Abundance vs. Scarcity
Posted on Sep 25, 2007 - 2:52pm by E. Phil Haley in Economy, NAFTA, Politics
Given the controversy surrounding the Mexican Truck Issue and the recent strike by GM workers I’ve been doing a lot of thinking lately about the Abundance vs. Scarcity Mentality Model as I was introduced to it by Stephen Covey; the author of “The 7 Habits of Highly Effective People“. I think it’s best to let him explain in his own words:
“Most people are deeply scripted in what I call the Scarcity Mentality. They see life as having only so much, as though there were only one pie out there. And if someone were to get a big piece of the pie, it would mean less for everybody else.
“The Scarcity Mentality is the zero-sum paradigm of life. People with a Scarcity Mentality have a very difficult time sharing recognition and credit, power or profit – even with those who help in the production. They also have a a very hard time being genuinely happy for the success of other people.
“The Abundance Mentality, on the other hand, flows out of a deep inner sense of personal worth and security. It is the paradigm that there is plenty out there and enough to spare for everybody. It results in sharing of prestige, of recognition, of profits, of decision making. It opens possibilities, options, alternatives, and creativity.”
Now, I’m quite sure it’ll take me quite awhile, if ever, to completely reconcile this concept with the trucking industry but I do have a few thoughts on the subject; open to criticism.
A Rising Tide Raises All Boats
Its the reason I found myself a supporter of NAFTA in the first place. I thought then, and think now, that anything done to help Canada and Mexico grow their economies cannot help but increase our own economy. It won’t happen overnight and there will be short-term growing pains that might cause some immediate problems. Yes, there are security issues to be dealt with. Yes, there are safety issues to be dealt with. Yes, its likely that the Mexican truckers will, in the beginning, see more benefits than American truckers. In the long-run, though, I don’t see a downside to opening our borders to commerce.
Obviously, there are cultural issues that cause a resource rich nation like Mexico to suffer from a poor economy but limiting commerce between our two countries won’t solve those problems. And I understand that opening the borders isn’t an instant cultural cure, either, but its a start.
Buy American
One issue that caused workers to walk off the job yesterday revolved around where new plants would be built. The union insisted that GM agree to a contract that guaranteed that all new facilities would be built on American soil and GM balked. I would too.
If you can buy something cheaper at store A than you can at store B then you’ll only shop at store B if they offer other benefits that offset the higher cost. Its also unlikely that you’d agree to circumstances that forbade you from shopping at any store other than B. But that’s exactly what the Auto Workers are asking of GM. I don’t blame them for trying to maintain the status quo; but GM must compete globally to grow and stay profitable (no profits = no jobs at all). That means they need the option to build cars on an even footing with manufacturers that aren’t being held hostage by their employees.
It seems to me that the union and the rank-and-file are stuck in a Scarcity Mentality. I can think of a lot of scenarios in which the combination of open borders and an auto industry free to compete globally can exponentially increase economic opportunity and growth.
Hell No! We Won’t Go!
So I read that, in one poll, more than 90% of the respondents indicated they wouldn’t drive a truck into Mexico. Hmmm…That reminds me of a story. Back in the ’80s, when I was dispatching trucks instead of driving them, I had a pair of brothers, both owner-operators, that refused to go anyplace but California. As a matter of fact, they would only go to Los Angeles. They’d go further north to pick up a back-haul – but L.A. had to be the outbound leg. We had a fair amount of freight to L.A. but, of course, the limitation they placed on their routing also served to limit their overall income.
Finally, after many attempts to get them out of their rut they both told me that they were familiar with the route and they were afraid of going someplace new. I couldn’t believe it. When I pointed out the fact that they had never gone anywhere, including L.A., until they went there the first time they both reluctantly agreed to try a few new routes. Once they discovered that trolls didn’t live under all the bridges between here and everywhere they became the two most successful truckers we had under contract.
Why on earth would anyone complaining about a lack of freight look askance at a new market? It’s beyond me. We’ve never done anything ’till we’ve done it the first time.
In Conclusion
Well, not really. I’ve got lots more thinking to do about the Abundance vs. Scarcity Mentality Model and its relationship to the trucking industry. I’m not entirely sure all the conclusions I’ve drawn to this point are complete and I’m sure I’ll think of more correlations, as well. I’d really appreciate your thoughts on the subject, in agreement and otherwise, but I’d prefer a conversational rather than confrontational tone.
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I have nothing to challenge you on. I enjoyed how you relate one of the 7 habits of highly effective people to the mentality of truckers and the UAW. I will pass this along to my family in Detroit, who may have an opinion to challenge you on.
I happen to agree with you here Phil. You have presented a logical point of view that few can argue with, well, maybe a few!
We are far beyond the point that we can afford to maintain the isolationist, protectionist attitude that a minority of very vocal Americans have. We are in a global economy, like it or not.
I fully expect the outcome of the GM strike to cause the company to move some production to Mexico and Canada. Canada will be blameless and Mexico will take the brunt of the blame when in reality, it is the workers and the union which will have caused the job losses.
Some may not realize it, but GM’s wage and benefit package costs the company $78.00 per hour per worker as compared to $49.00 for Toyota, yet the wage packages are comparable. A company cannot survive with that great a difference in costs and stay competitive. Do we want to blame NAFTA and the Mexicans on this? Some will but the reality is, Toyota has a better business model.
I’m looking forward to more of your observations on this
First article I’ve read that doesn’t blaim GM or Mexico. Maybe I don’t get out enough…
Nafta is turning out to only help the Chinese. When Mexico complains about losing jobs to China because of labor costs, there’s a problem we can’t solve by helping Mexico.
I heard today that Richard Nixon gave China the Trade agreements THEY wanted so they wouldn’t invade Taiwan. No wonder it’s one sided and we have such a trade deficit.
China is going to build an auto plant in Tijuana to make cars to be sold in the US. Thanks to NAFTA. Mexico might get a few jobs, but at what cost?
NAFTA is just not right. I agree we should do something for North America, but all we did was help China more.
China invades Taiwan, the U.S. is pulled into another war that we probably would lose. America has a comittment to the defense of Taiwan.
Now China owns enough of the US through purchase of our T-Bills that were they to dump them on the open market, it would destroy the American economy and life as we know it. And it would have a domino effect. In other words, China has us all by the short hairs.
It wasn’t NAFTA that caused this, and we can’t blame NAFTA. NAFTA is an agreement between three countries. The US, Canada and Mexico.
We got into this predicament through granting China MFN (most favored nation) status as well as other trade agreements and by our own inherent greed. The same happened with Japan. We helped build them into the economic powerhouse they are today.
We have to get with the program. The days of isolationism are behind us. Like it or not, we live in a world economy. And that can be a good thing if we make it work to our advantage.
Nafta may not have caused it, but like a lot of things, we intended Nafta to do one thing and China is the one taking advantage of it.
[quote comment="304"]The days of isolationism are behind us. Like it or not, we live in a world economy. And that can be a good thing if we make it work to our advantage.[/quote]
True, But it seems we always get the short end of the stick on any trade agreement or we are depending on someone else to open their markets, which they don’t (Japan, China, etc…) While we remain wide open, setting the example, but getting taken advantage of at the same time.
China does own a lot of T-bonds (not bills) which have maturities greater than 10 years (usually 30). If China, or any nation that holds a large amount of our debt, were to begin a large sell-off of those bonds that would cause the yields of new bonds to increase and the value of existing bonds to decrease; putting retirement funds and portfolios at risk. (As bond prices drop due to increased market supplies, interest yields increase; and if prices increase due to increased demand than interest yields are reduced.) An extended mass exodus by foreigners from the treasury market would cause a steady rise in interest rates that would have a negative effect on the stock market as well as retirement funds and portfolios holding bonds losing face value. This would definitely cause problems but I’m not sure it would spell the end of life as we know it. It’s happened before and it may happen again.
As far as taxes, tariffs, trade agreements and subsidies go; they’re all intended to level fields but they don’t always work as intended. As in the case of targeted taxes, any attempt to manipulate free, open and unregulated trade through the means of incentives or disincentives will always result in unintended consequences. But, of course, free and unregulated trade is a pipe dream.
All that said, it doesn’t mean that we should stop trying to build a better world economy; and, in my opinion, opening the door to new possibilities has a greater upside potential than attempting to protect the status quo.
Well said Phil and thanks for the correction. Bills, Bonds, I got them confused.
It is my understanding that China holds trillions of dollars in T-thingmajiggers which could have a devastating effect on the economy. But maybe that’s what is needed is to call their bluff.
We don’t need open trade with China at our expense. We do need close ties with our northern and southern neighbor and again I agree, we need to throw all this PC crap out the window and get trade negotiators to the table that will not give concessions as easily as they have in the past
I agree that open trade with China, as it currently stands, seems to benefit China far more than it benefits us and I’m not sure why the agreements put in place by Clinton weren’t severely altered by Bush; but they weren’t. As to the T-bonds held by foreign countries; there is about $9 trillion held by a veritable plethora of countries with China being a major player. I heard back in early September that they were attempting to sell between $48 and $64 billion, a significant amount, but it’ll be November (when the reports come out) before we know for sure which country was actually selling the bonds. (It could be another country doing so as a go between for China or doing so at the behest of China.) We’ll see.