All things are no longer equal: Favoritism for the Mexican trucking industry
posted at 8:39 pm on October 25, 2011 by J.E. Dyer
One of the impressions one would get from mainstream media coverage of any event is that we’re still in Kansas (as it were), and that the context of truth and value that we all grew up assuming still applies.
If the 2012 election is about anything, it will be about how many voters have figured out that that isn’t the case. The world has, metaphorically speaking, turned upside down – and not by accident but by agency. The voters, and the ideologues making decisions in the US government, have two different sets of assumptions about truth and value.
A good illustration of this is the differing concepts of each party about “jobs.” When the voters say they want jobs, they mean they want a resurgence of opportunity in the various fields in which they have worked: manufacturing, accounting, engineering, sales, construction. By “jobs,” the voters mean vocations, lines of work and expertise to build on, paths to fulfillment, accomplishment, greater responsibility: the means to a better life for themselves and their families.
Of course jobs should come with a paycheck, but what’s important about a “job,” as opposed to a welfare hand-out, is that it’s something that leverages your importance – your skills, your character – to merit that paycheck. A person with a job has a lot of influence over how much he earns and what he can do with it. A job is always a two-way street, in which the employee can shape his own destiny through how much he’s willing to put into it. The market is quite marvelous about rewarding greater effort, when it comes to the goods and services customers prize.
That is not how the ideologues who now govern the United States see “jobs.” For them, “jobs” are a systemic/economic given, to be treated most profitably as units of political influence and taxpaying value. Jobs are a mechanical abstraction; what’s real is constituencies and dependencies. Their view of jobs is not that America is stronger when she’s producing more of them, which she does with breathtaking power on her own. It’s that jobs represent an opportunity to cultivate that most prized of political assets: dependent constituencies. If there are to be more jobs, what’s important to the Obama ideologues is that the jobs be something their government can tighten or loosen the valve on.
For many of them, this is because they see jobs in the abstract as something on which a hazy power structure already tightens or loosens the valve. Many of them literally think a capitalist cabal – “big business,” “Wall Street” – decides to distribute jobs freely or dole them out parsimoniously. That is not the experience of the average person who has ever held a private-sector job, but Obama’s team is not composed of such people. The fry-dropper at Burger King, who can see that her job is probably about to be cut because there’s hardly any customer traffic on her shift, knows more about the economics of employment than quite a few of Obama’s federal-agency managers.
This disconnect between each party’s understanding of truth and value is a major factor in the almost unparsable noise of the current political debate. A week ago, on Fox News Sunday, center-left panelist Liz Marlantes declared that Rick Perry’s energy plan would fail to resonate with voters because what people care about is jobs, and Perry had said nothing about a plan for job creation.
But millions of voters understand that Perry’s energy plan is a jobs plan. It would not only create jobs in the energy industry, it would make energy cheaper for everyone, households and businesses alike, and thus improve everything about our economic picture, including investment, business start-ups, and hiring.
What it would not do is leave job-creation in the hands of federal-government planners.
We have reached the point at which we can no longer pretend we are talking about the same things. The Obama administration and its apologists in the media are not talking about economic improvement, opportunity, or even relief as the average voter understands them. Another case illustrates that beautifully: the case of the Mexican trucking industry.
I should state up front that I’m a friend of free trade in general, and not an advocate of special protections for US businesses. The latter simply cost the American consumer more – and all attempts to prevent the market from rendering its judgments end by needing perpetual shoring up, mainly in the form of incessant public bail-outs and favoritism.
But what’s going on with the trucking industry has nothing to do with the market. It has to do with a weird concatenation of ideological stances. All things are no longer equal. There is nothing in this situation that is happening because the market would demand it. No “capitalist cabal” is making the relevant decisions. The Obama ideologues are fully in charge. They have produced the situation, lock, stock, and barrel. Here it is.
NAFTA – the North American Free Trade Agreement – is a good idea and always has been. I’m in favor of it. I don’t think NAFTA and Interstate 35 are tools of the devil to undermine American integrity. But it’s possible to cynically invoke NAFTA for the wrong reasons, and that’s precisely what the Obama administration has done.
The first Mexican-registered long-haul truck crossed the border into Texas, with full access to the US road network, on Friday, 21 October, under the aegis of NAFTA. (A US law, you may remember, passed in 1994. Yes, it took this long.) If I had my druthers, Mexican trucks would have had full access to US highways by 2000, which is what was supposed to happen under the original provisions of NAFTA. Canadian trucks already have such access. Law enforcement and security precautions would have had to be somewhat different with Mexican trucks, given their origin and the crime problems from that particular US border, but it’s not the access to the US hauling market I object to.
The problem is what has led up to the triumphant ceremony on the 21st, and the comparatively disfavored position of the US trucking industry. The first Mexican truck admitted with full access to US highways arrived 10 weeks after Obama imposed new fuel-efficiency regulations on big-rigs and other heavy transport trucks, along with new emission targets. Officials of the trucking industry lined up shoulder to shoulder with Obama for a photo op in August, when the new regulations were issued, but a few journalists who still retain critical thinking capabilities reported that the industry officials’ complaisance was not replicated among independent owner-operators.
Large firms that retain fleets of trucks may be able to amortize the cost of buying new, compliant rigs relatively quickly, as promised by federal regulators. (That promise in itself will, of course, depend on the future price of fuel. Saving on higher-priced fuel may be current saving, but it doesn’t amortize a sunk cost in the manner predicted by the regulators.)
But independent truckers will be hit hard. A number of them won’t be able to afford to buy compliant rigs, and will have to cease operation. Others may be able to afford it, but will never realize the savings potentially available to large firms, because the life-cycle for a truck – how long it’s kept and operated – is typically shorter for independent owner-operators. The increased cost, without off-setting savings, will eat into profits, expansion plans, and hiring. Smaller operators handle less overall volume and have less discretion over loading as well, and loading is everything when it comes to fuel efficiency (and the need for harder-working, higher-emitting engines). Since the purpose of trucking is to bear heavy loads over long distances, simple physics will price many independents out of the business.
But wait – there’s more. Besides fuel-efficiency regulations, the US trucking industry has also been hit with a new set of safety regulations. These regulations, however well-intentioned, are not only costing the industry more, they are in some ways actively defeating their own purpose. But costing the industry more is bad enough. Who feels the costs the most? That would be independent owner-operators, of course. One of the cost impositions an owner-operator is ill-positioned to overcome is the need to hire additional drivers in order to haul the same freight in the same time while complying with safety rules.
Here are a couple of examples of the level of debate producing the decisions on these regulations. This one comes from the Jim Motavalli piece on fuel-efficiency regulations (at BNet):
In the absence of regulations, companies that led with new aerodynamics and engine technology often lost out because their prices were higher, the [American Trucking Associations] said. Regulations create a level playing field.
Well, no. Regulations tilt the playing field on behalf of favored constituencies. The market is a level playing field. Regulations inherently create artificial advantages and disadvantages.
This priceless soundbite is from a Washington Times piece on the new safety regulations:
“Since fatigue is a national epidemic, it does not take a rocket scientist to figure out that 10 hours per day is safer than 11 hours a day,” said Edward C. Bassett Jr., an attorney with the APITLA, in a Wednesday letter to Mr. Obama.
So, the US trucking industry – already affected by California’s new emission regulations – is facing regulations that will force many smaller operators out of business, cost jobs, and make transportation costs more expensive for all commercial enterprises. Under these conditions, new competition from Mexican truckers seems like it might not be the best idea.
But the Obama administration isn’t just admitting Mexican trucks to US highways. As reported back in April by the Green Room’s Director Blue (Doug Ross), it’s using US taxpayer dollars to enable Mexican trucks to operate on our highways. Mexican trucks will have to comply with EPA fuel-efficiency and emission standards too. But what American truckers have to pay for themselves, Uncle Sam is funding with your tax dollars for their Mexican counterparts.
When it comes to safety regulations, meanwhile, the sheer logistics of enforcement will mean that Mexican truckers will be able to avoid much of the cost as well. Just as US industry officials speak for large trucking operators, agreements with the Mexican government will act as an agent for Mexican haulers in terms of compliance bona fides. Mexican truckers and large US firms will develop a modus vivendi with regulators; it’s the independent owner-operators who can neither absorb new costs nor make favorable arrangements with government agencies.
Just as Obama’s “jobs” plan is not a jobs plan as most voters would understand one, so his approach to Mexican trucking and NAFTA is not “free trade.” It’s regulatory favoritism. We are so heavily regulated now that it is no longer possible to speak in terms of level playing fields and markets. There is little left in life in which we cannot be punished or incentivized by regulatory decisions.
Control over how ever-increasing regulation is wielded is the apparent objective of the Obama administration; we can speculate as to why Mexican trucking is to be favored, but the point is that it is being favored by conscious policy, just as large trucking firms are being relatively favored by conscious policy, and small truckers are being absolutely disfavored in every way by conscious policy. There’s no “market” to it – except the iron reality that small businesses can’t compete when the playing field is artificially tilted against them.
More and more Americans are living that reality. Do we understand that Barack Obama doesn’t see it the way we do? Do we “get” that he and his advisers, for their ideological reasons, want the playing field tilted? Have we internalized the truth that all things are not equal, we’re not singing off the same sheet of music, and we aren’t in Kansas anymore? We’ll find out in 2012.