Friday, November 26, 2010

Blame the victim

Please read this post in conjunction with my basic position paper "What is this blog all about?"

There is a lot of discussion in the media these days about how the boomers are leaving much less for their children.  (The boomers are the people born after World War II, and are now retiring.)

In other words, it appears that the standard of living for the working adults of today will not be as high as it was for their parents, the boomers.

Thomas Friedman, a New York Times writer, has stated:

(The Boomers have) "eaten through all the abundance like hungry locusts".

Whether Friedman coined this phrase himself or borrowed it from another writer I do not know.  In any case, the statement is absolutely outrageous, it is the big lie, it is disinformation, it is revisionist.  It is a "blame the victim" commentary on the problem.

Over the last 50 years, millions and millions of manufacturing jobs were transferred overseas.  Many of these jobs paid a living wage that enabled workers to buy appliances, cars, and  houses.  These workers also paid taxes to all levels of government.  The workers created finished products that customers wanted to buy and use.  In this way there was a value-added or wealth-creation effect.  Further, when the customer spent money to buy the product, his or her money went back into the domestic ecnomy. 

Each job sent overseas results in a contraction of the economy.  Each job sent overseas means a living wage disappears and means that there is a reduction in tax revenue to governments.  Each job sent overseas means that money to buy the related product goes out of the country, never to be seen again.  Each job sent overseas results in a reduction of the overall wealth-creation effect in the economy.

In the light of the comments in the preceding paragraph, all absolutely factual, isn't it more plausible that the  "eating through of the abundance" is due to the transfer of manufacturing jobs to foreign countries, rather than being due to the phenomenon offered by Friedman?

The ordinary citizens of America never requested that jobs be sent overseas.  The ordinary people did not ask for lower prices on goods.  No one knew about transferring jobs to foreign countries.  So the loss of jobs cannot be blamed on the boomers or any other group of ordinary people in America.

The idea of transferring jobs to foreign countries was conceived by American manufacturers.  The motive was increased profits.  The jobs were sent overseas on the initiative of American manufacturers, and jobs were sent overseas voluntarily. 

The transfer of manufacturing jobs to overseas locations has occurred continuously since the early 1960s and is still continuing.  It is the same as water dripping on a stone.  The stone is gradually worn away.  So our economy has been worn down and diminished.  This is the reason why people currently in the workforce are finding lower wages and are experiencing a lower standard of living than their parents.  This is the reason why many people will never find a job.  This is the reason for lower tax revenues and higher government deficits.

Friedman's statement assumes that Americans have forgotten that between 5 and 10 million manufacturing jobs were sent out of the country in the last 50 years.  Between 1982 and 2004 alone, there was a 40% reduction in the participation of Americans in manufacturing employment.  Part of this reduction was due to increased efficiency in the remaining domestic manufacturing sector.  However the larger part was undoubtedly due to simple transfer of the work to overseas locations. 

Friedman's statement is intended to make Americans forget about the relentless transfer of manufacturing jobs overseas, or to make them believe that the transfer of jobs has had no deleterious effect on the economy.  

I do not see how anyone could believe that the transfer of jobs to overseas locations has had only small or no adverse effect on the economy.

Instead of accepting that it was a huge mistake to send these jobs out of the country, Friedman is blaming the current economic situation on the ordinary working men and women of America. 

I believe that government and business "leaders" know very well that they have wrecked the economy through the transfer of millions of manufacturing jobs to China and other low-wage countries. 

In summary, sending manufacturing jobs overseas creates a one-two-three-four punch to the economy: 

+ Lose the manufacturing jobs that provided a living wage, allowing workers to buy houses, cars, and appliances.

+  Lose the value-added effect of manufacturing employment, and lose the associated enrichment of the economy.

+  Further make ourselves and our economy poorer by having to send half a trillion net dollars annually to foreign countries, to pay them to do our manufacturing for us. 

+  Foreign countries such as China are awash in our cash, and invest the excess in U.S. government securities.  Then we have to send these foreign countries another hundred billion dollars per year in debt service.

In brief but accurate terms, America has been brought low by the actions of our government and business leaders, not by the actions of ordinary citizens. 

How can we get ordinary Americans on-board to minimize buying of foreign-made goods and to insist that stores carry goods made in America?  As difficult as it may be to get this type of campaign going, this is the only way we are going to solve our economic problems and give employment and hope to all our people.

Wednesday, November 3, 2010

Protectionism, free trade, buy American

Please read this post in conjunction with my basic position paper "What is this blog all about?"

Unfortunately, if public figures make a given statement enough times, a major portion of the population will come to accept and believe it. 

One hundred or more years of repetition (brainwashing), have created the following simplistic word associations:

Liberal = bad

Socialism = bad

Protectionism = bad

Free trade = good

However the fact is that too much or too little of anything is BAD, and there is an intermediate position which is GOOD.. 

If we say protectionism is bad, and we therefore reduce and reduce the amount of protectionism, to the point where our economy is wrecked, we have gone too far.  In this case, some increased amount of protectionism becomes GOOD.

"Free trade" sounds good because the word "free" is in there.  But, again, too much free trade, to the point where our economy is wrecked, is BAD.  

Many more examples could be given.

People may dismiss my blog as that old chestnut "Buy American".

Yes, there have been "Buy American" campaigns over the years.  These campaigns were on the right track.  If large numbers of people had supported these campaigns, we would not be in the big mess we are in today.  However, with little public interest, the campaigns died away.

Now in 2010, things have gone to the point where most Americans, probably at least 80%, recognize that the employment situation is disastrous.  All we need is a respected public figure to lead on the issue.  With proper leadership, we could get at least a good portion of the jobs back from China and other foreign countries ourselves, without waiting for the government to act. 

In any case, the government will never act effectively.  The government is too careful, too politically correct, to risk annoying China.  But if a good case can be made that China is keeping its currency artificially low, and if China refuses to act, then we would be justified in putting a 25% tariff on everything coming in from China.  This action would have two good effects:

+  Provide additional tax revenue to the government - badly needed!

+  Provide a breathing space for American entrepreneurs to start or re-start factories, and for existing American factories to see increased orders.

A small increase in manufacturing in America would lead to a small increase in manufacturing employment.  A small increase in employment would raise hopes of people and they would buy in stores.  Increased store sales of American-made goods would lead to increased manufacturing activity and employment.  The process would go around and around with increasing benefits to the economy and to the American people.

It can happen.  It can be done.  Let's do it!.