President Trump has been in office for a week now. So, it would be a good time to review progress thus far, given his phenomenal rate of advance on key issues. With cuckservative presidents past, a year wouldn’t be enough. Plenty of sites can handle all the actions Trump has taken, but I want to focus on the effects his Presidency has on the world I see around me, particularly with respect to small businesses.
For the businesses we do business with, particularly design or manufacturing companies, the Trumpening affects or promises to affect three key areas: supply chains, H-1B visas, and Obamacare. This week, we focus on these issues and look forward to seeing how Trump’s policies affect them.
Of these three areas, supply chains have experienced the most visible effect so far; many businesses we are in contact with are planning for the practical impact of import tariffs. Starting in the mid 2000s, perhaps 2003-2004, the momentum for outsourcing to China really picked up steam. Some niche components that we designed and supply went through a game of domestic musical chairs as one US supplier after another vanished from the map over the years. Worse, we paid tooling charges several times to have these components redesigned after each move. Eventually left with no quality options (one remaining domestic supplier who is heavily into defense developed quality problems, possibly associated with HR issues), we finally took these designs first to Taiwan, and then to China after our Taiwan vendor moved there. That company then went defunct anyway, causing us to once again retool this component in China via a US intermediary who specializes in such things and speaks the language.
Although our manufacturing and final assembly remains in the US, it is practically impossible to find any domestic component suppliers who aren’t just fronts for Chinese sources, even those high-tech suppliers who are named after chest-thumping US states. Most “Made in USA” high-tech products contain at least some Chinese content, like it or not. In fact, some sub-assemblies are available on Amazon for less than we can buy the components alone, much less the circuit boards, assembly and fulfillment costs. Clearly, there is a massive amount of trade dumping going on, the math doesn’t leave any other options.
The buzz in the industry among my sources is that a 50% general tariff is likely from the Trump administration. My libertarian friends would crucify me for this, but I think a 200% or 300% tariff would be needed to correct the massive trade imbalance in a meaningful and permanent way. A large tariff on components would cause prices to jump, but not as much as you think. For companies like ours who are still manufacturing here, doubling or tripling the prices of components is a small hit when compared to the existing assembly and fulfillment costs, which would only go up slightly. For our high-end, high-margin products, we could absorb the additional cost and more than make it up on increased sales volume as more Americans have more income to spend. Our low-end, low-margin products might have to increase in price slightly, but our napkin math shows us that a 200% increase on Chinese components might increase the low-margin prices by 10% or so, which is entirely reasonable.
Despite this, expect to hear a lot of bitching and threats from large manufacturers and their big-box retailers who have heavily invested in overseas supply chains, and whose offerings are much more price-sensitive. Small businesses, however, are in the best position to heavily innovate and automate, lapping their larger rivals who depend on globalism as a subsidy.
As far as the revenues collected, I would like to see that money funneled into public R&D projects in the short term, and the results of that research made publicly available, open-source fashion, so that any American company, large or small, can use it to create jobs and new wealth and help heal the economic damage globalism has caused. More later on this approach, which some would call a neo-fascist policy, but focusing on only the bottom line at the expense of the interest of Americans has led us into this economic blind alley we’re already in.
The white-collar immigration swarm, H-1B visas have imported large numbers of moderately-skilled Indians and Chinese to take jobs formerly held by highly-skilled Americans. Originally sold as a way of filling “badly needed skill gaps”, the H-1B visa program was abused from practically day one. Knowing that the H-1B program offers visas to fill positions for which qualified American applicants are unavailable, here’s how the dodge works.
First, BigCo would advertise for a job with skill or experience requirements that are impossible to meet. For example, a job posting might require 5 years experience in writing applications for Windows 10, which would be impossible since that OS hasn’t been out that long. Although this is an extreme example, and most impossible requirements are much more subtle than that, we have seen examples exactly this blatantly absurd about a new OS. More often, the impossibilities are things such as experience with some obscure and irrelevant technology or some combination of technologies that are highly unlikely to be in the grasp of most individuals.
Armed with this practical impossibility which allows HR to weed out all applicants, BigCo then certifies that no American applicants meet the job requirements. Poof, H-1B visas are then justified, so the call goes out to staffing companies which specialize in sourcing applicants through this program. Magically, these staffing companies happen to have hundreds of resumes of foreign applicants with exactly the desired skill sets, and references to back them up. In come the “highly skilled and essential” Indians and Chinese by the planeload. Worse, once they have infiltrated a company, the system kicks into overdrive as entire shops become nothing but clusters of foreign workers who spend a good chunk of their time writing more impossible HR requirements. These shops quickly become full of rabid, anti-American attitude, but short on actual skills since, after all, if their resume was padded with one lie, why not more? Although we’ve managed to do well as outside consultants by cleaning up their messes as they wreck project after project and bring companies to the brink of destruction (and in some cases over the brink), I, and countless others, would love to see this business line vanish, never to return.
Again, if Trump works to roll-back the H-1B visa program, expect the big boys to bitch and threaten, but the practical effect will be a flood of skilled Americans back into high-tech jobs that were wrested from them by a system of massive fraud, collusion, abuse and in some cases, outright intimidation. Hopefully there will be some indictments that come out of this also.
If you wanted to design legislation to completely destroy small, family-owned businesses, it would look like Obamacare. Obamacare destroys family businesses in four key ways:
• High premiums on unnecessary coverage
• Abusive minor health programs for low-income families
• Prohibition on pre-tax reimbursement
• Prohibition on benefits to principals
Let’s look at each of these anti-family, anti-small-business and anti-American globalist weapons individually:
High premiums on unnecessary coverage: Obamacare requires mandatory coverage for things such as maternity, contraception, psychiatric care and substance abuse. The family-run small businesses, typically operated by fairly responsible people, don’t need any of these except perhaps maternity coverage, and even that restricted to a small set of females in the family. But, these families are forced to pay for this coverage anyway so that Slutbag Sally and Methhead Mike down the street can live it up.
Abusive minor health programs for low-income families: Obamacare requires that low-income families, if coverage was purchased through the marketplace, enroll their minor children into
indoctrination and experimental basic health programs which would make even the most rabid anti-vax activist seem too moderate. What does this low-income policy have to do with family-run small businesses? Because, on paper, responsible family-run small businesses look like they are being run by paupers, as most of the business revenue is reinvested, pays salaries or pays down debt incurred to grow the business. These people, then, if buying insurance through the marketplace, get their children funneled into the same Orwellian pipeline as Slutbag Sally’s kids, or for that matter, poor decent people who are scratching out an honest living the best they can.
Prohibition on pre-tax reimbursement: Obamacare specifically prohibits, as of 1 July 2015, businesses reimbursing insurance coverage outside the marketplace. See above for why small businesses would want to avoid the marketplace.
Prohibition on benefits to principals: As bad as all the above are, the family owners of these businesses aren’t even allowed to cover themselves on the company plan, forcing them back toward that marketplace wicket. Sure, they can provide great benefits to their employees, but not to themselves. This leaves them with less revenue to hire others, forcing otherwise great employee prospects to work at any job they can scratch up at BigCo just for the benefits.
The result: the systematic destruction of family businesses everywhere, causing more people to be dependent upon and compliant to BigCo, and thus globalist, dictates. Every small business owner we know, without exception, is convinced that dismantling Obamacare will be the greatest boost to the domestic economy that the Trump administration could make. It was very encouraging to see him take the first step in this direction literally on day one.
So, this week, we are encouraged to see early forward motion on Obamacare, plus pull-back on NAFTA and the Trans-Pacific Partnership agreement. Some of these changes will hurt in the short term, give fodder to globalist media to accuse Trump of destroying the country and the economy, and cause higher prices, but the end result will be worth it for everyone. We’ll talk about some of the pain that is coming, and some of the pressure that the big boys are planning to use on the man on the street, but in the meantime we’re happy to see most small businesses adopting a war footing to stand shoulder-to-shoulder with the administration to get past the rough spots.
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14 Comments on "Trump Week In Review"
It is worse than you think, Chinese managers who hire Chinese workers expect a kick back from each of them to keep their jobs. The Chinese managers also puts themselves at the top of every patent application. I have seen entire departments go from one Chinese engineer to 100% Chinese within two years after the Chinese engineer is promoted to management.
Tom that is a splendid piece. The Tyler boys should have you on ZERO Hedge.
Right on man!
Great stuff. I really appreciate your explanation with concrete examples. This will help me wade through the propaganda vomited by the enemy press.
[…] Source: Trump Week In Review – Starving the Monkeys […]
[…] Progress so far, as it affects small business. […]
One of the most descriptive tomes I have seen on the H-1B mess. Kudos. H-1B program needs an entire review top to bottom and replaced if necessary.
Shrugger in Arkansas
Great piece Tom.
H1B visas are bad. L1 visas are double-plus ungood. Companies with divisions in foreign countries can obtain blanket L1 visas to bring in large numbers of foreign workers into the US, for at least 5 years, without the stipluation that the skills they have (usually marginal and often completely fake) cannot be found in the US. Just come on in and work in the US, no questions asked. And unlike H1Bs, there is no “prevailing wage” requirement.
One of the last stages of the “great hollowing-out” taking place in large US firms is the wholesale replacement of remaining US workers with L1 visa holders, who are delighted to receive half the wages as the people they replace. Five years is an eternity in business, and when the clock does run out, the old batch is easily replaced by a new batch, assuming the company is still around.
At least 100,000 of these L1s come into the US every year.
[…] http://starvingthemonkeys.com/2017/01/27/trump-week-in-review/ […]
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