manufacturing is
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that builds america you know it's a it's also. local banks trying they can't. basically loan their money out to other areas that they're invested in to with their region and so the manufacturers now don't have to compete against wall street you know for where the money's going then you get easier access to capital you have manufacturers that have incentives by local government right now what happens is i have a plant in san diego and also in germany and they don't want you in your city usually because what happens is retail gives them a percentage of sales tax of the local government this money from that the manufacturing doesn't just have people living there and it may or may not be the city so that really don't care for their or not it but they want retail stores because that affects them well when you have a local governments that really don't care if you have a factory there or not you know then what they what happens is that you know they they go out of their way to you know over inspect everything and make everything difficult on you and other places you know they want the manufacturers or given him a break or helping out in different ways and so it's the whole system of you know
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everything from people buying things local government you know the way capital councils around the education system we have for kids where they're train for trades that affected the manufacturing and our couple our attitude toward it they're going to add what they want to hear. that other countries don't have blue collar white collar ok that's an american invention that came after world war two right now somehow it's prestigious for some reason not to have to a job we have to use your hands and brains at the same time so actually a call center person's time if that wall white collar worker but a. a porsche mechanic or that gets paid a lot you know isn't even making three times the as much and so you have a prestige factor ironically here for people that there are actually physically doing things especially that uses brains and skills but in other countries they will spring surgeon uses their skills and brains are physically doing things a sculptor isn't a painter is those are high level things you know so we shouldn't we shouldn't like categories white color blue color but being physical or not it really is you know
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it's a complete picture what you do in a smart you are and we've lost that here where people don't respect as much people actually do stuff you know there's a lot of difficult things like plumbing in a high rise building is a very technical thing to make it work you know and people of tennessee take those things for granted and i and a lot of the many facts so you know are very technical so are you suggesting are people with the smart to do this or are you suggesting that we should make our educational system more like it was in the sixty's when you had college track first says you know. the industrial track or in germany yes but this it's a pretty. difference because what happens is ok is that i took five years of machine shop for three years and i was going to use in college and i was an engineer because the system you keep you can have both we know how to make it and you know the theory behind it and us has got to get back to that and so we've got to train people i think you're absolutely right alan thank you so much alan u.k. great to have like you have thank you to see this in other conversations of great
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