Wednesday, July 27, 2011

What's Wrong With America's Job Engine

In response to the Article by David Wessel July 27 2011

Although in the article David states the obvious - we are bleeding jobs and  the economy is growing too slowly.  David is trying to make the excuse for corporations by saying - if the companies knew the can sell more they would be more inclined to hire people. This is basically like stating that if the chicken saw more food it would lay more eggs. That is not the crux of the reason that America Job Engine is not growing.

Just consider the point mentioned briefly in the article "In a survey of 2,000 companies earlier this year, McKinsey Global Institute, the think tank arm of the big consulting firm, found 58% of employers expect to have more part-time, temporary or contract workers over the next five years and 21.5% more "outsourced or offshore" workers."

Well - now we are talking - if you read this and you understand that employers plan to "outsource and offshore more workers" doesn't it state the obvious - THERE WILL BE LESS HIRING IN THE US!!!
Not only that - but those same corporations and CEO's that cry to the government that they do not have enough skilled workers in this country and that they want more H1-B visas to "qualified workers" from other countries to come to the US - turn around and ship jobs overseas.

But more than that - not only that jobs get shipped. Corporations have to build factories and invest in those countries they hire. This creates an enormous transfer of investment from the US to countries like China, India and Korea - well guess what - if the money flows out - there is not enough money and willingness to invest in good old USA. That is the true crux why you see low job growth and nonexistent recovery - the investment balance in the US is negative!

See the article by David Malpass and Stephen Moore July 5 2011
By the way - those corporations that bring in 65,000 workers every year to the US (and most of them end up staying later) do not really do this because they can't find qualified people here in the US. The do it because they want qualified people on the CHEAP! See the article by Stephanie Gleason July 27 2011

With all the unemployed people out there - there are many engineers and tech workers able and bright that are looking for work in this troubled economy. Yes some of them might be in their 50's with lots of experience which will cost the company more than they are willing to pay.

By going the H1-B way, Multi-National corporations enjoy two way benefit approach. Cheaper labor overseas and cheaper labor in the US (for those jobs they do leave here). This goes to show the point I explained in my previous Blog regarding corporations in America. The point is that the corporate profit motivation by itself does not benefit the national interest of the people who give this corporation the right to exist. If a corporation is an entity it must choose a nationality to be loyal to. Just as people in the US are sworn to loyalty for the US - Corporations that are formed in the US must operate as a national powerhouse for the benefit of people of the country of origin - considerations of shipping of jobs should be limited by the people who give the corporation the right to exist. This not the way corporations operate today in the US.

Saturday, June 18, 2011

Don't Hold Your Breath

In Response to the Time Magazine Article

Don't Hold Your Breath June 20 2011 by Rana Foroohar,8599,2076568,00.html

It looks to me that America has plunged into a deep hole. It is bothering to me and to many other Americans. America is not on sustainable path and something needs to be done before we will get to the point of chaos that is happening in Greece right now. The political system in this country has grown to become unsustainable and incapable of leading this country to the capacity this country has had 50 years ago. We have turned from a productive nation that at one point was able to produce most of its good to a nation that imports most of the goods purchase at stores. This change has caused a severe reduction in the ability of this country to generate jobs. So why are people surprised that the economy is too weak to generate enough jobs? As long as the economy was able to produce enough service jobs and rely on tax revenue from sales of cheap goods from over seas (as happened in the last 20 years) the economy did OK. Once we passed a critical threshold from which there was severe layoff from services and manufacturing in 2007 - we seem not to be able to generate enough jobs.

The article talks about 5 myths

1) This is a temporary blip - this myth is correct - no one knows when the economy will get back to normal (say 5% unemployment)
2) We can buy our way out of it - this myth is correct - It will not work because we do not have enough jobs that export $ so we can pay for the stuff we import - buying more will just put us in a bigger hole!
3) The private sector will make it all better - this myth this correct - corporations that have money do not spend it here because they can invest it where he growth is (China India etc.)
4) We'll pack up and move for new jobs - this myth is correct - even if you move you may not find good enough work and most people can't move anyway because they are under water. Many of the jobs offered are at lower pay.
5) Entrepreneurs are the foundation of the economy - this myth is correct - the # of start ups and IPO's are in decline. Large corporations control segments of the market and the opportunities are not as rosy as they were in the 80's.

The dilemma we have is that if we want manufacturing jobs - we will not be able to compete with the cheap labor from China, India etc. Manufacturing in the US is viable only if taxation is placed on imports. But wait we have taken taxation off instead. Corporations for a long time pushed to take out taxation because they saw the benefit that cheap labor overseas will give them. Now corporations have it the way they like it. They can invest in factories overseas - make the stuff there for cheap - bring it here and sell it for a nice profit. So why are we surprised we do not have enough jobs. It is not just manufacturing that moved. the manufacturing drags with it engineering design and R&D - we are bleeding out of our own making. We enjoy the "benefit" of cheap goods that now we can fill our house with (and trash later) but we are also now seeing the effects of it in terms of loss of jobs. This process of "pressure equalization" between the low wage countries and high wage countries like the US is inevitable according to many in the name of free economy. What these people forget to tell you is that countries like China and India do not let their people bring in good from the US without taxation -so why are we doing this to ourselves. Although many corporations in America are successful many people in America are not doing great. With official unemployment over 9% (unofficial over 14%) we need to wonder what are we doing wrong and how can we fix this.

We must hold corporations responsible to this country. Although the Supreme Court determined that corporations are entities with rights like individuals, many corporations seem to have forgotten that they are there to serve the people and the country. Corporations, although instruments of profit making, should have the public responsibility to the American people that supersedes their ambition for easy profit that they accomplish by going multi-national and off shore. The effects of American corporations moving R&D and manufacturing overseas not only creates unemployment and reduction in GDP, but also reduces innovation on a national scale.Countries like Germany have dealt with the same issue. They did not simply take the rout of exporting jobs out of the country. Their export is strong and unemployment is lower than the US.

As pointed out in

"worker representation to be half of board members of companies. In Germany, the industrial and financial sectors are highly regulated keeping jobs from being outsourced and ensuring main street benefits rather than just wall street"

I see this as the biggest challenge America is facing. America does not need health care reform. It needs Corporation reforms that will allow both Corporations and Citizens (that most own stocks in the company the work at) to achieve success together.

For more reading about corporations in America - read this...
by  Thomas P. Byrne