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BMW Areal
Photo: Guido Radig

On the first Sunday of March, 1993, my wife and I took our young daughter for a dim sum lunch in Chicago’s South Side Chinatown. Afterwards, we bought her some traditional Chinese clothing. There would be many more dim sum lunches, we told her, as we liked Chinese people and knew she enjoyed the outings. However, we would avoid buying more products made in China, including toys, until the Chinese government significantly changed its practices to allow more American-made products to be sold there. (We’re still waiting.)

American companies were, of course, welcome as investors in China if they built up manufacturing there, and shared technology. However, various barriers continue to impede the selling of American-made goods. The merchandise trade deficit with China has grown from $6 million in 1985 to $6.2 billion in 1989 (the year our daughter was born) to $18.2 billion in 1992. In 2015 it exceeded $365 billion, the largest with any country, ever. The total trade deficit with China last year, including both services and goods, was a whopping $338 billion.

Certain members of Congress and Washington think tank researchers have spotlighted Chinese protectionist or “mercantilist” economic policies. The only widely known public figure to speak strongly and often about the topic over many years has been Donald Trump. While there are convincing reasons to believe Mr. Trump is not Presidential material, he has raised pertinent questions as to the way we have managed our trade relationship with China. (He has also brought other countries into the discussion, more on this in a moment.)

Some years ago, an Indiana supermarket executive and former State Department diplomat shed light on the matter. In the late 1980s, he studied the Mandarin language and Asian affairs at the Foreign Service Institute, then worked on trade policy. He had been part of a team negotiating the US-China trade relationship. What happened, I asked him. How did the Chinese get the better of us?

His answer was simple. In China, he and his American colleagues were “so taken with the culture” that they largely missed the business subtexts of the Chinese, who knew exactly what they wanted. They got it, too: continued liberal access to the American market, without a significant change in Chinese policy toward American-made imports.

During the current political season, Mr. Trump has continued to highlight the trade deficit with China as a legacy of failed deal-making, and he also speaks of job sucking trade deficits with Japan and Mexico. But what about Germany? The 2015 trade deficit with Germany was more than $20 billion higher than with either Japan or Mexico. What’s more, Germany is not particularly known for protectionist trade policies.

It is just very competitive.

Negotiating a more balanced relationship with China will not get us far, unless many more Americans of average and higher abilities prepare for demanding work in the productive and competitive economy. Remember, one reason why Chinese manufacturers became big suppliers here in the first place is that many Americans decided our country was graduating from a manufacturing vocation, and should become a “post-industrial” society.

They thought services would make up the gap, but services haven’t even come close. In 2015 our total trade deficit with the world – including both goods and services — was $539 billion. In fact, the U.S. has run a trade deficit every year since 1976, with its first $100 billion+ deficit in 1984. These deficits have occurred in recession and in expansion; during war and during peace; when the dollar is high and when it’s been low; when some interest rates were in the 20% range, and when the federal funds rate was at zero.

They began years before either NAFTA or the rise of China as a global economic power.

We have not been competing well with low cost countries like Mexico and China, nor with high cost countries like Japan and Germany.

It has been a long time since we’ve had a really competitive economy. The sooner we realize this, the quicker we can focus on solutions not only at the negotiating table but — most importantly — within our own selves. These solutions will demand a return to practical thinking, to hard-nosed approaches in our lives, our educational pursuits, and our work aspirations. In international terms, they will demand resisting impulses to scapegoat our neighbors in Mexico, and trying instead to learn more from the example of competitive countries like Germany.

Charles Orlowek

Chicago

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Eve Wolk Arnovich

Today, August 15,2013, Eve Wolk Arnovich passed away in Florida, aged 95.

In a generation noted for its practicality, Eve stood out for hers. Her own father died young, and her mother did hard physical work into a robust old age. For many years after marrying, Eve herself worked, at a store called Oreck’s, while keeping tabs on three children, two houses, and my uncle Hy’s diet. He’d had a nearly fatal heart attack, and then his brother had a fatal one, so she kept a very close watch. .

Her vigilance gave my uncle an extra couple of decades.

During the short northern Wisconsin summers Eve did not work at the store, but she had her hands full with her other responsibilities plus handling fair weather visitors from the East Coast. She took my brother and me fishing, cleaned and scaled much of what we caught, squeezed fresh orange juice, cooked meals — often for 12 or 15 people — at the lake house, and never to my knowledge had any domestic help.

If she did try domestic help, it’s hard to imagine anyone coming close to her standards.

For many years my uncle dated a girl named Evelyn, whom everyone assumed would become his wife. Then one day he met Eve, and the other girl was quickly forgotten. Eyebrows were raised at this pretty new girlfriend from a hardscrabble family, at a time when social standing preoccupied many Americans.

Some time after being widowed in 1975 Eve moved to Florida and eventually remarried, but she would return to Wisconsin in the summers. Later on she developed Alzheimer’s disease, and I never saw her again. Yet I think about her often. Yesterday, on what turned out be her last day, I’d heard someone complaining and thought about what Auntie Eve would say. “Quit your bellyaching!” was what came to mind.

Eve didn’t have higher education, nor did she have the ambition — as my mother did — to strike out from her small home town. Within the world she knew, Eve was so competent. She was solid. She was content where she was, like her son is, while her daughters moved away and became educated and modern women.

There aren’t too many American women left like Auntie Eve. If you were born into the Baby Boom and saw your life open to many wide-ranging options, you were unlikely to choose her path. Yet she was really something.

Charles Orlowek
11:10PM Central Daylight Time
August 15, 2013

Modern hamburger, nostalgic price.  This old facade was uncovered by workers in Chicago on March 14, 2013, in the 1100 block of North Ashland Avenue.  ImageImageImage

ImageLiving in the “Land of Lincoln”, how often do we cross paths with people like the man himself?  Most centenarians have yet to meet, I imagine, someone approaching Lincoln’s simple greatness or deep melancholy.  Yet Lincoln was also a native born Kentuckian transplanted to backwoods Indiana (only later to move to Illinois as an adult).  He was what we would call an old stock American of white Anglo-Saxon heritage.

Over the weekend I stumbled on a community of such people.  in the 2010 census, Jonesboro, Indiana shows 1756 souls with only a single African-American and no Asians.  In the local paper, obituaries from adjacent areas showed these family names: Walker, (Turner) York, Manning, Porter, Kenworthy, and Nichols.  Of the six individuals, two were born in Kentucky, one in Tennessee.  A baby boomer drinking at Jonesboro’s  Tobby’s Bar told me his mother had come to the area from Kentucky.

So the  migration of Kentucky families into backwoods Indiana seems to have long outlasted Lincoln’s time.  The experience of Jonesboro and its neighbors shows this migration continuing well into the twentieth century.

Nearby is the larger town of Marion, a stronghold of the Ku Klux Klan in the early 1920s.  It’s possible that no town in America was hotter for the Klan than Marion.  And even in 1930, after the Klan’s heyday had passed, there was a well-known lynching of black men there.  Today, by contrast, Marion seems to have an easy multicultural vibe,  a college town where 15 percent of the population is African-American and everyone holds her head up high..

Aside from Tobby’s, someone said there was another bar in Jonesboro but I didn’t notice it.  There’s also a  gas station with convenience store but no other storefont businesses.  Next to Tobby’s on the main block, on the only other storefront which appears maybe to be occupied, a sign bears the words “JONESBORO DEMOCRATS WE CARE ABOUT YOU”.  It seems that not every family cut from Lincoln’s cloth went in for that new Republican party after all.

Charles Orlowek

WHY CHICAGO should change its home page to “http://www.cityofchicago.gov

ImageDuring the 20th century,  US babies’ life expectancy rose from 47 to 77 years, yet instead of putting much more money away for longer retirements, we have — as households and as a nation — actually been saving a smaller portion of current income.   State pension “holidays”  — official vacations from the burden of saving for the future — have contributed to a shortfall in Illinois.  Empty promises to ourselves now need recalibration, while recognizing that commitments absolutely needing to be kept — including those associated with maintaining our inherited infrastructure — may require more revenue to support.

Each day the Illinois legislature delays, matters slip further.  Many legislators seem to think of themselves as elected advocates more than as governing officials.  What can the City of Chicago do to spur legislators to  address current realities?  One small symbolic measure comes to mind in three letters: “GOV”.

That’s right.  The city’s internet home page is “www.cityofchicago.org”, placing it at the same status as any organization lobbying the city.  It is the same “.org” status  available to any group competing for donations and a bit of respect.   Likewise, the city’s official flag with its 4 stars sometimes appears as just another brand logo, as shown in the Whole Foods Market display.

The City of Chicago could endorse a serious approach to governing by changing its home page to http://www.cityofchicago.gov

This would underscore the need for all elected officials to really govern, and not just advocate.  It would encourage elected folks to show how democracy can work.  Many of the world’s conflicts are based on assertions of the primacy of religious law over laws thought up and enacted by people.  One of the best ways to show the strength and currency of democracy is to make it work, to elevate it and to celebrate its success.   Let’s encourage this path and assert the legitimacy and durability of Government by the governed.

Charles Orlowek

Last Sunday afternoon I met up with clients in Minneapolis; between the three of us we passed through four major US airports (Denver, Minneapolis-St. Paul, and Chicago’s Midway and O’Hare). All were quiet compared with an average travel day, much less the normal Sunday after Thanksgiving. Arriving midday at Midway security, I got in line behind just two individuals.

The reason for such quiet airports, I was told later, was that airlines had offered few if any discounted fares this Thanksgiving.

For a while now US airlines have been cutting back on the number of flights, and you have to wonder whether leisure air travel is reverting to a rich person’s pastime. When passenger air travel was first introduced it was a luxury; only in the 1960s and 70s did it become experienced by a wide swath of the middle class.

There is no guarantee that future generations will enjoy such access. Here is another piece of evidence pointing to diminishing prospects for the middle class.

Last summer I spoke with a group of about 20 jobseekers and decided to test a hunch. I asked a show of hands for how many had ever considered various types of work as a:

– Cost accountant
– Utility line repair and maintenance technician
– Process engineer
– Mechanic (car, truck, industrial equipment, maintenance)
– Computer programmer
– Drafter (computer-aided design, building systems, etc.)

Only one person raised her hand, and only at the mention of half of these typically middle-class jobs. For the other occupations no hands at all were raised.

Then I asked for a show of hands on how many had ever thought of these activities:

– Raising money for a cause in which you believe
– Working with disadvantaged youth to guide and encourage them
– Working as an artist

Five or six hands went up at the mention of each of these tonier undertakings.

Now here’s the kicker. I threw in a few of what might be called servant’s jobs:

– Personal chef
– Children’s governess
– Pet care or pet grooming specialist

And yes, in each case several hands went up. The noblesse oblige activities and the servants’ jobs had gotten a much higher response than the middle class jobs.

The hunch was, of course, that among the reasons for middle class decline is that the appeal of traditionally middle class occupations has itself waned. Replacing them are occupations which spend wealth, rather than generate it.

Obviously there are many factors behind the erosion of the middle class. Beyond partisan and ideological talking points, here’s something more to consider.

Charles Orlowek
Chicago, December 3, 2011

Thursday night my wife Sharon and I settled into a hotel room and looked outside to see the Seattle monorail snaking along below the Space Needle. To Sharon it was the definitive “Jetsons view”.  The Future, circa 1962.  Today we’re trying to maintain our lifestyles while fearing what the future may hold, but in 1962 the reverse held: optimism for the future coexisted with fear of the present.  The world sweated through a missile crisis in Cuba, while the premiere of Godfrey Ridout’s confident orchestral work “Fall Fair” was fresh in the memories of the world’s diplomats.

In 2011 we are saving again, out of fear.  (In the boom years of the mid-00s people borrowed relentlessly to ‘trade up’, and net household savings in the US went to zero.)  Too many of us no longer embrace the future.  Now we brace for it, try to steel ourselves against it.

The banking industry each year organizes an international conference and trade show called Retail Delivery, which I attended last week.  (It’s a good event to exhibit products or software used by banks to manage their operations, furnish and promote their branches, develop online banking and other customer services platforms, etc.)  One of the exhibitors was a TV production company promoting a show encouraging kids to save, articulated with pre-packaged educational materials banks can use to reach out to schools.  Kids earn points redeemable for plastic action figures.

Consumption promoting savings.

In 1962 many schools promoted savings.  Straight.  Teachers encouraged children to buy special stamps each week, at a dime or quarter apiece, and stick them into a savings book which, when filled, could be redeemed for a US savings bond.  A $25 bond could be bought for something like $18 in stamps.  Years later the bond would mature and be redeemable for cash in its face amount.  Kids learned patience and saving for some distant future.

If such initiatives were to have a chance today, it would fall to the private sector to energize them.  During the recent boom years when saving was out of favor, ING Direct pioneered a new type of internet banking which promoted savings to a young generation.  The firm even opened retail cafe locations where savings is still pitched alongside inexpensive lunches, coffee, and pastries.  In April, 2012 I’m organizing the first marketing conference of the Canada-US Business Council Chicago, and Arkadi Kuhlmann of ING Direct will be one of our speakers, along with some leading Montreal ad men.

Fear and optimism can coexist productively now as they did in 1962.  Fear is driving much of current savings, but what more can be done to promote proactive savings for a distant and promising future?  What can be done to encourage people to get ahead of the game when their prospects improve?  And, when the time is right, what will motivate people to use those savings to acquire knowledge and real skills with the currency to earn stable wealth for future generations?  I’d really like to hear from anyone with good ideas, or just half-formed ideas in progress!  In the coming months I hope such ideas can animate discussions with people like Dana Dolan of BAI (organizer of the Retail Delivery event) and the CUSBC Chicago marketing conference next April 19.

Charles Orlowek

Chicago, October 19, 2011