Are BMW imported cars?

The following short and simple article appeared in the NYT. I thought that I will include it as a blog post because of the number of important questions that are embedded in it: Is an X3 assembled in South Carolina an imported car? ( I think that the Camry is one of the cars that has the highest percentage  of US manufacturing in it). Note also that a foreign manufacturer is creating US jobs and is also increasing US exports.
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FRANKFURT — BMW said on Friday that it would invest $1 billion over the next two years in its factory in Spartanburg, S.C., which will become its largest production site.

The expansion will add 800 jobs in Spartanburg and increase the plant’s capacity by 50 percent in 2016, BMW said. In addition, the plant will begin to produce a new, large crossover vehicle.

Expansion of the plant had been expected, but BMW did not disclose the scope of its investment until Friday at an event attended by Penny Pritzker, the secretary of commerce for the United States, and Nikki Haley, governor of South Carolina.

BMW, based in Munich, said the decision to expand production in Spartanburg reflected the importance of the United States market, the company’s second-largest after China. BMW sold 377,000 vehicles in the United States last year, or 19 percent of the company’s total.

“At the BMW Group, we have a golden rule: Production follows the market,” Norbert Reithofer, the chief executive of BMW, said in Spartanburg, according to prepared remarks. Mr. Reithofer managed the Spartanburg operations from 1997 to 2000 and has often said that the optimistic American attitude he encountered there shaped his management style.

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A finished BMW X3 was driven off the assembly line on Thursday at the Spartanburg plant in South Carolina. Credit Chris Keane/Reuters

The Spartanburg plant already produces BMW’s line of X series crossover vehicles, which combine elements of sedans and S.U.V.s. The new crossover model produced there will be called the X7, BMW said. It did not say when production of the X7 would start, but typically it takes about three years to bring such a vehicle to the assembly line.

BMW also plans also produce a hybrid version of its smaller X5 crossover in Spartanburg “in the near future,” the company said.

The company’s plans should help American exports, since BMW ships about 70 percent of the vehicles produced in Spartanburg abroad. Germany owes its status as the world’s third-largest exporter, after China and the United States, primarily to the car industry. BMW and its German rivals Mercedes-Benz and Audi dominate the global market for luxury vehicles.

With the investment, the capacity of the Spartanburg plant will rise to 450,000 vehicles and the work force of 8,000 will grow by 10 percent. The figure does not include additional jobs that the investment will generate at suppliers or local businesses.

The event Friday was BMW’s 20th anniversary of producing cars in the United States. BMW said it had built 2.6 million vehicles in Spartanburg since the plant opened in 1994. After the expansion is complete, Spartanburg will have the largest capacity of BMW’s 28 production facilities around the world.

BMW still produces more than half its vehicles at plants in Germany, however.

(A version of this article appears in print on March 29, 2014, on page B3 of the New York edition)

Income Inequality, Again.

The following article by Professor Krugman speaks of a book by Piketty. The book in question was released in English only about 10 days ago but practically every review praises it as a classic in the making. The issue that Professor Pikkety is concerned with is that of inequality of income on a global level. This should be enough of a background for the remarks by Mr. Krugman on income distribution in the US

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Mar 22, 9:36 am 9

Working for the Owners

I’ve just finished a draft of a long review of Thomas Piketty’s Capital in the 21st Century, which argues that we’re on the road back to “patrimonial capitalism”, dominated by inherited wealth. It’s an amazing book; among other things, it does an awesome job of integrating economic growth, the factor distribution of income (between capital and labor), and the individual distribution of income into a common framework. (It’s all about r-g). One slight weakness of the book, however, is that Piketty’s grand framework doesn’t do too good a job of explaining the explosion of income inequality in the United States, which so far has been driven mainly by wage income rather than capital. Piketty does take this on; but it’s kind of a side journey from the central story.

No matter; it’s still a masterwork. But I’ve been thinking about this quite a bit, and one thing that strikes me is the remarkable extent to which American conservatism in 2014 seems to be about defending and promoting patrimonial capitalism even though we aren’t there yet.

Think back to the Bush administration, whose main economic theme was the “ownership society“: in effect, the message was that you’re not really a full-fledged American, no matter how hard you work, unless you have a lot of assets. Think of Eric Cantor’s famous Labor Day tweet in which he used the occasion to celebrate business owners. More recently, Mike Konczal has pointed out that despite claims that the Tea Party somehow represents a rebellion against business domination of the GOP, the Tea Party agenda corresponds almost perfectly with Wall Street’s goals.

Oh, and let’s not forget the long crusade against the estate tax.

In short, the GOP is more and more a party that consistently, indeed reflexively, supports the interests of capital over those of labor. But why?

Well, one thing you might imagine would be that the party was responding to a change in society — aren’t more and more Americans asset owners, for example through their retirement accounts?

And the answer is no. In fact, the concentration of income from capital in a few hands has risen sharply. Tucked deep inside the CBO report on trends in the US distribution of income are data on the concentration of various types of income; here’s the one percent’s share of capital income:

So what we’re seeing is that half the political spectrum now instinctively accords much more respect to capital than to labor, at a time when capital income is growing ever more concentrated in a few hands — and is surely on its way to being concentrated largely in the hands of people who inherited their wealth.

Curious, isn’t it?